Poor Provider Credentialing Impacts Care and Revenue

Imagine discovering your surgeon’s license expired six months ago, or learning that your hospital is losing millions in revenue because of inaccurate details that cause denied claims. These scenarios aren’t just hypothetical – they’re real consequences of poor provider credentialing that happen every day in healthcare organizations across the country.

Poor provider credentialing impacts everything from patient care to financial stability. Missing a single expired license or skipping one background check can lead to denied claims, legal liability, and damaged reputations.

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In this article, we’ll explore how these credentialing failures happen and, more importantly, how to prevent them from threatening your organization’s success.

Understanding Provider Credentialing

Provider credentialing — also known as physician credentialing or medical credentialing — is a thorough review of educational background, professional training, licensure, certifications, and ongoing professional performance of providers.

Healthcare organizations invest significant resources in this detailed verification process, recognizing its fundamental importance in maintaining patient safety and organizational excellence.

The complexity of provider credentialing presents significant challenges – one of a credentialer’s biggest difficulties is managing varying licenses with different renewal periods and continuing education requirements. Some states estimate traditional credentialing to take between 30 to 60 days, while others warn it can range from 90 to 150 days. This process is dependent upon multiple stakeholders, from credentialing specialists to peers providing reviews.

While many healthcare organizations still rely on manual or decentralized credentialing processes, the potential for verification errors could compromise patient safety and organizational compliance. Healthcare organizations must navigate this intricate process carefully, as poor provider credentialing can result in serious regulatory violations and potential liability issues.

Healthcare organizations must ensure their providers meet strict standards set by accrediting bodies like The Joint Commission (TJC) and the National Committee for Quality Assurance (NCQA), as well as state medical boards and federal agencies such as the Centers for Medicare & Medicaid Services (CMS).

When this process falls short, poor provider credentialing impacts the entire organization: patient safety is compromised, revenue is lost, and trust is broken.

Provider Credentialing Impacts on Patient Care

When healthcare organizations fail to properly verify their providers’ credentials, patients face real risks. This isn’t just about paperwork — poor provider credentialing impacts patient safety in direct and sometimes dangerous ways.

Patients may unknowingly receive care from providers who have expired licenses, inadequate training for specialized procedures, or problematic practice histories that weren’t properly investigated. Without thorough verification, healthcare organizations miss critical red flags like previous malpractice incidents or serious performance concerns at other facilities.

Quality of Care

An NIH study found that approximately 90% of medical errors in hospitals and health systems are related to system errors, and rigorous credentialing alone reduces adverse patient safety events by up to 25%. Providers who haven’t maintained proper continuing education requirements may not be practicing according to the latest medical standards.

This disconnect from current best practices puts patients at risk of receiving outdated or suboptimal treatments, highlighting how stronger provider credentialing directly reduces risks to patient health.

Longer Wait Times

Delayed and poor provider credentialing processes can significantly increase patient wait times, creating barriers to timely medical care. These delays negatively impact patient health outcomes and the overall care experience, undermining the primary goal of healthcare delivery.

Patient Trust

Patient trust in healthcare systems has subsequently declined in recent years, with data showing overall provider trust has fallen from 71.5% in April 2020 to just 40.1% by January 2024. While multiple factors contribute to this decline, credential verification failures represent one important element that erodes patient confidence. Patients expect to know their providers are qualified to care for them, and poor provider credentialing can undermine this expectation.

Financial Consequences for Healthcare Organizations

Poor provider credentialing can create a complex web of economic challenges that extend far beyond immediate administrative costs.

Claim Denials

Ineffective provider credentialing practices are common, with more than half of medical practices reporting denials related to provider credentialing. According to a Plutus Health Survey, claim denials represent the greatest revenue cycle management challenge, with 58% of organizations identifying this as their top concern. The financial impact is stark — more than one in five healthcare organizations report losing over half a million dollars annually due to denied claims.

While many denials are overturned, it costs $118 per claim to rework claims. With poor practices, these seemingly insignificant costs can rapidly accumulate into substantial revenue interruptions that compromise financial planning and organizational stability. Hospitals and health systems are spending nearly $20B annually to fight denied claims, demonstrating the magnitude of this issue.

Legal Liability

The potential for legal liability introduces another layer of financial risk, with penalties and settlements that can reach significant figures. Non-compliance with CMS regulations can result in civil money penalties and exclusion from the Medicare program, leading to substantial financial losses.

Similarly, regulatory bodies may impose sanctions, including the loss of accreditation, which can jeopardize a healthcare organization’s ability to participate in federal healthcare programs and result in significant revenue loss. These financial penalties can destabilize organizational budgets and limit resources available for patient care.

Reputational Damage

Reputational damage resulting from poor provider credentialing failures can have long-term economic consequences, such as a loss of patient trust, a decline in referral networks, and reduced revenue streams, all of which can hinder future growth and sustainability. Healthcare organizations must recognize that each credentialing error represents not just a paperwork issue, but a potential multi-dimensional financial threat that can undermine organizational stability and economic performance.

Causes of Poor Provider Credentialing Practices

Healthcare organizations face systemic challenges that undermine effective credentialing practices.

A primary issue is technological limitations, with many healthcare providers relying on outdated systems that cannot manage the complexities of modern credentialing. A 2021 survey found that 73% of healthcare organizations report using legacy systems, which significantly impedes their ability to manage provider credentialing and other operational processes efficiently.

Many healthcare organizations still rely on paper files, spreadsheets, and email chains to manage provider credentials. These outdated methods increase the likelihood of human error, inefficiency, and delays.

Staff turnover can exacerbate these issues. With a continuous flow of new providers to credential, it’s easy for credentialing staffs to become overwhelmed, especially as documentation requirements become more complex. The sheer volume of work can lead to poor provider credentialing that causes missed deadlines, data inaccuracies, and costly mistakes.

A lack of standardization also contributes to inconsistent and poor provider credentialing practices. Without a unified system or set procedures, organizations are left with varying approaches across departments or locations, making it harder to maintain consistency and ensure that credentialing standards are met.

With 75.7% of healthcare practitioners and tech currently holding one or more licenses and certifications, the need for efficient, scalable credentialing processes has never been greater.

Healthcare organizations must address these challenges to ensure compliance and patient safety while navigating an increasingly complex regulatory environment.

How to Address Provider Credentialing Issues

Addressing credentialing challenges requires a strategic approach that integrates modern technology and continuous improvement practices. Adopting automated credentialing systems can significantly reduce processing times, minimize errors, and enhance visibility into provider qualifications. A 2023 MedTrainer poll showed that most healthcare organizations take 10 hours or more to credential a single provider. Reducing these times can improve operational efficiency, minimize administrative strain, and accelerate provider onboarding.

Healthcare provider credentialing should be viewed as an ongoing, dynamic process—not a static administrative task. Organizations that prioritize continuous exclusions monitoring and license expiration tracking are better positioned to complete credentialing quickly and remain compliant.

Ways to Address Poor Provider Credentialing Issues:

Automate Credentialing Processes: Automation speeds up credentialing and reduces human error. It allows healthcare organizations to credential providers more accurately and efficiently.
Implement Continuous Monitoring: Continuous monitoring tracks credentials in real time. Automated alerts can help identify and address compliance gaps before they become critical issues.
Ongoing Training for Credentialing Teams: Regular training keeps credentialing teams updated on regulations so that teams can efficiently navigate evolving compliance requirements.
Create Standardized Workflows: When all credentialers are following the same process for each location and payer, it’s less likely a step will be missed, and ensures there’s always a plan for what comes next.

Eliminate Risk with Smarter Provider Credentialing

Effective provider credentialing isn’t just about checking boxes. It’s fundamental to protecting your healthcare organization’s integrity and ensuring patient safety, and providers must demonstrate a continuous commitment to professional excellence.

Every delayed verification or missed expiration represents a potential risk to your healthcare organization’s reputation and bottom line. By embracing automated