Contributed Content: The Credentialing Crisis: How Outdated Systems are Costing Rural Hospitals Millions

Inefficient credentialing processes are draining rural hospitals of critical revenue and delaying care, says this hospital leader.

Editor's note: Martha Henley is the COO of Java Medical Group and CEO of Unity Medical Center in Manchester, Tennessee. She can be reached at martha@javamedicalgroup.com.

In small, rural hospitals, every dollar matters. Across the country, rural providers face intense financial pressures, staffing shortages, and ever-growing administrative burdens. But there’s one invisible process that often goes overlooked, even as it quietly delays care, weakens access, and bleeds hundreds of thousands of dollars from already fragile hospital budgets: provider credentialing.

Credentialing is the process where hospitals and payers verify a provider's qualifications to practice medicine and bill for services. In theory, it’s about safety and accountability. In practice, it’s a fractured, repetitive and painfully slow system that can bring care to a standstill in communities that need it most.

For rural hospitals, the stakes are even higher, and the need for centralized credentialing has never been more urgent.

The high cost of red tape: real-world effects on rural hospitals

The need for centralized credentialing efforts is felt deeply by rural communities. Take the case of a Tennessee hospital that hired a board-certified orthopedic surgeon who relocated and established a full-time practice in the community. The hiring of a specialized service provider was a tremendous win for care access, especially given that patients were previously traveling hours for joint replacements and fracture repairs.

Credentialing for the surgeon through Medicare and multiple commercial insurers stretched over four months due to paperwork backlogs and redundant processes. During that delay, the hospital paid a full salary, malpractice insurance, and relocation benefits totaling over $120,000. At the same time, the surgeon was limited to a narrow set of billable services and the hospital missed out on an estimated $400,000 in reimbursements for orthopedic procedures typically performed each quarter. Over half a million dollars in value was lost, all due to administrative red tape.

Another rural hospital in Tennessee brought on a full-time nurse practitioner to help expand its family medicine clinic, but credentialing delays created $45,000 in payroll and clinic overhead while the nurse saw patients unbilled. Yet another rural hospital in Alabama hired a part-time physician to provide weekend clinic coverage. Medicare credentialing took 90 days to finalize, resulting in $150,000 in delayed reimbursements and an operating margin of below 1% that forced the hospital to defer hiring of additional staff to support community health needs.

The case for centralized credentialing

In large health systems, credentialing is typically handled by a dedicated team of specialists. In small hospitals, the task often falls to one or two administrative staff members who must navigate dozens of portals, forms and payer-specific processes while managing other critical duties. For rural hospitals operating with thin margins and limited cash reserves, these delays can be devastating.

A system where providers submit a single, standardized credentialing packet to a secure state or federal portal that’s validated once and accessible by all participating payers and hospitals could eliminate many of these issues.

Centralized credentialing could:

• Cut credentialing timelines from over 90 days to 30 days or less
• Eliminate redundant applications for multi-facility providers
• Increase accuracy and reduce human error
• Improve compliance with licensing, malpractice tracking, and ongoing verification

For a rural hospital onboarding 10 providers annually, even a 30-day reduction in credentialing time could recoup over $1 million in additional revenue, enough to fund new staff, technology upgrades or critical service line expansions.

Fixing the system with policy solutions that work

There is already a precedent for centralized credentialing action. Some states like Texas and Georgia have implemented centralized credentialing databases for Medicaid and some commercial plans, while the Veterans Health Administration uses a national provider credentialing file across all VA facilities.

To accelerate federal centralized credentialing, policymakers should:

• Mandate credentialing reciprocity among payers and states
• Develop a federal credentialing database through HHS or CMS
• Provide grants and training for rural hospitals to adopt credentialing software
• Require credentialing decisions within 30 days from submission

Rural hospitals are the backbone of healthcare access in America’s most underserved communities, but they are being strangled by outdated, inefficient processes that delay care and threaten their viability. A centralized credentialing system is one of the rare reforms that would immediately improve access, reduce delays, and help stabilize the financial foundation of rural care. It’s time to modernize the system. Rural hospitals, their providers, and their patients can’t afford to wait.

Editor's note: Care to share your view? HealthLeaders accepts original thought leadership articles from healthcare industry leaders in active executive roles at payer and provider organizations. These may include case studies, research, and guest editorials. We neither accept payment nor offer compensation for contributed content.

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