Healthcare BPO Market: Growth, Size, Share, and Trends

The US mandated ICD-10 implementation under HIPAA by October 2015, expanding codes from 13,000 diagnoses and 11,000 procedures in ICD-9 to ~68,000 diagnoses and 72,000 procedures, increasing coding complexity. This drove demand for skilled medical coders, HR, accounting, and technical support, with outsourcing favored due to insufficient in-house expertise. ICD-10 addressed ICD-9’s limitations, enabling precise coding essential for reimbursement and claims processing, making BPO providers critical partners. With ICD-11 approved by WHO in 2019 and effective from January 2022, healthcare organizations are preparing for another transition, incorporating new diagnoses and refined criteria. BPO firms are investing in training, technology, and infrastructure, positioning themselves to support ICD-11 adoption, further boosting the global healthcare BPO market.

While offshoring business processes can offer cost savings, healthcare organizations often hesitate due to potential loss of visibility and control. Outsourcing may reduce oversight of daily operations, raising concerns about work quality, adherence to standards, and service consistency. Vendor goals may not fully align with clients, affecting accuracy, flexibility, and timeliness. Sensitive patient data shared with third-party providers also increases risks of breaches, regulatory violations, and reputational damage, as seen in 145 reported healthcare data breaches in early 2023. Fragmented communication can cause misunderstandings, delays, and misalignment of expectations. Even with customized solutions, discrepancies between BPO providers and clients are common, making the potential loss of control a significant deterrent to outsourcing healthcare processes.

Artificial intelligence (AI) and machine learning (ML) are transforming drug discovery by increasing efficiency and improving early-stage success rates. AI algorithms can rapidly analyze vast datasets to identify potential drug candidates, while deep learning generates molecules targeting specific diseases with minimal side effects. This has driven adoption of AI by pharmaceutical and biotech companies, accelerating development of treatments for chronic diseases like cancer and reducing time-to-market. Collaborations between pharma firms and AI-driven companies are increasing, enhancing drug design and discovery. Notable milestones include FDA orphan drug approval for an AI-discovered medication, AI-created antibodies by AbSci, and Insilico Medicine initiating Phase I trials for an AI-identified molecule—achievements achieved faster and at lower cost than traditional methods, boosting the healthcare BPO and CRO markets.

Healthcare data, including patient records, treatment histories, and insurance information, is highly sensitive and valuable, making healthcare organizations and BPO firms prime targets for cyberattacks. Threats such as ransomware, malware, phishing, and insider attacks can disrupt operations, compromise data integrity, and result in identity theft, financial fraud, legal liabilities, and reputational damage. In 2023, the healthcare sector experienced a record 725 major breaches, compromising 133 million records, a 156% increase over 2022. Contributing factors include inadequate internal controls, outdated policies, insufficient management support, and lack of personnel training. These challenges heighten concerns over patient privacy, requiring stricter compliance, enhanced cybersecurity, secure communication platforms, and increased operational investment, significantly impacting the healthcare BPO market.