Medical Coding Market Size

Medical Coding Market Analysis

The Medical Coding Market size is estimated at USD 22.69 billion in 2024, and is expected to reach USD 35.63 billion by 2029, growing at a CAGR of 9.45% during the forecast period (2024-2029).

The factors responsible for the growth of the market include the escalating demand for coding services, the rising need for a universal language to reduce frauds and misinterpretations associated with insurance claims, and the high demand for streamlining hospital billing procedures.

The demand for coding services is significantly increasing owing to the rise in medical admissions. For instance, as per the American Hospital Association's (AHA) Hospital Statistics 2024, there have been around 34 million admissions in all the hospitals in the United States so far in 2024. The high number of hospital admissions raises the demand for skilled medical billers and coders to manage medical billings, which is anticipated to catalyze the growth of the medical coding market over the forecast period.

There's a growing inclination within the medical coding market to transition toward a more efficient and user-friendly coding and billing solution that offers streamlined processes and enhanced convenience. This, in turn, is increasing the demand for skilled medical coders professionals in the market. For instance, according to a report published by the Association of American Medical Colleges in February 2024, the demand for medical coders is high. It continues to rise due to the historic shift in age demographics in the United States. This growth of the older population poses healthcare challenges, including an anticipated shortage of 105,000 physicians by 2030. Additionally, according to the Bureau of Labor Statistics (BLS), in September 2023, the BLS projected an 8% increase in medical records and health information technician positions, including medical billers and coders, between 2022 and 2032. Thus, the rising demand for medical coders underscores the imperative for an efficient, user-friendly coding and billing solution to address healthcare challenges effectively.

Medical coding facilitates standardized documentation across healthcare facilities, enabling administrators to analyze the frequency and efficacy of treatments within their organization. This capability is especially crucial for large-scale medical institutions such as tertiary-care hospitals.

Advancements in coding software are expected to help clinicians effectively manage the large amount of data across healthcare facilities. For instance, in July 2023, Amazon Web Services Inc. (AWS) launched AWS HealthScribe. This new HIPAA-eligible service empowers healthcare software providers to build clinical applications that use speech recognition and generative artificial intelligence (AI) to save clinicians time by generating clinical documentation. Thus, the introduction of advanced clinical documentation technology leveraging speech recognition and generative AI is poised to drive significant expansion in the medical coding market over the forecast period.

Major players in the market are introducing new products to cater to the rising demand for medical coding, which is further expected to propel the market growth. For instance, in December 2023, the new PULSE technology, a landmark and transformative SaaS product, was launched by CorroHealth for the healthcare industry, advancing and forever changing how hospitals and clinics code and recover revenue. PULSE is an innovative medical coding automation platform designed to streamline and expedite the coding process. This automated solution significantly boosts productivity in fee-for-service and value-based care scenarios, providing substantial benefits to healthcare organizations.

There has been a high demand for investments in medical billing and coding software programs that can lead to long-term financial benefits and a positive return on investment (ROI) to its major investors. For instance, in March 2023, CodaMetrix, an AI-powered platform for healthcare revenue cycle management, secured USD 55 million in Series A funding led by SignalFire. The company utilizes machine learning, natural language processing, and deep learning to analyze electronic health records for autonomous medical coding.

Thus, the escalating demand for coding services and the high demand for streamlining hospital billing procedures are expected to propel the market's growth. However, continuously changing regulations, data security concerns, and the need for adequately equipped information technology (IT) professionals in the healthcare sector are expected to hinder the market's growth.