What is physician credentialing in healthcare?

December 30, 2022

Physician credentialing is known by many names — medical credentialing, provider credentialing, doctor credentialing, healthcare credentialing. No matter what you call it, one thing is true — you can’t skip it. 

Credentialing for medical providers is an indispensable requirement when working in such a high-risk industry. Physician credentialing reassures patients that they are being treated by a healthcare professional who is qualified and has the necessary certifications and licenses. 

Physician credentialing is also crucial to obtain in-network reimbursement from insurance plans. Unfortunately, many facilities struggle with the credentialing process, and that harms their cash flow.

The physician credentialing process can get overly complex, especially if your facility lacks digital support. To ensure that daily operations run effectively, administrators must understand what credentialing is, how it’s conducted, and the time and resources required for fast and successful medical provider credentialing.

If your facility wants to streamline processes to save time and energy, it’s time you re-examined the current state of your processes and considered alternatives to manual physician credentialing. 

What is physician credentialing?

Physician credentialing is the process of verifying and assessing a physician’s professional records, education, training, skills, and experience to confirm that the physician is qualified to practice medicine. 

Although medical credentialing is commonly associated with physicians, a similar credentialing process applies to nurses and other healthcare providers.

In a provider’s practice, credentialing is not a one-time event. Credentialing is required in the following cases:

  • Initial credentialing when healthcare providers join an established practice or start a new practice
  • Periodic re-credentialing to maintain credentials
  • When a provider switches from one practice group to another
  • When a provider enrolls with a new insurance payer

Credentialing is a time-consuming and labor-intensive process that usually takes 90 to 120 days to complete. That’s because there’s an extensive list of information that must be collected, submitted, and reviewed. However, it may take over 120 days if the insurance company is slow with processing or if the documentation is incomplete and needs to be resubmitted.

Why is physician credentialing important?

Completing the credentialing process properly and on time should be a high priority for all healthcare facilities that want to see continuous growth and success. Here are a few key reasons why physician credentialing is important.

It builds patients’ trust and the facility’s reputation

If a patient doesn’t trust their physician, they most likely won’t listen to the physician’s recommendations. And they probably won’t return to that physician, or to the facility for that matter, and will seek healthcare elsewhere.

If a patient is meeting a physician for the first time, there is no trust yet. What helps patients trust the physician is knowing that the physician is fully credentialed. With credentialing, patients can feel confident in following the physician’s advice on medication, diet, and exercise changes, or even on surgery. The mental state of your patients plays a crucial role in the healing process. And if the patient has confidence in their physician's ability to treat them, the healing process will go a lot smoother.

Not only that, a patient might not even come to your facility if a physician lacks proper credentialing. Thanks to the availability of information, patients have the power to research a physician before booking an appointment. Therefore, it is important for healthcare facilities to maintain a positive online image. Having fully credentialed providers is one of the most effective ways to demonstrate that your facility provides high-quality care.

It’s necessary for facilities to earn money

Healthcare facilities and individual providers sign contracts with insurance companies to make money. These contracts include clauses that dictate how healthcare providers are reimbursed for patient care services. 

Usually, these contracts specify that in order for services to be covered and reimbursed, practitioners must be fully credentialed. Hence, if a facility skimps on the credentialing process, they run the risk of losing money.

It minimizes the rate of medical errors

After studying data on medical death rates over an eight-year period, Johns Hopkins patient safety experts determined that in the US, more than 250,000 deaths occur each year as a result of medical errors.

Although the majority of deaths related to medical errors are attributed to systemic problems, unwarranted variation in physician practice patterns that lack accountability contribute as well. Therefore, you need to ensure that all your physicians, nurses, and other care providers are fully credentialed to lower the risk of medical errors.

It protects physicians and facilities from lawsuits

In court, it is crucial to have a complete and accurate record of each physician’s credentials. By demonstrating that you checked your healthcare providers’ credentials and updated the checks as necessary, you may help protect yourself and your facility from liability if a malpractice claim is made against a healthcare provider working in your facility. You’ll not only protect yourself from legal action but also save money by avoiding expensive court fees.

How physician credentialing works

Requirements for obtaining credentials can differ depending on where a physician practices.

Here’s what a typical physician credentialing checklist includes:

  • education, training, and board eligibility or certification 
  • work and medical staff history
  • clinical privilege history
  • peer contact information for references
  • clinical report cards and performance reviews
  • claims history and malpractice insurance carriers
  • federal, state, and professional licenses and registrations
  • clarifications for gaps of 30 days or more in education, training, or work history 

Experts recommend that physicians start compiling this information as soon as possible. In fact, some residents learn about credentialing while still in training. Medical credentialing is a continuous process, and physicians should try to keep track of their credentials as they go. When the time for credentialing comes, physicians that kept track of their information will be able to quickly provide up-to-date documentation and speed up the whole process.

Three phases of credentialing

The provider credentialing process involves three phases: credentialing, privileging, and enrollment.

  • Credentialing phase: a provider’s qualifications are verified and reviewed.
  • Privileging phase: based on verified credentials, a provider is given permission to perform particular services at the facility.
  • Enrollment phase: a provider is allowed to bill and get paid for their services.

Make sure that you disclose all required information on the application and complete every field. The most frequent complaint that practices and facilities have is that they receive incomplete applications. Incomplete applications delay the credentialing process, as reviewers can’t start their work until the application is 100% filled out.

After a provider has obtained their credentials, they enter an agreement with an insurance company. This agreement gives the practice the ability to charge and get reimbursed for the services they provide thanks to their status as in-network providers. Without the necessary credentials, healthcare practitioners are unable to treat patients and obtain payment from insurance companies.


Recredentialing, also known as re-enrollment, occurs occasionally. Credentials have an expiration date determined by the market in which the provider operates. Practitioners are required to go through the same credentialing process to demonstrate that they have the most recent knowledge and up-to-date skills in the rapidly evolving medical field. 

Everybody with credentials will get notified through email or a paper letter when they need to go through the process again, with a deadline provided. Providers may carry on with regular practice until the deadline. To avoid suspension, healthcare practitioners should start the recredentialing process as soon as they receive their notification.

Challenges in the physician credentialing process

Getting medical credentials is often a rocky process for several reasons.

Many facilities are still doing credentialing manually. Records are created and kept by multiple people, which causes them to become inconsistent, chaotic, and outdated. And if practitioners submit incomplete applications, the already lengthy credentialing process takes even longer. 

If a facility is growing and lacks robust digital support, provider credentialing can get even more burdensome and complex as the staff has to take care of other vital and time-consuming processes like benefits verification and vendor management. Add all of this up and the staff is drowning in paperwork and spreadsheets. Or, in the best-case scenario, they have to log in and out of several different platforms while still falling behind.

Finding all of the up-to-date documentation becomes practically impossible when the time comes to renew a physician’s credentials. What’s more, in this disarray, it’s easy to forget about expiration dates altogether, which can lead to reimbursement issues.

Lastly, facilities must abide by each insurance company’s policy as well as local and federal laws and regulations. All while constantly ensuring data security and integrity (which is not possible if information is stored in spreadsheets).

Alternatives to manual credentialing 

Manual credentialing no longer works for many facilities, especially facilities that are growing. Instead, healthcare facilities opt for outsourcing credentialing and credentialing software

Outsourcing physician credentialing

Larger facilities use either an in-house team for credentialing, outsource their needs, or use a combination of both to prevent delays and stay on top of all documentation. There are many companies that offer provider credentialing services; you just need to determine if this strategy is right for you.

Healthcare facilities commonly struggle with staff turnover. When you find yourself understaffed (maybe an employee quit, was terminated, or is on medical leave), outsourcing provider credentialing will be an effective stopgap. Outsourcing will ensure there won’t be any breaks in your credentialing processes. Not having this backup option might cause significant obstacles to onboarding and getting physicians paneled, eventually affecting revenue.

Another reason why facilities choose to outsource credentialing is because vendors have an extensive fleet of employees and maintain structured credentialing processes. On the contrary, facilities often struggle to organize credentialing processes and retain staff.

Vendors that offer physician credentialing services are able to handle the process efficiently due to their expertise and experience in the field. They know the specifics of each step in the credentialing process and have the time to communicate with the board or insurance companies when needed, which improves accuracy and speed.

On paper, outsourcing should decrease administrative burden. Outsourcing shifts hiring/firing, raises, time off, and other staff management responsibilities to the vendor. With outsourcing, facilities no longer need to worry about the ever-increasing expenses of carrying additional staff members. However, if the vendor’s employees are not appropriately screened and managed by the vendor and do not do their job well, outsourcing may negatively impact the facility. Therefore, if you are considering outsourcing medical credentialing, you must dedicate ample time to researching vendors and picking a reputable and experienced provider.

Physician credentialing companies may promise that you will reduce your costs if you fully outsource the process to them. However, their claims may be untrue because costs depend on many factors. Facilities should periodically calculate the cost of outsourcing to check whether it indeed saves them money compared to employing and managing their own workforce.

It’s also worth noting that when you outsource credentialing to a vendor, it removes some of your facility’s control over the provider onboarding and reimbursement processes. Hence, make sure that your outsourcing vendor provides credentialing status updates on a regular basis, giving you information on the status of providers in progress.

Provider credentialing software

If your facility determines that you want credentialing to remain in-house, then it’s critical that you purchase strong physician credentialing software.

The market has a lot of options to choose from when it comes to credentialing software. You won’t be able to try them all before you commit to one because it would take an enormous amount of time and effort, so here’s what you need to pay attention to when picking your credentialing solution.

  • It’s crucial that your software is user-friendly and HIPAA-compliant. 
  • Software should allow you to automate and centralize the physician credentialing process and make it paperless. 
  • Requesting, signing, uploading, storing, and tracking documentation should all be done in one place.  
  • Software should help you track expiration dates and automatically notify the facility and providers that the expiration date is close.
  • Software should allow you to request licenses and custom documents from any healthcare provider via email and text.
  • You should be able to customize applications to your facility’s needs and requirements and send them to physicians to edit and save at any stage.
  • It’s best to opt for web-based, cloud, or SaaS software so you aren’t tied down to one computer and in order to get real-time updates.

Capterra provides an extensive list of physician credentialing software options with reviews and lets you compare multiple solutions.

Physician credentialing and more with PreferredMD

PreferredMD software is more than just a physician credentialing solution. Credentialing is just one of the many features that facilities get when using our software. 

Our credentialing module allows facilities to request, sign, upload, customize, and track documents in one place without having to go through hundreds of hard copies each time. 

PreferredMD lets you automate and centralize the physician credentialing process, along with vendor management, benefits verification, and more. And with automated notifications for both your facility and healthcare providers, you can track expiring documents and protect your reputation (and income).

Lastly, PreferredMD is HIPAA-compliant and user-friendly. But you don’t have to take our word for it. Schedule a demo meeting and see for yourself!

share article
Subscribe for updates

Latest articles