Credentialing Services

Why Is Credentialing Important In Healthcare?

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Here at PayrHealth, we are aware that proper credentialing is an important feature of any functioning healthcare facility. To keep daily operations running smoothly, it’s crucial that administrators understand what credentialing is, how credentialing is performed, best practices for credentialing, and the commitment of time and resources that may be necessary for fast and effective provider credentialing.  

To that end, this guide will take a closer look at how proper credentialing practices will benefit your healthcare facility, as well as how credentialing affects medical providers and their patients.

The Credentialing Process: A Brief Overview

Before we look at real-world examples of why provider credentialing matters for healthcare facilities, let’s go over the basics of the credentialing process.  

In a nutshell, credentialing is how a healthcare facility verifies the qualifications of the prospective medical practitioners they want to hire. This verification process is especially vital when hiring Licensed Independent Practitioners, or LIPs. A LIP is anyone who is “permitted by law to provide patient-care services without direct supervision.”1

The legal definition of who can practice as a LIP varies from state to state, although it usually includes people who hold:

  • MD degrees
  • DO degrees
  • PhD degrees  
  • PsyD degrees

In several states, nurse practitioners are also permitted to work as LIPs.  

What You’ll Need to Verify Someone’s Credentials

Although a degree from medical school or another similar institution is a major aspect of the credentialing process, it isn’t the only item you’ll need before allowing an LIP to work in your facility. Far from it.

In fact, one of the main frustrations that people experience in the credentialing process is the sheer amount of information that needs to be gathered. These items often include but are not limited to:

  • Basic details like name, date of birth, mailing address, phone number
  • Personal details like gender, ethnicity, social security number  
  • Proof of immunizations
  • Proof of a passed drug test
  • A full record of any past malpractice claims, suits, sanctions, or other disciplinary actions
  • Several peer references
  • National Provider Identifier (NPI) number, username, and password
  • Proof of continued medical education at an accredited institution  
  • Record of an active professional liability insurance plan  

Length of the Credentialing Process

Completing a thorough credentialing process for a single prospective hire can often take between three to six months, or more.2 With so much paperwork to gather and the various institutions to contact and request records from, weeks can go by with little progress.

Having such a large amount of documentation to pursue, even a three- to six-month time frame with days or weeks of inactivity can feel like a scramble. One of the credentialing issues in healthcare is that many facilities struggle to maintain a full and honest commitment to their verification processes because of the time and resources that are required for even a single credentialing process.

Adding to these concerns is the fact that practitioners need to have their credentials renewed every two years (except in Illinois, where the time table for credential renewals is every three years).3 For these reasons, many healthcare facilities invest in the services of a Credentials Verification Organization, or CVO.

A CVO is a third-party company that outsources the credentialing service, helping healthcare facilities hire more efficiently and effectively, and avoid errors.  

Provider credentialing

Why is Credentialing Important in Healthcare Facilities like Yours?

Whether your healthcare facility is private or public, big or small, general or highly specialized—performing the credentialing process quickly, accurately, and completely should always be a top priority.

If you’re seeking continued success or even growth of your healthcare organization, these are just a few of the main reasons why you need to value your facility’s credentialing practices and take steps to ensure they’re done correctly every time.  

Reason #1: Credentialing Improves Trust  

Trust is the foundation of a successful healthcare system, especially when it comes to positive patient outcomes. Without trust, patients are less likely to be open and honest with doctors about their medical histories, current concerns, signs and symptoms of a disease, and so on. They’re also less likely to follow post-care treatment schedules.

When patients know that their doctors and the other medical staff they interact with are fully qualified to perform their jobs in a professional manner, they’re more likely to put their faith in the healthcare system and cooperate with practitioners.  

Reason #2: Credentials are Necessary for Earning Money  

Both healthcare facilities and individual medical practitioners earn money through partnering with health insurance companies. The contract between a healthcare provider and insurer (or payor) is often referred to as a payor contract.    

Among other complications in payor contracts, there are clauses that determine how facilities and practitioners will be reimbursed by the insurance companies for the patient care services they provide.

payor contracts will stipulate that practitioners must be fully credentialed in order for their services to be covered by the contract and reimbursed. Therefore, if your medical practice cuts corners in the credentialing process, you could open up yourself and your practitioners to financial losses.  

Reason #3: Credentialing Helps Limit the Rate of Medical Error  

By 2007, medical error was the fifth-leading cause of death in the United States, with nearly 100,000 deaths per year caused by some form of medical error.4 These errors include:

  • Miscommunication
  • Physician-ordered prescription errors
  • Adverse drug events
  • Incomplete patient medical records  
  • Overcrowded facilities
  • Understaffed clinical areas
  • Overly complex and mismanaged workflow patterns

While some of these errors are simply human errors, by properly credentialing every practitioner in your medical practice, you lower the risk of medical error as a whole.  

Reason #4: Credentialing Protects You from Lawsuits

Having a full and accurate record of every practitioner’s credentials will prove vital in litigation. If there is a malpractice claim on a healthcare provider in your facility, you can help indemnify yourself and your institution from legal responsibility by proving that you verified every single one of their credentials and renewed the verification as needed.  

Not only will you shield yourself from liability, but you’ll also avoid costly fines related to legal disputes.

Reason #5: Credentialing Boosts Reputation

With the democratization of information, patients have the power to research their healthcare professional before committing to them as a patient. This practice of researching and reviewing is becoming more popular—and more important to consider by healthcare facilities—as the population becomes more tech-savvy.5  

To that end, individual practitioners and healthcare facilities must maintain a positive online reputation. Medical credentialing is a simple and effective way to prove that they are perfectly qualified to perform patient care services—thus, improving their reputation.  

Additionally, practitioners who are successfully credentialed are permitted by law to treat all patients, regardless of their insurance plans. This allows the practitioner to see more patients, further driving business to your facility and helping the whole healthcare organization prosper.

Avoid Credentialing Headaches with PayrHealth

payor contracts are over-complicated documents that add a tremendous amount of pressure to the already difficult steps in provider credentialing. Insurers try to make you meet their own demands for credentialing your practitioners, often going against your best financial interest.

With PayrHealth, you don’t have to worry about payor contracts keeping your business down.

PayrHealth is the leading solution for payor contract management. They take care of your contracts so you can focus on patient outcomes and other daily operations. They’ll negotiate the best rates, monitor the contracts, alert you of any changes, and continue to fight for better terms every step of the way.

To be able to credential more efficiently, see more patients, grow your business, and earn a higher return on your payor contract investments, contact us at PayrHealth today.


  1. LIP credentialing.
  2. Revenue Cycle Inc. Provider Credentialing & payor Contracting Processes.
  3. The Joint Commission. The Who, What, When, and Where’s of Credentialing and Privileging.
  4. Medical News Today. Medical Error Is The Fifth-Leading Cause Of Death In The U.S.
  5. The Bogotá Post. 10 Reasons Why Medical Credentialing Is Important.
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