Credentialing 101

Healthcare Credentialing 101: Its Importance, Challenges, And the Risks of Poor Credentialing

November 19, 2020
Karen Stockdale, RN, BSN, MBA

QUALITY PATIENT LOGISTICS begins with hiring quality people to provide care, which necessitates a proper and error-free credentialing program. Credentialing is the process of verifying qualifications, certifications, and work experience of healthcare providers and contractors: this process is vital to maintaining both a safe and professional care environment, as well as regulatory compliance or accreditation.  The Joint Commission defines credentialing as “The process of obtaining, verifying, and assessing the qualifications of a practitioner to provide care or services in or for a healthcare organization.” This covers employees and contracted vendors of the organization (1).

Credentials can come in many forms – paper and electronic evidence of licensure, education, training, experience, and certifications.  Each payor, hospital system, or service provider (such as a provider for NEMT transportation) must collect credentials per the specific regulations for each job category, verify, then store them securely.  Primary source verification is required for each piece of documentation (no copies of copies), and credentials must be readily producible for facility inspectors, surveyors, attorneys, or administrators.    

Despite being a crucial and fundamental aspect of delivering quality healthcare, the credentialing process is riddled with inefficiencies and challenges. Read on to learn more about the credentialing process, its difficulties, and how we can create a more efficient, accurate credentialing model in healthcare’s future.

Why is Credentialing so Important?

Credentialing is an important part of providing patient safety and quality - top priorities for healthcare providers, vendors, and contractors.  Even so, medical errors are very common these days, as found by a 2018 Johns Hopkins study claiming that medical errors are the third leading cause of death in America, only after heart disease and cancer.  The average hospital patient is cared for by about 18 to 27 professionals during their stay.  With that many people providing care in an environment that is prone to errors, it is for everyone’s safety that each caregiver is held to professional standards in training, education, experience, and background.  

Credentialing is the gatekeeping process to ensure all due diligence is performed by the organization to provide quality care. One example of what can happen when a healthcare organization doesn’t properly check credentials happened in Illinois in 2012.  A podiatrist operated on a diabetic patient’s foot, in spite of the fact that her foot was infected and should not have been operated on.  The foot ultimately required amputation.  In the lawsuit, it was found that the podiatrist did not have the proper board certification and postgraduate training credentials.  The podiatrist was found liable for $900,000, but the hospital had to pay $7.7 million - a very expensive credentialing mistake (7).  

Conversely, in another example of a lawsuit involving credentialing, the outcome was much different.  One case detailed a woman that suffered a knee injury while traveling out of state.  She sought care, but then requested to be discharged to go home and finish her care.  Unfortunately, the patient did not follow up with her home physician, and her leg had complications and had to be amputated.  She sued the treating hospital out of state for damages.  The excellent documentation of the facility, comprehensive policies, and credentialing process with peer review saved the day.  The hospital was found not liable (8).  

Adverse events like these can be quite costly for organizations. Other costs come in the form of business disruptions related to noncompliance, FRAUD, and damage to reputation.  Costs are so high, in fact, that the cost of NOT credentialing is FIVE TIMES as great as the cost of running a credentialing program (6). So, with such a high risk involved - why would any organization fail to provide complete credentialing? The answer lies in the complex nature of credentialing processes.  

Complex Regulations

Despite the fact that each healthcare provider or employee must maintain a set of up-to-date credentials, it’s not always clear which set of credentials are needed. Each state in the US has its own regulations, some more stringent than others.  Some states coordinate with other states in compacts to streamline the process of workers crossing state lines, while other states maintain their own unique criteria (2).  With traveling healthcare workers becoming increasingly common through staffing agencies and mobile services, workers and organizations must become familiar with numerous state regulations.  Add to that the number of organizations that operate in multiple states – and you have an ever-increasing documentation burden.

Credentialing regulations come from several sources. Many facilities are accredited by CMS and The Joint Commission (TJC), but there are also many other specialty professional accreditation organizations. Further, each job title has its own set of requirements:  LPN, LVN, RN, APRN, PA, MD, DO, board certifications, specialists, pharmacists - you get the picture.  Many non-clinical workers and vendors also need credentials kept on file – insurance, driving licenses, CPR, hazardous material handling, etc. (3). Credentialing is a complex process, leading large healthcare organizations to staff an entire department with several professionals dedicated to maintaining the credentialing process and ensuring employees and vendors are up to date.  


Despite being a crucial part of delivering quality care, the credentialing process is fraught with issues, bottlenecks, and complications.  Many vendors and temporary workers do not have a standardized process for filing and providing their own credentials, and struggle to produce the required documentation.  This lack of organization can be a major frustration for hospital credentialing departments.  Ignoring a requirement or losing track of the request can introduce a significant risk of liability for healthcare providers in the case of an accident or compliance auditing.  Accrediting bodies, just as The Joint Commission, require credentialing, and can ultimately cut off Medicare funding for a hospital if they lose accreditation.  Insurance companies typically would follow suit, and hospitals can find themselves in dire straits.  

Some credentialing bodies, such as universities, government-issued licenses, and professional organizations have online verification of credentials – for select states.  Yet there is no centralized national repository for physicians, nurses, medical assistants, EMS, or any other professional category to store credentials across employers.  This piecemeal approach is time-consuming and confusing.  

Another issue organizations face is building a storage and monitoring system that doesn’t require large amounts of manual labor.  Many healthcare organizations still primarily use spreadsheets, paper files, and scanned copies to manage the volume of credentials, which has many limitations. The credentialing coordinator needs to not only gather information and keep up with new hires and new vendors but update work status and document those exiting the organization. These types of systems lend themselves to error and can cause inadvertent penalties or harm.  

Data Security

Credentialing involves sharing private information, some that could be disastrous in the wrong hands – so information security is paramount.  Exposing providers, vendors, or contractors to the nightmare of a security breach is costly and damaging to reputation.  Credentials must be kept and stored for a certain amount of time by each organization – it varies state to state.  Some regulations, like EMTALA, require storage of ED records for five years. Most organizations use a standard time frame that exceeds regulations, such as seven years (4).  

Lost Time and Revenue

Credentialing and re-credentialing delays equal lost patient care time and revenue. Office re-work and constant back-and-forth checking are also inefficient.  If employee contact information is not kept up to date (another credentialing responsibility), then delays are even more significant.  Keeping up with re-credentialing is a necessary part of the job and is often more difficult than the first round.  In today’s fast-moving healthcare world, especially working under 2020 pandemic conditions, delays are intolerable.

Allowing workers to start the job before credentials are in place is risky – with plenty of horror stories out there about imposters and poor employees falling through the cracks in the system.  Healthcare worker shortages are very real, and the pressure to staff adequately is only increasing.  This urgency places additional pressure on credentialing departments to get it done fast.  Cases of nurses working without valid licenses continue to hit the news.  Many are not discovered until they make a mistake like giving patients the wrong medications or diverting narcotics from the hospital for personal use. These individuals are subject to criminal charges, and hospitals can also be held liable for hiring them (9).  

When planned start dates are pushed back due to delays, this forces managers to try to fill that time somehow – usually with overtime.  This is bad for the bottom line and leads to staff burnout, understaffing, increased sick days, and low morale.  There are many hidden costs to a slowed-down onboarding process, resulting in lost company revenue.  One study in the American Journal of Managed Care(AJMC) compared outcomes after implementing an electronic credentialing system in a major healthcare system. The analysis showed that credentialing files passed quality reviews with 9% increase in accuracy, and turnaround time for physician credentialing was reduced by 33% (5).

Real Solutions

Just as the AJMC study found, electronic credentialing solutions have many advantages.  Cloud-based software that collects, time stamps, and stores credentials save organizations millions each year.  In one example of a physician credentialing process, a one-month delay in credentialing of one provider can cost as much as $30,000 in lost revenue.  The amount is substantially higher for specialties such as orthopedics and cardiothoracic surgery.  

Every payer, hospital, or service provider that relies upon credentialing suffers opportunity cost and lost revenue from inefficiency and delays - time is money.

Every payer, hospital, or service provider that relies upon credentialing suffers opportunity cost and lost revenue from inefficiency and delays - time is money.  Inability to use people to perform the jobs they are hired for - whether a transit driver, a nurse, or a surgeon - creates lost revenue.  Organizations are pressured to create efficiencies and leaner processes to find lost revenue, and electronic credentialing solutions are a valuable tool for attaining that goal.

Smooth systems with auto-notifications of credential expirations enhance communication and greatly reduces opportunities for human error. Pre-built templates and checklists go through credentialing processes step-by-step, ensuring nothing is missed. Electronic reporting allows data to be collected and segmented in purposeful ways for quality and compliance.

Another big advantage of cloud-based software is the ability for individuals to better manage their own documents, even on a mobile device.  They can simply email multiple documents to a new employer quickly, ensuring no lapse in work time.  This is a big advantage for travel nurses, emergency response personnel, and telehealth practitioners.  

Wildfires, hurricanes, and pandemics - it seems that recent history has had its share of disasters.  Security of records in the cloud is standard for medical information - but not always credentialing.  Having all of those painstakingly-gathered pieces of information safe and secure could mean a much faster return to normal operations.  Modern solutions for an advancing and changing patient care logistics world are essential to keep pace with competitors and the innovations of the future.  

Want to streamline credentialing in your healthcare organization? Check out VectorCare Trust.

Interested in reading more from the Patient Care Logistics Journal? Our latest podcast episode with Ryan Riberia, CEO of SIMX VR, covers all things about improving patient outcomes with telemedicine and medical VR.