For healthcare finance leaders, revenue growth is a clear focus now, with 70% of executives prioritizing it and 76% emphasizing denial reduction as a key area. While denials remain a challenge, there’s plenty of opportunity to turn this around and minimize their negative impact on the bottom line.
So, why are denials still so prevalent—and so costly? The answer lies in a combination of outdated processes, limited visibility and rising payer complexity that puts even the most efficient revenue cycle teams on the defensive.
Let’s explore three ways denials impact finances—and how you can tackle these challenges with confidence.
1. Denials Cause Costly Revenue Delays
Even when denied claims are eventually reimbursed, they create significant interruptions and add administrative burden, disrupting cash flow. Instead of swiftly converting billed charges into revenue, hospitals must dedicate resources to appeals and follow-ups, slowing down reimbursements.
Currently, hospitals collect only 94% of expected revenue within six months, a drop from previous years. This reduction, driven largely by denials and underpayments, is particularly pronounced in cases involving complex inpatient or specialty claims. These delays can create cash flow bottlenecks, hinder investments in patient care and increase reliance on external financing.
What can you do?
Leverage advanced AI tools to streamline claims processing and predict potential denials. Automation capabilities can reduce manual rework and accelerate cash flow.
Watch the “Partner Perspective: AI is Changing the RCM Game” on-demand webinar to see how forward-thinking organizations are transforming their claims process using AI.
2. Many Denials Are Preventable
One of the most frustrating realities of denials is that many can be avoided with proper processes in place. Issues such as eligibility verification errors, incomplete documentation and coding inconsistencies are common culprits behind denied claims. Without the right tools, these preventable problems are often detected too late.
Additionally, many organizations adopt a reactive approach, tackling denials case by case instead of addressing the systemic issues that cause them. This leads to ongoing rework, appeals and significant write-offs. On average, 7–11% of claims are underpaid, with mid-sized hospitals writing off approximately $1.6 million annually due to denied claims.
What can you do?
Implement analytics platforms and machine learning models to monitor trends in real time. These technologies enable proactive interventions to prevent denials before they occur.
Read “Mastering Healthcare RCM with Analytics” to see how leading RCM teams are using analytics for smarter denial management.
3. Denials Strain Patient Relationships
Denied claims don’t just hurt finances; they disrupt the patient experience. When claims are not resolved, the financial burden often shifts to patients, leading to billing confusion, unexpected out-of-pocket expenses and mounting frustration. These challenges can erode trust and patient satisfaction, ultimately impacting long-term engagement.
For healthcare organizations, this creates a significant risk to reputation and revenue. Patients blindsided by billing issues are less likely to pay balances, return for care or recommend providers, directly affecting long-term financial and brand health.
What can you do?
Reframing denial management as a strategic priority can benefit both cash flow and patient relationships. Addressing denials not only reduces financial strain but also builds trust and helps ensure a positive patient experience.
Proactive Steps Towards Better Denial Management
The most successful organizations treat denial management as a key strategic priority rather than a back-end issue. They employ a combination of real-time insights, intelligent workflows and team-wide accountability to tackle denials effectively.
Take these steps to start improving denial management:
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Analyze Denial Patterns
Use analytics tools to identify trends and root causes across departments, payers and timeframes. -
Automate Appeals
Simplify and streamline the appeals process using automation, allowing teams to focus on high-value claims while reducing repetitive tasks. -
Promote Cross-Functional Alignment
Foster collaboration by providing shared visibility across teams, breaking down silos and aligning around shared revenue goals.
Read the Denial Management Best Practices Guide to learn how to build a more proactive and profitable denial strategy.
By implementing these strategies, you can accelerate reimbursements, reduce write-offs and establish a more robust financial foundation that can withstand today’s payer complexities.
Don’t let denials quietly drain your revenue. With the right tools and strategy, you’re one step away from turning a recurring challenge into a strategic advantage. Contact FinThrive to learn more.
