Healthcare finance leaders today are swimming in data, such as denied claims, write-offs, appeal volumes, payment variances, yet many still struggle to turn that data into action.
Denials now account for roughly 11% of all submitted claims, which for an average health system means well over 100,000 unpaid claims every year. The difference between reactive firefighting and proactive prevention often comes down to which denial metrics you track, how you interpret them and whether your teams are aligned around them.
Which KPIs Matter Most
Here are six metrics that consistently show up in high-performing revenue cycles and the insights they offer:
|
Metric |
What It Measures |
Why It’s Important |
|
Denial Rate |
% of submitted claims denied (volume or dollar amount) |
A barometer of upstream issues like eligibility, documentation or coding. Rising denial rates are a strong signal to focus on prevention. |
|
Clean Claim Rate |
% of claims accepted without rework or resubmission |
Higher clean rates mean less wasted effort and faster cash flow. A dip often signals process breakdowns. |
|
Appeal Success Rate |
% of denied claims that are overturned through appeals |
Helps assess whether your appeals process is working — or if it’s wasting resources. |
|
Denial Write-Off Rate |
% of denials that are never successfully appealed and get written off |
Represents real lost revenue. Even a small improvement here can move the needle. |
|
Average Days to Denial Resolution |
How long claims are stuck in the denial/appeal process |
Time kills cash. Delay increases days in A/R, reduces predictability and adds cost. |
|
Top Denial Reasons / Root Cause Categories |
The common types of denials (e.g., eligibility, coding, medical necessity) and which payers / service lines are involved |
Understanding “why” enables targeted fixes — training, system changes, policy updates. |
WATCH: RCM Key Performance Indicators | FinThrive Webinar
Putting Metrics Into Context
Tracking metrics is only half the battle. Here’s how to interpret and use them effectively:
-
Benchmark both internally and externally
Compare by service line, payer, or location and not just system wide. When benchmarking internally and externally, keep in mind that even a 1–3% revenue loss from underpayments can add up to millions in missed reimbursement each year—losses that often remain invisible without clear tracking and categorization. -
Measure the downstream cost
A high denial rate isn’t just about denied dollars; it’s also about administrative waste, staff burnout, delayed cash flow. Metrics like “cost-to-collect,” “work hours per denied claim,” or “impact of denial rework” help illustrate the full cost.
-
Look for patterns, not just totals
When you start to look at denial and underpayment data by service line or payer, the patterns become clear—and often alarming. One recent study found that over a third of inpatient admissions resulted in underpayment when analyzed across payers and services. Identifying where those patterns cluster allows teams to focus interventions where they’ll have the greatest financial impact. -
Track trending over time
It’s not the number this month that matters so much as the direction over several months or quarters. Are you seeing improvement, or are issues creeping back in?
Aligning Your Team Around Metrics
Because denial management touches multiple functions, aligning teams is essential:
- Define roles clearly, such as who owns data collection, who owns appeals and who owns prevention?
- Use shared dashboards so finance, clinical, coding and revenue integrity teams are looking at the same metrics.
- Review metrics regularly in cross-functional meetings; celebrate wins (e.g. reduction in denials from a payer) and problem-solve root causes.
- Set targets for key metrics (e.g. reduce denial rate by 2-3 percentage points / improve clean claim rate to 95%+) and tie them to accountability.
LISTEN: AI and Denials | FinThrive Webinar
From Metrics to Strategy: What to Do Next
Here are strategic steps to turn denial metrics into improvement plans:
- Prioritize metrics: Focus first on those with the highest financial impact (e.g. top deniers, services, or payers).
- Build or refine dashboards: Include clean claim rate, denial rate (by payer / service line), days to resolution, appeal success rate.
- Invest in classification: Standardize denial reason coding across payers to reduce “noise”, which can help you separate routine errors from real revenue loss.
- Enable visibility: Empower teams with self-service tools so they don’t wait for IT or analysts.
- Benchmark and adjust: Use industry reports and peer data to set realistic targets.
RELATED: Mastering Key Revenue Cycle Metrics Checklist
Denial metrics are everywhere, but without careful interpretation, they just become more noise. For healthcare finance leaders, the path to stronger financial performance lies in selecting the KPIs that matter, understanding their root causes and aligning teams to act.
With metrics like denial rate, clean claim rate and appeal success rate, measured thoughtfully, you can move from reacting to denials to preventing them, and as a result, recover revenue, streamline operations and make cash flow more predictable.
