Every revenue cycle leader is feeling the strain.
Amid persistent staffing shortages, unpredictable payer actions, rising denial rates, and greater patient financial responsibility, moving a claim from encounter to reimbursement becomes a challenging obstacle course. With the increasing complexity of compliance, it’s understandable why many organizations face a slowdown in cash flow, more revenue leakage, and greater burnout among revenue cycle management teams.
The consequences are not abstract: operational inefficiencies and revenue losses are mounting, threatening both short-term financial health and long-term viability.
At the same time, health systems that process millions of claims annually have started to chart a way forward, not through radical reinvention but through smart, strategic evolution. Focusing on operational resilience and technology enablement, these are helping transform revenue cycles — for a more sustainable and intelligent future.
The Cost of Staffing
Health systems are grappling with staffing shortfalls across both clinical and operational functions, including RCM. Retaining talent has become one of the most pressing and costly challenges for finance leaders as the burnout rate among RCM professionals continues to increase, particularly among coders, billers, and claims processors, who are expected to do more with fewer resources. The impact hits squarely on the bottom line.
According to a recent analysis, the average initial denial rate rose to 11.8% in 2024, up from 9.4% in 2023. Denials require extensive rework, and each denied claim costs an average of $118 in administrative labor, according to industry estimates.
Likewise, revenue leakage from denials is no longer a back-office issue; it’s a front-line threat. In 2023, 19% of in-network claims and 37% of out-of-network claims were initially denied, according to KFF. The reasons vary, including administrative errors (18%), services not covered (16%), and lack of prior authorization (9%).
What’s more alarming is the extreme variation in denial rates between payers. Some insurers reported in-network denial rates as low as 1%, while others reported rates exceeding 50%, according to the same KFF report. High-performing systems are taking a proactive stance, integrating predictive analytics and real-time reporting to flag denial risk early and engage cross-functional teams for resolution.
Despite unprecedented volumes of RCM data, much remains fragmented and underutilized. Data transformation is happening, but it requires operational rigor. Metrics such as denial overturn rates, days to bill, and aged accounts receivable (A/R) over 90 days can offer leading indicators when reviewed in near real-time. Weekly performance huddles and shared dashboards are best practices among organizations making strides here.
AI Is Moving from Concept to Capability
Artificial intelligence and automation are no longer aspirational; they are now a reality. According to a 2025 KLAS survey, 78% of large health systems now use AI or robotic process automation for core RCM functions.
The real-world results are compelling:
- 30–40% reductions in denial rates
- 30–50% cuts in administrative costs
- 50–60% faster claims turnaround times
In one example, automation and AI reduced documentation effort by 40%, halved turnaround times, and saved approximately 15,000 employee hours per month.
The Blueprint for a Future-Ready RCM Operation
What does a future-ready revenue cycle operation look like when these strategies are implemented effectively? It begins with human-centric automation, where AI tools are used not to replace staff but to support them. Technology that automates repetitive tasks, flags inconsistencies, and speeds up claim preparation and validation empowers skilled coders, billers, and auditors. This approach reduces burnout and frees professionals to focus on higher-value activities like complex coding, denial resolution, and compliance reviews.
Next is a shift from reactive denial management to proactive denial prevention. High-performing organizations no longer wait for denials to occur; they use advanced analytics to identify patterns and root causes before claims are submitted. Whether it’s missing documentation, eligibility mismatches, or payer-specific nuances, teams can intervene upstream to stop denials before they happen.
Metrics also take on a more refined role. Rather than being overwhelmed by dashboards, teams focus on a core set of actionable metrics that drive their performance. These include clean claim rates, first-pass resolution rates, denial overturn rates, and accounts receivable (A/R) aging trends. Short feedback loops enabled by weekly reviews and real-time dashboards allow for agile pivots that improve financial performance and team accountability.
A future-ready RCM operation also thrives on cross-functional governance. Clinical, financial, and IT teams don’t operate in silos. These teams identify upstream issues that impact revenue capture and optimization. For instance, front-end registration errors or clinical documentation gaps can be collaboratively addressed before they translate into denials or payment delays.
Finally, transformation is not a one-time project. Agile RCM teams embrace iterative change, adopting flexible workflows in response to changes in payer policy, regulatory shifts, and changing patient expectations. Whether rolling out a new prior authorization solution or refining coding logic with machine learning, these teams can continuously test, measure, and adapt to achieve the best outcomes.
Denials are rising, staff are strained, and financial pressure is intense. However, the tools to respond are increasingly accessible. RCM leaders who leverage hybrid intelligence solutions that marry advanced technologies with the expertise of trained professionals can build more resilient, efficient, and future-ready revenue cycles. The path forward is clear, and it starts with a more innovative strategy and evidence-based action.
Emily Bonham
Emily Bonham is Senior Vice President of Product Management with AGS Health.
