by Hari Velayudhan, Chief Revenue Officer
Introduction
Improved payment and A/R measures can coexist with greater financial loss.
Kodiak Solutions’ 2026 benchmarking analysis illustrates the disconnect. Across more than 2,300 hospitals on its platform, payment timing and key A/R measures improved in 2025. Yet net revenue losses from final payer denials and uncollected patient balances rose 25%, exceeding $48 billion.[1]
The gains matter. But a performance standard built on speed alone can give an expensive failure a passing grade. Billing can meet its turnaround target by passing an account to the next team, even when that account requires correction. The department records completed work; the enterprise inherits more expense and delay.
That expense needs an owner whose accountability follows the failure across departments, from the process that created it to the full cost of getting paid. Whoever owns that financial result must also have the authority to change the process.
When targets reward recovery while leaving preventable rework unresolved, the operating model is the failure.
One failure. Several departments. Growing cost.
Consider a scheduled procedure with an authorization that doesn’t match the service ultimately billed. The payer denies the claim. Patient access rechecks the authorization, coding or clinical staff confirm the service, and the denials team pursues payment.
Payment eventually arrives, and each department records completed work.
The performance targets reward moving the account forward. The failure that created the work remains untouched.
Premier’s 2025 survey quantified the cost of that recovery work. Based on 2023 claims, it found an average administrative cost of $57.23 to fight a denial. Roughly 70% of denials ultimately resulted in payment.[2]
Each recurrence consumes capacity that could address other revenue exposure. The added expense erodes margin even when payment arrives in full. A final denial or an underpayment that’s never recovered adds lost reimbursement to those costs. And while the account remains unresolved, delayed cash and uncertain collection dates complicate working capital planning.
Change what earns a passing grade
Those financial consequences trace back to the authorization gap. A denials leader may be accountable for winning an appeal without having authority to change the scheduling or authorization process that made the appeal necessary. Raising that leader’s recovery target leaves the source of the expense intact.
Suppose changes to a scheduled service are causing the mismatches. Rechecking the authorization when the service changes adds work before billing. Its financial benefit may appear several departments later, when a claim gets paid without correction or appeal. Measured against an upstream turnaround target, that extra verification can look like worse performance. Across the revenue cycle, it may be the better financial decision.
The executive has to resolve that trade-off. Compare the added verification cost with the recovery expense, payment delay, and lost reimbursement it could prevent across the cycle. When the enterprise gains, change the departmental target that makes the correction look like a failure.
Closing the affected accounts doesn’t satisfy the target. Measure whether the process change reduces repeat mismatches and recovery work, then assess its effect on the total cost and timing of payment. Added verification earns its place when the financial benefit holds up across departments.
A department’s performance includes the avoidable work its process creates for other teams. That consequence belongs in its definition of success.
Stop funding the same failure
At the next revenue cycle review, choose one recurring failure with material financial consequences. Bring together the people who can change the process and agree on the financial improvement that will count as resolution. Keep the issue open until there’s evidence that the correction delivers.
That evidence can change the next investment decision. A recurring workload that once justified more recovery capacity may justify an upstream process change. The full financial picture gives prevention a stronger claim on resources, even when its cost and benefit fall in different departments.
The executive standard is whether the enterprise stops paying for the same avoidable failure.
Learn More
Explore why legacy RCM models leave revenue at risk (and what leaders should require instead) in Revenue Risk Is Outpacing Legacy RCM Models.
1. State of the Healthcare Revenue Cycle. Kodiak Solutions, 31 Mar. 2026, www.kodiaksolutions.io/internal/benchmarking_reports/march_2026_benchmarking_intelligence_report.
2. Claims Adjudication Costs Providers $25.7 Billion – $18 Billion Is Potentially Unnecessary Expense. Premier, Inc., 24 Feb. 2025, premierinc.com/newsroom/policy/claims-adjudication-costs-providers-257-billion-18-billion-is-potentially-unnecessary-expense.
