By Frank Forte, CEO, EnableComp
LinkedIn: Frank Forte
LinkedIn: EnableComp
A CFO in a large Midwest health system had what looked like an easy call to make. Consolidate the organization’s complex claims into a single generalist revenue cycle management (RCM) platform and save roughly $400,000. The added benefit was fewer vendors to manage.
Then we ran the other side of the ledger. Leaving the complexity specialist would cost the system close to $25 million in revenue the generalist RCM vendor would not recover. Sixty times what the switch would save.
The $400,000 was real. It just wasn’t the number that mattered.
In complex claims, almost no one calculates the cost of walking away until it’s too late. Yet that’s the number that decides everything.
The instinct to switch isn’t random, either. A recent McKinsey survey found that the health systems most likely to switch vendors are those already missing their performance goals.
The reasoning feels sound. If performance is lagging, change the partner. But a vendor switch mid-underperformance means rebuilding payer relationships and claims history from zero at the exact moment the system can least afford the disruption.
Switching doesn’t fix underperformance. Here, it compounds it. The old vendor disengages the moment the exit is announced. The new one can’t see the backlog for months. Meanwhile, lost recoveries pile up.
What the Blended Number Hides
Most CFOs evaluate an RCM partner by a few headline metrics. The trouble is that those metrics can combine complex claims with a much larger pool of routine work. A partner reporting an 85% overall recovery rate looks strong, and on routine claims it probably is. What that single figure hides is how the hardest categories actually perform, where recovery can run more than 20 points below the blended average.
A generalist platform and a specialist firm don’t do the same job. A generalist optimizes for speed, clearing the most claims at the lowest cost per touch, work that often runs just a few dollars a claim and resolves in days.
Complex claims are different. A workers’ compensation or out-of-state Medicaid claim can take more than a year to resolve, with appeals and state-specific rules complicating every step. A specialist isn’t just measured on whether a claim eventually gets some level of payment. It’s measured on how many claims are recovered and on the ultimate reimbursement value once every appeal and adjustment is worked through, not on how cheaply or how fast the claims are processed.
Each complex category needs its own benchmark, because a partial recovery reported as a resolved claim looks identical to a full one on a dashboard that only tracks volume. Blend these categories into the same recovery rate as routine claims, and the gap between what was collected and what was owed disappears into the average.
A Claim Is Not a Claim
Complex claims are a revenue asset, not an operational problem to be managed down. These claims hold the dollars most likely to be underpaid or written off, which makes them some of the highest-yield receivables on the balance sheet. Cut spending there and you shrink your highest-return receivables.
When you need a knee replaced, you don’t go to the physician who performs the most procedures of every kind. You go to the surgeon who has done that one operation thousands of times, because experience with the specific problem is what determines the outcome. Complex claims work the same way. Recovery depends on payer-specific knowledge and state-by-state regulatory expertise that takes years to build.
A CFO who treats complexity expertise as a commodity, interchangeable with any platform that quotes a lower fee, is handing the hardest revenue in the system straight to the payers.
What Switching Actually Costs
When a health system moves complex claims from a specialist to a generalist, recovery rates typically fall several percentage points, and the damage compounds from there.
A new vendor needs 12 to 18 months to ramp up, rebuilding payer relationships and relearning the state-by-state rules the prior specialist had spent years mastering. During that time, recovery sits below where it started while receivables age and the cash that should be arriving doesn’t. By the time the new partner reaches full speed, the system has lost two years of yield it will never get back.
That’s the calculation the Midwest CFO finally saw. Staying delivered roughly a 60x return, and there are not many places in a health system budget where that kind of yield is sitting.
Building the capability in-house produces the same result, with existing staff taking on specialized work they were never trained for. I tell finance leaders we don’t talk in fees, we talk total yield. The dollars you save on a contract mean nothing if you’re losing more reimbursement revenue on the “upside.”
Fix the Measurement Before You Fix the Vendor
What should a CFO do when complex-claims performance disappoints? Almost always, the answer is not a new contract. It is a sharper look at three things.
Start with the number. Pull complex claims out of the blended rate and benchmark each category on its own. Workers’ comp, VA, motor vehicle, out-of-state Medicaid, coordination of benefits, and clinical denials each behave differently.
Then change what you hold the partner to. Stop measuring fees and clearance speed. Start measuring total yield, the ultimate reimbursement recovered per claim once every appeal is worked. That number shows up in net revenue.
Finally, ask where the denials are coming from. A partner worth keeping doesn’t just recover the claim. It feeds the root cause back upstream so the same denial stops recurring. If yours can’t, start there, not with a new contract.
A disappointing number deserves a hard look. So does whether it was the right number to measure in the first place. The organizations that outperform understand what complex claims are worth. They don’t switch to save on fees. They deepen the relationships already recovering their most difficult dollars, because that is where the yield is. Switching feels like disciplined capital allocation. In complex claims, it is usually closer to capital destruction.