By Noah Breslow, Chief Executive Officer, Revecore
LinkedIn: Noah Breslow
LinkedIn: Revecore
For a long time, hospitals could count on one thing: even when reimbursement was complicated, it was still mostly predictable. Care was delivered, claims were submitted, and while denials happened, revenue generally followed.
That is no longer the case.
Across the country, hospitals are feeling a real shift in leverage toward payers, and the impact is showing up on the bottom line. Denials are increasing. Payments are taking longer. Underpayments are becoming harder to spot. Together, these forces are quietly putting pressure on margins in ways many organizations are still struggling to see but already feel.
The data backs this up. The American Hospital Association reports hospitals faced more than $130 billion in Medicare and Medicaid underpayments in 2023, a gap that continues to grow on average 14% annually even as operating costs rise. At the same time, commercial denial rates keep climbing as payers apply AI and automation to more systematically deny and underpay claims, often targeting areas that are harder for hospitals to detect and appeal.
This is not a temporary disruption. It is a structural shift in how revenue risk is being distributed, and hospitals are now carrying more of it than they realize.
Payers Are Playing a More Strategic Game
Today’s payers are far more deliberate in how and where they slow, deny, or reduce payment. Automation and analytics are no longer just administrative tools. They are being used to target claims that hospitals are least likely to catch, challenge, or appeal.
Medicare Advantage is a clear example. Multiple reports from the HHS Office of Inspector General have found high rates of inappropriate denials tied to prior authorization and medical necessity reviews. Commercial payers have also been accused of using similar approaches, layering in complex rules and opaque logic that make it harder for providers to understand why a claim was denied or underpaid.
The result is what many hospital leaders are experiencing firsthand. Claims get denied, delayed, or quietly paid below contract. Even when revenue is eventually recovered, the cash comes later, after significant investment and effort, and often without full transparency. Hospitals end up carrying financial risks in the meantime, without visibility or certainty around when payment will arrive, and while wrangling rising expenses that now outpace inflation.
Revenue Leakage Is No Longer About Simple Errors
For years, revenue leakage was treated as a fixable execution problem. If you improve documentation, add staff, and tighten processes, things will get better. In today’s environment, that mindset falls short.
Leakage is increasingly built into the system. It comes from variation in payer rules, contract interpretation, authorization requirements, and automated claim reviews. It starts upstream, long before a claim is submitted, and often across multiple teams that are not fully connected.
Payer behavior variation is making this even harder. Research from the Kaiser Family Foundation shows how widely coverage rules and utilization management practices can differ, even within the same insurer, with some in-network denial rates as low as 1% and others over 50% across plans and states. That kind of variation creates blind spots for individual hospitals and health systems that traditional reporting does not catch until revenue is already gone.
When revenue loss is driven by systemic variation rather than simple errors, the traditional playbook breaks down. Preventing leakage requires earlier insight, not just cleaner billing.
The Financial Gap Between Hospitals Is About to Get Wider
Organizations that rely only on looking backward will continue to lose ground. The losses may not show up all at once, but they add up over time through slower cash, higher costs to collect, and revenue that is never fully recovered.
On the other hand, hospitals that can identify or predict risk earlier will be in a very different position. When teams can see which claims are most likely to be denied, which payers are changing behavior, and where underpayments are starting to trend, they can act before those issues hit the balance sheet.
That is where data and analytics start to matter in practical ways. Not flashy dashboards, but tools that connect authorization outcomes, denial patterns, payment variance, and payer behavior into something teams can actually use. McKinsey has shown that hospitals using advanced analytics in revenue cycle functions can meaningfully reduce denials, improve cash flow, and cut costs to collect by 30 to 60 percent when insights are built into daily operations.
That ability to act earlier, not just analyze later, is becoming one of the most meaningful sources of financial advantage.
The Shift: Balancing Recovery and Prevention
Hospitals cannot control payer consolidation, policy shifts, or broader market forces. But they can control how well they understand what is happening inside their own revenue cycle and how effectively they respond. The most resilient organizations are no longer treating prevention and recovery as an either/or decision. They recognize that revenue protection requires both: preventing what you can based on historical trends and aggressively pursuing what you’re unable to predict as new behaviors surface.
Even the best insights cannot anticipate every denial or underpayment. Payer behavior changes constantly, policies are interpreted inconsistently, and new issues surface, sometimes without warning. That reality means some revenue will always need to be chased. The goal moving forward will be to apply effort where it protects the most revenue and informs smarter prevention. By analyzing which claims break, where payers deviate, and why appeals succeed or fail, teams gain intelligence they can use to refine documentation, processes, and strategy over time. AI can help here, too, but only when it is used as a practical tool. Its value is not in replacing people, but in surfacing patterns that are impossible to see at scale otherwise. Used well, it helps teams focus their effort where it protects the most revenue.
As we enter this next era of revenue cycle management, financial performance will not be driven by who has the biggest billing staff or the most aggressive appeals process. It will depend on which organizations can spot risk early, respond faster, and prevent losses before they happen.