Revenue Cycle Management Challenges: How Healthcare Providers Can Tackle the Top 6
Razor-thin margins, staffing shortages, and soaring costs all make providing care for rising patient volumes a struggle.
The good (and bad) news is that his year’s revenue cycle challenges could be your worst. We are all in the teeth of healthcare’s digital transformation, and change is an incredible trial. Knowing how others face these challenges will help you determine how you can overcome your unique obstacles. Review the issues and their remedies to shepherd your revenue cycle through the coming year.
What are this year’s revenue cycle challenges?
This year’s revenue cycle challenges are the areas in operations that threaten to leak the most revenue and raise costs. The 74 healthcare leaders recently surveyed by Becker’s Hospital Review, list the following top challenges:
- profitability / thin margins / declining reimbursements / viability in an inflationary economy
- staffing - clinical and administrative
- cybersecurity
- implementing cost-saving measures without compromising the quality of care
- the fact that low-paying Medicare / Medicaid patient volumes are growing while reimbursements from these federal agencies shrink
- regulations surrounding the use of AI by state and federal regulatory agencies
- meeting the demand for mental health care, particularly for children and teens
- finding the budget to implement AI and digital advancements into legacy systems
Most likely, your healthcare organization is facing one or several of these revenue cycle challenges. You’re not alone. Almost 52% of U.S. hospitals will operate at a loss, mostly due to soaring labor and supply expenses. We cover most of these challenges in this article.
Healthcare organizations are pulled between capturing the efficiency and cost-saving promise of digitization and technology while working hard to serve the patients standing at their front desks. You must modernize, and yet modernization takes money and you must show profit to attract the new investment that keeps you serving your community.
Forward-thinking (sometimes experimenting) providers address these dire revenue cycle management challenges using proven and as-yet-unproven strategies. Though the upcoming year will present obstacles, cutting-edge innovations promise to help healthcare evolve into a more streamlined, more lucrative enterprise.
Healthcare revenue cycle challenge #1: thin margins in an inflationary environment
PwC's Health Research Institute (HRI) anticipates an 8% increase in medical costs this year. This nearly record-high trend is attributed to inflationary pressures, rising prescription drug costs, and increased utilization of behavioral health services. HRI is also revising the medical cost trends for the past two years to reflect higher figures than previously reported, based on feedback from surveyed health plans and their trend experiences.

At the same time, CMS finalized a 2.83% cut to this year’s physician Medicare payments. Given that private insurers frequently use Medicare rates as a baseline for negotiations, particularly for in-network providers, revenue decline is inevitable.
The AMA, AHA, and even legislators are pushing back aggressively against this move. While healthcare organization margins are rising on the whole, remember that, as mentioned above, over half of all hospitals will operate in the red in the coming year.
Current solutions
Healthcare organizations are adopting multifaceted strategies to navigate thin margins pressured by inflation. Only driving toward operational efficiency, technology adoption, and strategic financial management can short-circuit spend.
Workforce optimization and labor cost control
Hospitals have cut external contract staffing to near pre-pandemic levels, saving millions while addressing turnover through upskilling programs and use of AI, automated, and digital solutions. 66% of providers use technology to reduce clinical labor burdens, enabling staff to work at the top of their licenses. They are also using predictive analytics to optimize staffing ratios, thereby reducing overtime and burnout.
Supply chain cost containment
Standardizing purchases with preferred suppliers in committed buying programs has reduced supply expenses by up to 25% through volume-based discounts. Automating procurement workflows to enforce contracted suppliers and minimize exceptions also cuts expenditures.
Technology and automation
Deploying AI and automation for revenue cycle management has returned meaningful gains.
Automating prior authorizations reduces denial rates by anywhere from 30 to 68% and significantly accelerates claims processing and eligibility verification. When providers use predictive analytics to identify at-risk accounts early, it can improve collections by 15 to 20% according to PwC’s Healthcare Trends study. Robotic process automation (RPA), possibly the form of AI most organizations use today, streamlines back-office tasks like billing and compliance reporting. When healthcare organizations use robust contract management software to monitor payer underpayments, they often recoup millions.
Take a quick, self-guided tour through a powerful AI-driven contract performance optimization and payer underpayments identification tool:
With 77% of health executives putting AI as a top three priority in the coming year, clearly many are betting on this technology to keep them viable.
Impediments to technology adoption
Change resistance and intimidation
Given that you’ve been bringing on software solutions for the past few years, however, the thought of unleashing a new tech initiative on your team is daunting. The average healthcare system may have a stack of technology solutions 10 to 20 solutions deep. With so many systems to manage, many practices never use the full extent of the capabilities each technology offers.
In a recent interview with us DOCS Dermatology Vice President of Revenue Cycle Valerie DeCaro explained,
“Healthcare is currently in a huge state of disruption. Change is hard. Getting your groups onboard and then motivating them to be successful takes careful planning. The change occurring fuels the high attrition rate.”
Use the practical frameworks in our recent article Change Management in Healthcare: Examples, Models, and Pitfalls to calm staff nerves.
Interoperability
Getting all of these systems to work together required a national movement. A mission-driven non-profit, the Healthcare Information Management Systems Society (HIMSS) has been actively working to advance interoperability among healthcare software systems – a platform crucial for providers looking to modernize their systems, cut costs, and increase revenue. Its Health Information Exchange (HIE) initiative aims to advance interoperability among healthcare software systems, which is crucial for providers looking to modernize their systems, cut costs, and increase revenue.
Take these three steps to establish or improve your system’s interoperability:
- Ensure your IT department is working according to Health Information Exchange (HIE) guidance.
- Implement universal data standards to facilitate smooth data interchange.
- Encourage collaboration among stakeholders to eliminate barriers.
Adopting new technologies and business models—while under sustained financial pressure—will take careful decision-making. Still, healthcare leaders agree that only bold technology strides will ensure healthcare organization success.
Data Silos
The division of healthcare data across various systems and providers poses challenges for interoperability and restricts the utilization of advanced analytics and AI-driven insights. Make sure to review the steps we provide in our Healthcare Data Integration of Multiple PM Systems to establish and refine your date interoperability drive.
Compliance
Adhering to regulations such as HIPAA, GDPR and more takes rigorous data security and privacy protocols. Maintaining compliance can slow the implementation of new technologies. Somewhat ironically, it can take technology to ensure your technology abides by state and federal laws. More healthcare providers are using AI-driven tools to manage evolving policies like Medicare Advantage rate changes.
Healthcare RCM challenge #2: cybersecurity
The Change Healthcare cyberattack—the largest healthcare data breach in U.S. history— was initiated on February 21, 2024 by the BlackCat/ALPHV ransomware group. This crime disrupted billing, claims, and pharmacy systems nationwide after hackers exploited legacy systems lacking multi-factor authentication. Change Healthcare ended up paying $22 million in ransom, but the stolen 6TB of sensitive patient and military data resurfaced with a second group, RansomHub, demanding additional payment. Total costs soared to $2.457 billion, including $9B in provider advances and legal liabilities. The breach impacted 190 million patients and crippled cash flow for 94% of hospitals, with 74% reporting care delays. Systems were partially restored by mid-March 2024, but litigation and financial fallout persist.
It’s no wonder cybersecurity is a top concern among revenue cycle leaders. It’s also not a surprise that CMS may tie Medicare reimbursements to validated cyber-resilience plans by 2026.
While establishing and maintaining cybersecurity is a constant task, the Change Healthcare breach certainly lit a fire under those organizations who were taking their time implementing robust security measures. 92% of healthcare organizations faced cyberattacks in 2024, driving $125B sector-wide cybersecurity investments from 2020 to 2025.
Just 17% of healthcare leaders feel their organizations have sufficient cybersecurity measures, according to this year’s Deloitte Global Healthcare Outlook. Further, the LevelBlue: 2024 Futures Report states, “Healthcare leaders are underestimating cyber risks while prioritizing innovation over resilience.”
Top 3 current cybersecurity solutions
Healthcare organizations are deploying aggressive cybersecurity strategies to combat escalating threats. Solutions like those below helped.
The following three solutions emerging as critical priorities for 2025:
AI-driven threat detection & autonomous response
- Deployment: over 75% of hospitals now use AI-powered tools like Cortex XDR (Palo Alto Networks) and SentinelOne Singularity to detect threats in real time and automate containment.
- Impact: measures like these reduce breach detection time from 98 days to hours, cutting incident costs by $1M+.
- Key Tech: generative AI analyzes 6TB+ of network logs daily to predict ransomware patterns and neutralize zero-day attacks.
Zero-trust architecture with micro-segmentation
- Adoption: mandated by proposed HIPAA updates, microsegmentation isolates critical systems (e.g., EHRs, IoMT devices) to block lateral movement during breaches.
- Case Study: hospitals using micro-segmentation saw fewer ransomware spread events and faster recovery.
- Compliance: the micro-segmentation solution must align with HHS’s most recent cybersecurity performance goals requiring “least privilege” access controls.
Proactive threat-hunting & cyber-resilience frameworks
- Strategy: 24/7 managed detection and response (MDR) services can now monitor 100% of cloud/EHR traffic for anomalies, prioritizing threats like supply chain attacks.
- Resilience Metrics: self-healing networks automatically patch vulnerabilities in legacy systems. Cyber-resilience drills reduce downtime from 19 days (2024 avg.) to <72 hours. Zero-trust adoption cuts breach costs by $2.4M per incident, while AI slashes response times by 89%.
The Change Healthcare cyberattack of 2024 stands as a stark reminder of the critical importance of robust cybersecurity measures in healthcare. This unprecedented breach exposed significant vulnerabilities in healthcare IT systems and underscored the severe financial and operational consequences of such attacks. As a result, healthcare organizations are now prioritizing aggressive cybersecurity strategies.
Healthcare RCM challenge #3: staffing
After a crushing RCM staffing shortage, some good news is dawning.
Healthcare leaders like Accenture believe that, with AI taking over many menial, repetitive tasks, the revenue cycle labor market will soon loosen, weakening worker bargaining power and even wages. At this time, however, your team is most likely overburdened.
Current solutions
For now, healthcare organizations are having some success countering the revenue cycle workflow burden with:
Cross-training
Healthcare providers are increasingly adopting cross-training strategies, where staff are trained to handle multiple roles within the RCM process. This approach not only enhances operational flexibility but also allows for personal development and career growth within the organization.
Remote work options
The adoption of remote work has expanded the talent pool and has become a key strategy in retaining employees who value flexibility. This shift has been facilitated by advancements in digital communication and project management tools
Automation
Leveraging technology to automate routine RCM tasks such as patient registration, appointment scheduling, and claims processing is another strategy. Automation helps reduce the workload on staff and minimizes human error, leading to more efficient operations and freeing up resources for more complex tasks. AI and automation are cooling the economy leading to a lower need for hiring FTEs, according to the recent Accenture report mentioned above.
Empowerment and engagement
Engaged employees are more likely to contribute positively to the workplace, improving both patient care and operational efficiency.
Use of analytics and AI
Implementing advanced analytics and artificial intelligence in RCM processes helps in making informed decisions, optimizing workflows, and improving financial outcomes. These technologies enable deeper insights into data, which can be used to enhance efficiency and effectiveness across the revenue cycle. These strategies are part of a broader movement towards more adaptive and technologically advanced healthcare management practices that aim to improve efficiency and better meet the demands of a changing labor market.
Healthcare RCM challenge #4: climbing denials rates
Just one year ago, Optum put the average private payer denial rate at 12%.
More recently, a survey of 516 hospitals in 36 states found that denial rates have climbed to 15%. This rise echoes industry sentiment, as research published in Revenue Cycle Intelligence reported that 75% of healthcare organization executives have observed an increase in the frequency of claim denials.
The financial impact of these denials is substantial. They can consume up to 5% percent of net patient revenue potentially resulting in revenue losses amounting to hundreds of thousands of dollars for healthcare organizations. Given these significant financial implications, it's understandable why denials are a top revenue cycle priority for revenue cycle executives in Managed Service Organizations (MSOs) and physician groups.
This escalating challenge underscores the critical need for healthcare organizations to implement robust denial management strategies and optimize their revenue cycle processes to mitigate financial risks and ensure sustainable operations.
Many spots in the treatment and claims process trigger payer rejection. The majority of denials stem from the lack of / issues with prior authorizations, eligibility, coding and modifiers, deadlines, patient information, claim data, and staff availability.
Several factors are fueling this rise.
First, payers facing high utilization during the COVID-19 pandemic began scrutinizing claims more closely. They will likely remain vigilant. These hefty profits also help payers afford sophisticated claims processing technology that sifts through their policies and your claims meticulously, finding every last reason to deny.
Current Solutions
Getting your denials lower is possible. We’ve delineated best practices for preventing denials here and six critical denial management steps here.
It takes proactive denial prevention and management to get your patients the care they need and your organization the revenue required to remain viable. The few extra minutes spent on patient documentation, prior authorizations, eligibility, and coding upfront save 15 minutes in appeal time for each denial. Many now manage denials with support from automation. It provides consistent work, completing tasks around the clock, and can even step in when you lose an RCM staff member.
By integrating advanced technologies and refining your denials management process, you can reduce denials to the 5 to 10% benchmark.
Healthcare RCM challenge #5: patient collections
For years, payer denials topped the list of healthcare organizations' top challenges. Recently, patient collections have been RCM leaders up at night. And for good reason.
A Crowe, LLP survey of daily transactions from more than 1,600 hospitals and 100,000+ physicians nationwide reveals:
- the number of patients who owe more than $7,500 tripled from 5.2 percent of all accounts in 2018 to 17.7 percent
- patient balances higher than $14,000 quadrupled from 4.4 percent of all accounts in 2018 to 16.8 percent
Both providers and patients struggle with the current healthcare payment landscape. The proliferation of high-deductible healthcare plans (HDHPs) has tossed American consumers into the most medical debt in history. KFF polling finds that 41% of adults have healthcare debt, the highest level of patient debt in the history of the United States.
Evidence abounds that patient collections are indeed becoming a top stressor. Salucro’s Healthcare Provider Fintech Insights Report surveying 176 healthcare professionals has 48% of respondents pinpointing patient collections as a critical concern.
A Kodiak study of 1,850 hospitals and 350,000 physicians shows patient collections rates fell from 54.8% to 47.8%, a seven percent drop in a three-year period.
When patients can’t pay (or are confused about paying), it’s up to healthcare organizations to cut a path toward reasonable payments that ensure they get the care they need. For good or ill, the onus for completing patient payments is on providers, as today’s patients have come to expect financial support or at least guidance.
You can keep patient accounts out of aging A/R by increasing upfront collections, but you need accurate good faith and patient payment estimates. Take a quick tour of how you can reliably automate them here:
Current Solutions
How will healthcare organizations stay viable when they can’t collect from what’s now a significant payer: the patient? Given that research shows patients are now responsible for 30 percent of provider income, collecting from them is critical for your organization’s viability.
With hundreds and often thousands of dollars on the line, patients have become consumers. Serve your consumers with these tactics:
Provide payment transparency
As patients come to terms with paying more for their healthcare, they want to know exactly how much they will be responsible for. You’re not the first to tell them their medical care costs have risen.
Payment transparency is a must in today’s patient-as-shopper environment. In a study conducted by Experian and PYMNTS, patients who were not provided cost estimates reported lower satisfaction than those who did receive estimates. Similarly, a study by InstaMed reveals that 80% of patients want to know their payment responsibility before receiving care. Front office staff get more comfortable tackling upfront collections head-on when they know what patients want.
Patient pay estimates in action:
- A growing radiology practice in the Pacific Northwest with a volume of 200 patients a day struggled with accuracy issues inherent in the manual processing of eligibility, benefits, and cost estimates. After bringing on an automated patient pay estimate solution to compile and send estimates, it increased its upfront collections from 5 percent in 2016 to over 42 percent today. It also reduced its bad debt by 45 percent, and its denials by 50 percent.
- Three-hospital healthcare organization HealthFirst discovered its low upfront collections were sapping revenue. Without the budget for new hires, they brought on a third-party patient payment estimate solution. Upfront collections increased over 45 percent and days in A/R dropped by 18 percent. Every dollar collected upfront is one kept out of A/R.
As the demand for cost transparency in healthcare continues to grow, clear payment estimates meet the expectations of discerning patients. They also improve financial outcomes for healthcare providers. Now that consumers are increasingly involved in their care decisions, you can demonstrate that you support their empowered status by delivering the clear financial responsibilities they face.
Offer digital patient portals
A comprehensive analysis of 3,456 records by the Journal of Internet Medical Research reveals that patients’ convenient access to their records and financial responsibilities benefits both patients and providers. Portals increase patients' awareness of their health conditions and encourage greater adherence to treatment regimens. Additionally, a Salucro Healthcare survey involving 1,348 U.S. healthcare consumers found that 62 percent preferred using patient portals over other methods for settling medical bills. The State of Patient Access Survey by Experian also highlights that engaging patients through user-friendly self-service portals not only fosters loyalty but also increases the likelihood of them recommending the service to others.
Patient portals in action
- A leading healthcare provider aimed to simplify system access and navigation for its over 10 million consumers by implementing more proactive communication and improving the user experience. It aimed to empower patients to manage their daily healthcare. This step has increased patient ratings by 26%. Further, patients’ total time spent on actions required between scheduling an appointment and completing the visit dropped from 12 hours for an in-person appointment to just two hours for a virtual appointment.
- Neil Calman, MD, Co-founder, President, and CEO of New York’s Institute for Family Health, an FQHC felt that patient portals, secure electronic messaging, and other e-health tools would increase patient and family engagement. He shares that even the poorest and those with limited education, “are energized about getting involved” but need access to tools. Portals are central too. He asserts that, “An underpinning of the Institute’s approach to patient education is “the conviction that everybody is in need of becoming educated and empowered about their own health care decisions.” With a robust patient portal, this organization was able to encourage patients to be more involved and understanding of their medical challenges.
The compelling evidence from studies and real-world implementations underscores the benefits of patient portals. These digital tools enhance healthcare management by making medical records and financial responsibilities more accessible, thus improving patient-provider communication and efficiency. As healthcare continues to evolve, patient portals will continue to provide an indispensable link between patients and providers.
Offer flexible, mobile-first payments
Providing patient convenience extends beyond portals. Reaching today’s remote and mobile workers involves text messages and emails. Consumers open text messages 98% of the time.
These communications must also provide links to portals where patients can review health information and pay bills.
In addition, today’s patients on the go need to be able to pay via options like credit cards, Google Pay, Apple Pay, electronic funds transfer, and payment plans.
Payment plans are becoming increasingly common in providers’ offices. Demonstrating your willingness to accept payment upfront and subsequent payments indicates your understanding of the burden healthcare expenses place on patients.
Enhancing patient convenience involves more than just access to online portals; it requires integrating various communication methods and payment options that cater to the lifestyle of today’s remote and mobile workers. The effectiveness of text messages, with nearly all being opened, highlights the importance of these channels in engaging patients effectively. Moreover, offering a variety of payment methods, including digital wallets and flexible payment plans, acknowledges the financial pressures of healthcare costs on patients. This comprehensive approach not only improves patient satisfaction and access to healthcare services but also demonstrates a provider's commitment to accommodating patient needs in a changing digital landscape
Healthcare RCM challenge #6: healthcare consumerism
As the financial responsibility shifts more towards patients, providers get a demotion from revered hero to one of many service providers. Healthcare organizations now must adopt a white-glove treatment approach: patient-centric, all the way.
Current solutions
The consumer-driven healthcare model involves a variety of approaches. Use these to continue to thrive in a patient-centric market.
Transparency and information access
Organizations are making pricing more transparent and ensuring that information on the quality and cost of care is readily accessible to patients. Patient payment estimates help consumers make informed decisions about their healthcare.
Digital tools and patient engagement
As mentioned above, mobile apps for scheduling appointments, telehealth services, and platforms that allow patients to access their medical records online. Such tools cater to the expectation for convenience and immediate access to health services.
Personalized and convenient care options
Healthcare providers that deliver personalized care (virtual care, diagnostic testing, genetic testing) that involves individual patient preferences and needs will outstrip competitors. These services are not only convenient, but even more effective, they help patients manage healthcare costs by reducing no-shows and optimizing resource utilization.
Patient empowerment through education
Educating patients about their health conditions and the available treatment options is another crucial aspect. This empowers them to make knowledgeable decisions about their care and encourages active participation in their health management.
Centralizing the Patient Experience
Make efforts to streamline administrative processes, reduce wait times, and improve the quality of interactions at every touchpoint. Healthcare providers are recognizing that a positive patient experience can influence patient loyalty and satisfaction, which are critical in a consumer-driven market.
Overall, the adoption of healthcare consumerism is shaping how organizations deliver care, emphasizing transparency, convenience, personalization, and patient engagement to meet the evolving expectations of healthcare consumers.
This year’s healthcare RCM challenges are brutal. Support helps.
As health system consolidation picks up again, how will you successfully achieve your organization’s strategic goals this year? Most MSOs, healthcare systems, and provider groups are gravitating toward digitization and automation to streamline their operations, cut costs, and improve net revenue. While modernizing now has some risks, given the critical need to contain costs, it's the only route to simplifying and optimizing your operations.
MD Clarity’s RevFind helps bring you into the digital era where you can optimize your revenue. It ingests, digitizes, and analyzes contracts, consolidating them in a single location. It compares every payment to payer contract terms and alerts staff to any discrepancies. Pursuing underpayments can result in millions of dollars in cash recovered and improved margins.
RevFind is a sophisticated contract management and modeling system engineered with deep payer contract knowledge. Its core functionality focuses on analyzing payer contract performance, identifying underpayments and denials, and assessing the revenue impact of proposed payer changes through modeling. RevFind's two-way data exchange capability ensures seamless integration with existing systems, enhancing interoperability. Healthcare leaders widely regard RevFind as one of the most comprehensive and precise contract management and modeling solutions in the market.
To experience how RevFind can optimize your contract management processes, leading to improved revenue and reduced collection costs, schedule a demo today.