Why health systems need a new operating model to defend earned revenue after the claim is submitted.
The shift
Revenue cycle has moved out of the back office. Not because billing has become more visible, but because the financial stakes have changed.
For health systems, margin pressure is no longer driven only by reimbursement rates, labor costs, supply inflation, or payer mix. Increasingly, it is shaped by what happens after care is delivered and after the claim is submitted: whether earned revenue is paid correctly, whether legitimate reimbursement pathways are operationalized, whether payer friction is recognized as a pattern, and whether the cost of pursuing payment quietly erodes the value of recovery.
That makes revenue cycle a different kind of leadership issue. Cash collected, A/R performance, denial activity, and productivity still matter, but they no longer answer the boardroom question: how much earned revenue is the organization actually protecting?
The pressure
The pressure is visible in the numbers. AHA reported that total hospital expenses grew 7.5% in 2025, more than twice the rate of hospital price growth, while hospitals spent an estimated $43 billion trying to collect payments insurers owed for care already delivered.1 Premier estimated that claims adjudication cost providers $25.7 billion in 2023, with 70% of denials ultimately overturned and paid, but only after multiple costly rounds of review.2 Kodiak Solutions reported that net revenue losses from final denials and uncollected patient balances exceeded $48 billion across more than 2,300 hospitals in 2025, up from $38.6 billion the year before.3
These are not just revenue cycle statistics. They are margin signals.
The exposure
The traditional operating model assumes that revenue loss can be managed through better workflow, faster follow-up, stronger denial processes, and more disciplined collections. Those capabilities remain essential, but they are no longer sufficient. The harder issue is that revenue leakage often does not appear as one clean problem. It appears as a set of disconnected operational events that compound into enterprise financial exposure.
A claim can move quickly and still be paid incorrectly. A denial can be overturned and still represent margin loss if it takes months of rework to recover what should have been paid the first time. A reimbursement pathway can exist but remain unworked because no team owns it at scale.
This is why revenue cycle leaders need to shift from managing queues to managing margin exposure.
The margin-defense model
The Knowtion Health Margin Defense Playbook frames this exposure across three connected capabilities: discovering revenue standard workflows miss, recovering revenue that should have been paid, and optimizing the work so the same leakage does not keep recurring. The playbook’s central point is important: hidden opportunity, payment variance, and recurring leakage may surface in different workflows, but they compound against the same margin.
That is the new RCM mandate.
1. Make hidden revenue visible
If leaders cannot see an eligible revenue pathway, they cannot size, resource, or defend it.
Health systems need better visibility into revenue that is legitimate but not always visible in standard workflows. This includes emerging or under-operationalized pathways such as Independent Dispute Resolution, statutory interest, contractual penalties, complex routing, and other opportunities that may sit outside traditional denial workflows. CMS reported that nearly 1.19 million federal IDR disputes were initiated in the first half of 2025, up 39% from the prior six-month period, which underscores how quickly specialized reimbursement pathways are scaling.4
2. Separate paid from paid correctly
A claim that closes is not necessarily a claim that protects margin.
Leaders need to distinguish between claims that were paid and claims that were paid correctly. That is a different discipline than traditional denial follow-up. It requires identifying payment variance, underpayments, DRG downgrades, partial reimbursement, COB and patient-involvement issues, payer policy disputes, and other places where the payment signal is present but incomplete.
3. Understand the economics of the work
Recoverable revenue does not always translate into protected margin.
Organizations need to look more directly at the economics of the work itself. Not every recoverable dollar is equally valuable if it requires excessive manual effort, repeated touches, or long resolution cycles. In a constrained labor market, the question is not simply whether an account can be worked. It is whether the work is being prioritized, routed, and resolved in a way that protects margin.
Why this matters across health systems
For large Integrated Delivery Networks and academic systems, this may mean finding tens of millions of dollars across payer behavior, service-line variance, complex claims, and underused reimbursement pathways. For regional and community systems, the same discipline may determine whether limited teams are focused on the work with the highest financial return.
The boardroom conversation is therefore changing. Instead of asking only what happened to cash, A/R, or denials, leaders should be asking where earned revenue is leaking, which patterns are recurring, what it costs to recover those dollars, and which issues should be prevented rather than repeatedly reworked..png?width=900&height=200&name=Boardroom%20question%20(2).png)
The boardroom mandate
Revenue cycle will always be operational, but in today’s environment, it is also strategic.
The health systems that get this right will not be the ones that just work more claims. They will be the ones that see leakage earlier, prioritize it more intelligently, and reduce the patterns that cause the same revenue loss to recur.
That is the shift from back-office revenue cycle to enterprise margin defense.
For leaders looking to apply this lens, the Margin Defense Playbook offers a practical framework for a broader financial question: how health systems can defend earned revenue across every point where payment can be missed, reduced, delayed, disputed, or made too expensive to recover.
[1] American Hospital Association, Costs of Caring Report 2026, March 2026.
Supports: 2025 hospital expense growth of 7.5%; hospital expenses growing more than twice the rate of hospital price growth; estimated $43 billion spent trying to collect payments insurers owed for care already delivered.
URL: https://www.aha.org/system/files/media/file/2026/03/5-Things-to-Know-about-the-Costs-of-Caring-Report-2026.pdf
[2] Premier Inc., “Claims Adjudication Costs Providers $25.7 Billion — $18 Billion is Potentially Unnecessary Expense,” February 2025.
Supports: $25.7 billion in provider claims adjudication costs in 2023; 70% of denials ultimately overturned and paid after multiple costly rounds of review.
URL: https://premierinc.com/newsroom/policy/claims-adjudication-costs-providers-257-billion-18-billion-is-potentially-unnecessary-expense
[3] Kodiak Solutions, Revenue Cycle Analytics benchmarking analysis, reported by Business Wire, March 2026.
Supports: more than $48 billion in net revenue losses across more than 2,300 hospitals in 2025, up from $38.6 billion in 2024.
URL: https://www.businesswire.com/news/home/20260331038554/en/Healthcare-Provider-Organizations-Saw-Net-Revenue-Losses-From-Final-Denials-and-Bad-Debt-Grow-by-25-in-2025-According-to-Kodiak-Solutions-Proprietary-Data
[4] Centers for Medicare & Medicaid Services, Supplemental Background on Federal IDR Public Use Files: 2025 Q1–Q2, January 2026.
Supports: 1,186,812 federal IDR disputes initiated between January 1 and June 30, 2025, up 39% from the prior six-month period.
URL: https://www.cms.gov/files/document/federal-idr-supplemental-background-2025-q1-2025-q2.pdf
