Hospital Revenue Cycle Management Guide: The Urgent Need for Revenue Cycle Transformation

At a Glance

Current Landscape

Narrow Margins Highlight Financial Pressure: Hospital operating margins increased from 2.7% in December 2023 to 4.9% in January 2024 but have since stabilized around 4%, reflecting ongoing financial strain and the need for robust revenue cycle management
Labor Costs Impacting Cash Flow: Rising labor expenses have slashed nonprofit hospitals’ median operating cash flow margin from 8.5% in 2019 to 5.3% in 2023, with wages and benefits now consuming 53% of expenses
Persistent Challenges Despite Cost-Cutting: Despite efforts to curb temporary staffing and boost efficiency, hospitals are expected to face lower-than-historical operating margins at least through 2025 due to high wage costs

The Challenges

Tech Gap Between Payers and Providers: Insurance companies outpace providers with 84% of them using AI compared to just 22% of providers
Hospital Staffing Shortages: Workforce gaps in revenue cycle are a critical risk for healthcare providers, with understaffed teams struggling to effectively manage increasing denials
Rising Denials and Financial Strain: With up to 15% of claims being denied, hospitals lose millions of dollars in revenue each year

The Path Forward

Advanced Tech: AI tools in claim management helps to cut initial denials and boost appeals success, yielding strong revenue recovery
Specialized Teams: Revenue cycle expertise—legal, clinical, and claims professionals, combined with AI technology—to maximize revenue capture and accelerate payment resolution
Process Excellence: Well-designed workflows to protect cash flow by standardizing, reducing manual touchpoints, and ensuring compliance—all of which minimize costly rework and delays in days to pay

84%

of denials can be avoided

28.3%

drop in hospital cash reserves since 2022

22%

increase in denied claims over $100K

About the Guide

With rising denial rates, increasing claims complexity, and persistent staffing shortages, hospitals must transform their revenue cycle management now to protect financial stability and ensure sustainable operations. This guide provides essential insights and strategies to strengthen the healthcare revenue cycle today and beyond.

“Aspirion has been a great business partner. They are very involved. The Aspirion team always highlights key issues during touch-base calls and offers training opportunities where applicable. Our representative is a great person who always tries to jump on our touch-base calls. The firm wants the partnership to succeed. Key Aspirion stakeholders are very well versed in denial trends and are fully engaged in our partnership.”

–Aspirion Denials Management Services Client (Source: KLAS Research Client Commentary)