The true cost of healthcare revenue leakage

Read Time: 6 Min
Countless preventable factors create significant revenue leakage for healthcare providers. These opportunities can help reduce losses and manage risk.

By Dan Storer, Managing Director of Healthcare Corporate Banking, Huntington Commercial Bank

Nearly all healthcare providers face revenue loss in some way, whether through uncompensated care, billing issues, or insurance disputes. Many providers, however, might not have considered just how much revenue is lost each year due to preventable factors. These issues cannot be written off as the cost of providing care – having fewer financial resources impacts community members in the form of reduced access to services, quality of care, and fewer community programs.

Razor-thin profit margins and strained staff make it a challenge to dedicate resources toward process improvement and innovation. The level of risk posed by not addressing these concerns, however, has become much too high. New technology and capabilities could offer the support needed to alleviate these issues. Making it a priority is the first step.

This article highlights three significant areas of healthcare revenue leakage and loss, including the estimated annual cost of those losses for providers across the country. You’ll also learn about opportunities for organizations to address those areas, reduce risk, and avoid losing revenue that could otherwise be spent helping people.

1. Coding errors or bias

Up to $20 billion annually in delayed or permanently lost reimbursements in laboratory claims alone

Inaccurate medical coding is a known problem and significant source of risk for healthcare organizations. Human error in entering diagnosis and procedure codes all factor into this issue. Biases from the physician or coder could also impact how claims are coded. Current staffing shortages only serve to exacerbate this issue, as staff are often spread thin, and training might be limited. If errors are caught, it takes time and resources to correct them. If they’re not, that could result in lost revenue and a poor patient experience.

One report that focused just on laboratory claims found approximately 35% of diagnostic procedures contain errors, which amounts to more than $20 billion in delayed or lost reimbursements. Extrapolate those findings to other areas within an organization, and the true cost of these errors is staggering. Lowering risk in this area could positively impact an organization’s reputation, finances, reduce compliance risk, and improve overall quality of care.


Automation is ramping up in the healthcare field, partially to address staffing shortages. Resolving coding errors and reducing manual entry are both additional potential use cases for AI. Autonomous coding solutions can augment existing coding teams to alleviate tedious manual processes and scale to fit workloads. Automation and AI are also powerful risk management tools. AI-backed solutions can also help eliminate both under-coding and upcoding biases to improve patient outcomes and prevent losses related to inappropriate codes.

Overall, this type of innovation could allow workers to reduce time spent on tedious tasks and instead focus on exception cases that require more creative problem-solving. Expediting medical claim coding could result in faster payments and fewer denials, lowering an organization’s overall risk in this area.

2. Underpayments and denials from Insurers

1-3% Annual Net Revenue Loss§

Denials account for substantial revenue loss, especially if healthcare providers choose not to challenge the denial due to restricted resources or inattentiveness. Underpayments for treatments similarly result in lost earnings. In fact, the Becker’s Hospital Review found surveyed healthcare providers lose 1-3% on average of their net revenue every year due to underpayment from commercial payers.

An emerging economic trend is causing this area to become a more significant potential threat. According to Pew Research Center, approximately 4 million people in the U.S. on average each month changed jobs in 2022. A new or lost job often means a change in coverage, which increases the risk of issues during claims processing. For healthcare providers, patients shifting healthcare coverage can result in miscommunications and claim denials for treatments previously covered.


Correcting medical billing errors on the healthcare provider side can help reduce denials, but it will not solve the problem entirely. Implementing automation solutions to handle coding standard claims frees up staff time that could be directed toward improving the denial management process. Challenging and scrutinizing denials could help providers better predict payments and prevent similar denials in the future. A streamlined process for reviewing, resolving, and responding to denials could help recover that lost revenue.

3. Changing payer mix

$42.67 Billion in Uncompensated Care

At the beginning of 2022, there were 26.4 million people in the U.S. without health insurance coverage††. Unsurprisingly, 47% of surveyed medical groups reported an increased in self-pay or uninsured patients during this same time compared with the previous year‡‡. While the rate of uninsured Americans is slowly decreasing – down to 25.3% in the early months of 2023§§ – this shifting payer mix presents new risk factors that could have long-reaching effects on healthcare providers.

Higher medical costs due to a lack of insurance and rising inflation could combine to create a potent revenue problem. Patients might delay payments or be unable to pay in full, and the collections process is a known drain on time and resources.

When payment is never collected, the cost of that uncompensated care can be massive: An American Medical Association’s survey of more than 5,100 community hospitals found the national cost of uncompensated medical care in 2020 to be $42.67 billion≠≠.


Understanding the likelihood of payment and when it will arrive can improve budgeting and outcomes for healthcare providers. An AI-backed payment risk engine could reliably predict this. These insights can help better finance department budgets, prepare for uncompensated care, and work to address factors causing a lack of payment.

A well-structured revenue cycle management process can also help streamline billing and collections to reduce the likelihood of unapplied cash. Automating claims processing and denial management can further cut down on delays and help identify the correct account for funds. Those funds will be available sooner for healthcare facilities to use for operational expenses, investments, or debt repayment.

Finding a solution to reduce losses and scale operations

The Huntington Corporate Healthcare Banking team is committed to connecting healthcare organizations with the solutions and resources they need to thrive in this evolving landscape. Learn more about how Huntington meets the needs of its healthcare clients and their stakeholders by reaching out to your relationship manager.

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Related Content

Revenue Intelligence. 2020. “Clean Claim, Write-Off Metrics Key to Diagnostic Provider Success.” Accessed September 20, 2023. Clean Claim, Write-Off Metrics Key to Diagnostic Provider Success (

Revenue Intelligence. “Clean Claim.”

§ Becker’s Hospital Review. 2023. “Look Beyond the Common Variance Report to Find and Capture Revenue.” Accessed September 20, 2023. Look beyond the common variance report to find and capture revenue (

Becker’s Hospital Review. “Look Beyond.”

Pew Research Center. 2022. “Majority of U.S. Workers Changing Jobs Are Seeing Real Wage Gains.” Accessed September 20, 2023. Majority of U.S. Workers Changing Jobs Are Seeing Real Wage Gains | Pew Research Center

American Hospital Association. 2022. “Fact Sheet: Uncompensated Hospital Care Cost.” Accessed September 20, 2023. Fact Sheet: Uncompensated Hospital Care Cost | AHA

†† Centers for Disease Control and Prevention. 2023. “U.S. Uninsured Rate Hits Record Low in First Quarter of 2023.” Accessed September 20, 2023. U.S. Uninsured Rate Hits Record Low in First Quarter of 2023 | Blogs | CDC

‡‡ Medical Group Management Association. 2022. “Pandemic Turbulence Easing on Medical Groups’ Payer Mix.” Accessed September 20, 2023. Pandemic turbulence easing on medical groups’ payer mix (

§§ Centers for Disease Control and Prevention. “U.S. Uninsured Rate Hits Record Low.”

≠≠ American Hospital Association. “Fact Sheet.”