Why Revenue Leakage Persists and How Leading Health Systems Close the Gaps

Health systems have spent years investing in revenue cycle technology, specialized teams, automation and process improvement. Yet revenue continues to slip through the cracks.

The industry data shows how persistent the challenge is. Initial claim denials reached nearly 12% in 2024, while denial administration adds an estimated $25 billion in unnecessary healthcare spending, according to data cited by HFMA. Experian Health’s 2025 research found that 41% of providers reported denial rates of 10% or higher, up from 30% in 2022, while 68% said submitting clean claims had become more difficult.

But denials are only part of the problem. Revenue can leak throughout the patient-to-payment journey, from missed authorizations and inaccurate coverage information to incomplete documentation, missed charges, coding discrepancies, underpayments and overlooked accounts.

Individually, these issues may seem manageable. Through thousands or millions of encounters, they can materially affect financial performance. So why does leakage persist despite significant investment? Because revenue leakage is rarely a single-point problem. It is often a visibility, connectivity and accountability problem.

The Problem Often Starts Long Before the Revenue Is Lost

One of the biggest misconceptions about revenue leakage is that it primarily occurs at the back end of the revenue cycle. In reality, the financial symptom often appears in a different part of the organization from the operational cause.

Experian Health found that 26% of respondents reported at least one in 10 denials could be traced to patient intake errors, highlighting how upstream issues can create downstream financial impact.

A missing authorization may result in a denial, but the underlying failure occurred much earlier. An underpayment may appear to be a payer issue but stem from coding, documentation or configuration. And charge-capture gaps may prevent revenue from ever reaching a claim.

Signature saw this firsthand in a large Southern health system, where the Clean Paid Claims Rate was 56.9% versus a 63.3% top-quartile benchmark—a 6.4-point gap. While the metric appeared to point to back-end performance, deeper analysis revealed significant upstream contributors, including coverage-related issues that stopped claims and created avoidable delays. By analyzing issues by volume, financial impact and aging, Signature uncovered revenue-impacting patterns that were less visible in existing dashboards.

Revenue Leakage Hides in the Handoffs

Patient access, authorization, clinical operations, HIM, coding, charge capture, billing, denials, vendor workflows, IT, payment posting and collections are deeply connected, yet often managed as separate functions with different teams, systems and metrics.

A registration team may meet productivity goals while coverage issues create downstream claim stops. Similarly, billing may meet submission targets while charge-capture gaps prevent revenue from ever reaching the bill.

Signature saw this firsthand in a revenue cycle assessment of a large East Coast health system. Revenue leakage was not concentrated in one failure point, but across fragmented handoffs involving access, authorization, charge capture, coding, billing, denials, vendor workflows and IT. Downstream issues such as documentation, authorization and timely filing often reflected root causes earlier in the revenue cycle.

Across the assessment, Signature identified tens of millions of dollars in potential net revenue improvement, with modeled opportunity reaching as high as $57 million.

That opportunity wasn't simply a collections issue. Addressing it required connecting financial outcomes to their operational root causes and creating accountability across functions.

Signature is now supporting the organization as it implements its patient accounting system across the enterprise. By pairing technology implementation with operational improvements, the health system has an opportunity to significantly reduce revenue leakage rather than simply becoming more efficient at addressing it after it occurs.

Five Ways Leading Health Systems Can Close the Gaps

1. Look at the revenue cycle end to end

Traditional departmental KPIs are important, but they don’t always reveal where value is being lost across functions. Leaders need visibility across the full patient-to-payment journey and the ability to connect operational activity to financial outcomes.

Instead of asking only, “What is our denial rate?” leaders should be able to identify where denials originate, which payers, facilities, service lines or workflows drive them, what is preventable, and what is the financial impact.

The Southern health system example shows why this matters. Segmenting issues by volume, dollars and aging helped reveal where action could have the greatest impact. The goal isn’t more dashboards—it’s better visibility into cause and effect.

2. Shift from recovery to prevention

Healthcare organizations will always need strong capabilities to recover revenue. But the greater opportunity is preventing avoidable leakage from occurring. When a denied claim is successfully appealed, the organization may ultimately collect the revenue, but only after additional labor, delayed cash and administrative expense. At an industry level, HFMA's estimate of approximately $25 billion in unnecessary spending associated with denial administration illustrates the cost of that friction.

Preventing the denial eliminates much of that rework entirely. The same principle applies to charge capture, coding, underpayments and other forms of leakage.

3. Find the revenue you don't know you're losing

Some leakage is easy to see. A denial creates an exception. An unpaid account remains in A/R. An aging claim appears on a work queue and so on. The more difficult problem is revenue that never generates an obvious exception or is obscured when performance is viewed only in aggregate. A missing charge may never appear in A/R. An underpayment may look like a completed payment. An incorrect contractual adjustment may close an account without triggering additional review. And a high-volume operational issue may mask a lower-volume problem with substantially greater financial impact.

Analyzing performance through multiple lenses including volume, dollars, and aging can expose opportunities that aren't readily apparent in traditional dashboards. The opportunity is not simply to process known exceptions faster. It is to identify exceptions the organization doesn't yet know exist.

4. Prioritize based on financial impact

Not every denial, account or variance has equal value. Yet many revenue cycle workflows still rely heavily on static work queues, account age or broad categories rather than financial opportunity. Analytics, automation and AI can help organizations identify patterns, predict risk and prioritize work based on potential financial impact, probability of recovery and required effort.

But technology alone isn't the strategy. Automating a broken process simply allows an organization to execute that process faster. The larger opportunity is to use technology and data to redesign how work is identified, prioritized and ultimately prevented.

5. Create accountability across the revenue cycle

Perhaps the hardest part of solving revenue leakage is ownership. Who owns a denial caused by an authorization failure? The denial team that receives it? Patient access? The clinical department? Technology? Payer contracting? The answer is rarely one function.

The East Coast health system example illustrates why end-to-end accountability matters. When documentation, authorization or workflow issues manifest later as denials, aged receivables or write-offs, fixing the downstream financial outcome without addressing the upstream cause creates a cycle of recurring rework.

Organizations need governance that connects revenue cycle, finance, clinical operations, IT, vendors and other stakeholders around shared financial outcomes. The goal isn't to assign blame. It is to create a closed feedback loop.

From Revenue Recovery to Revenue Performance

Revenue leakage isn't new. What's changing is the ability to see it differently. Health systems have more data, technology and analytical capability than ever before. But realizing the value of those investments requires connecting them across the revenue cycle rather than optimizing individual functions in isolation.

Industry data tells us the problem is significant. Signature's work with health systems helps illuminate why it persists: the location of the financial problem doesn't always reveal the location of its cause. Finding those opportunities requires looking beyond aggregate metrics, connecting upstream actions with downstream financial outcomes, and examining performance through multiple lenses.

The organizations that make the greatest progress will move beyond asking how much revenue they recovered. They will ask: Where are we losing earned revenue? Why is it happening? What are we spending to recover it? Which leakage is preventable? And what aren’t we seeing today that we should?

In an environment where every basis point of margin matters, the goal isn't simply to become better at recovering lost revenue. It's to build a revenue cycle designed to lose less in the first place.