Healthcare providers struggle as insurance denials, patient debt surge
INDIANA, UNITED STATES — Healthcare providers are facing mounting financial pressures as claim denials surge and patient collections decline.
The report reveals insurers denied 11.81% of claims in 2024—up 2.4% year-over-year, while providers collected $3 less per $100 from insured patients compared to 2023.
Rising denials squeeze cash flow
“Changing payor policies and billing rules often generate spikes in denials as providers hurry to modify workflows to comply with the new rules of the game,” Kodiak’s Vice President of Revenue Cycle Intelligence, Matt Szaflarski, told TechTarget.
According to a Kodiak Solutions analysis, Szaflarski suggests that the initial refusal of claims by healthcare payers seems to slow down the payments given to medical providers.
Request for Information (RFI) denials—particularly for high-dollar claims—spiked as insurers demanded itemized statements.
Despite reducing authorization-related denials by 7.7%, providers now face new hurdles as payer policies shift unpredictably.
Patient collections crisis deepens
Insured patients now account for over 50% of bad debt write-offs, driven by high-deductible health plans (HDHPs).
The average deductible reached $1,787 in 2024, 47% higher than a decade ago, leaving many unable to pay bills.
Delayed claim resolutions further hurt collections, as statements arrive months post-service.
Providers collected just 34.46% of insured patient balances, down from 37.58% in 2023. “Increased denials also increase the amount of time it takes to resolve claims with payors,” Szaflarski warned.
Some hospitals now prioritize point-of-service collections, but with 35% of accounts receivable (A/R) exceeding 90 days, revenue cycles remain strained.
Implications: A system under stress
The dual pressures of denials and patient debt threaten hospital viability, especially for smaller providers. Kodiak’s data shows A/R days grew 5.2%, squeezing liquidity.
While top-performing health systems mitigate risks through clinical-payer partnerships and staff accountability, most struggle to adapt.
“The revenue cycle has honestly never been more difficult and there are very few indications that this will change anytime soon,” Szaflarski concluded.
With denials and HDHPs here to stay, providers must target resources strategically—or risk further financial erosion.
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