Healthcare’s Perfect Storm Is Threatening Financial Sustainability
Healthcare leaders kicked off the new year cautiously optimistic, but with so many headwinds, changes, and plenty of uncertainty, 2025 has been an unprecedented year. Five years out from the pandemic, organizations are grappling with higher costs, reduced reimbursements, increased utilization, and claim denials that show no signs of slowing down. With the recent reconciliation bill hanging in the balance and Medicaid and Medicare’s future potentially on the line, there is a sense of trepidation among leaders about what is next.
One thing is clear: healthcare experts must rethink their strategies, abandon outdated, inefficient workflows and technologies, and consider and adopt new approaches to ensure financial sustainability.
Connecting a siloed system with a preactive approach
For nearly a decade, denials have been on the rise, and over the last three years, they have held steady at 12 percent, according to Optum. How can we solve this problem? With a preactive approach to revenue optimization.
Like all revenue cycle functions, denials management is complex and has a significant impact on operational efficiency, adding to the burden that time-strapped, overwhelmed clinicians, coders, and revenue cycle specialists are already up against. As the most time-consuming task in the entire patient journey in the revenue cycle, denials cost hospitals up to $20 billion a year.
As healthcare executives continue to prioritize growth strategies while also navigating mounting pressures, moving to a preactive approach is imperative. While proactive approaches address problems before they occur, preactive actions go one step further by eliminating the possibility that a problem will occur in the first place. AI-driven technology makes this possible and provides a learning mechanism for technology to improve with each touch.
Through integrated care enablement platforms, healthcare leaders can achieve efficiency, growth, and financial sustainability. Platforms with connected and unified workflows comprising ambient scribe tools, autonomous coding, and denial prediction tools enable audit-ready clinical documentation, accurate claims, and maximized reimbursement. Research shows that two out of three clinicians are using AI, indicating the market’s curiosity in exploring new avenues to make meaningful adjustments to stale systems.
With the combination of technology and human expertise, imagine a world where teams have complete visibility at every touchpoint of the patient journey, ensuring ownership, accountability, and a more efficient use of resources. Time is our most valuable resource, and these new strategies can ease the administrative burden, allow teams to work at the top of their licenses and give clinicians meaningful time back in their days to deliver the right care at the right time.
Reports show that more than 40 percent of denials are caused by coding errors including incorrect or missing documentation, overcoding, and undercoding. Clinical documentation gaps and coding errors that cause denials leave organizations vulnerable to compliance risks and revenue leakage. Reactively approaches such as addressing issues after they occur, such as deploying a coding edit after receiving a denial, is no longer best practice.
Many also rely on multiple point solution vendors to handle the various clinical and administrative functions. These siloed solutions are a barrier to visibility and accountability across the organization, wasting time and resources while increasing costs. Without complete transparency, teams lack insight into the upstream or downstream effects their work has on other areas of the revenue cycle, causing redundancies and only partial resolutions. The same is often true for organizations that work with vendors that handle multiple functions of the revenue cycle.
By taking a holistic approach, organizations can influence financial outcomes by protecting revenue and clinical outcomes by allowing clinicians to deliver quality care without unnecessary tasks getting in the way.
Planning now is more important than ever
As we look ahead to the upcoming months and beyond, healthcare leaders must continue to guide their organizations through uncertain times. Although technology and workflows are the foundation of smarter healthcare, we must not lose sight of the purpose behind our work. By freeing up teams to work at the top of their licenses, we can drive better outcomes at a lower cost, and transform the healthcare system into one that puts patients first while ensuring organizational sustainability over the long term. We owe it to stakeholders across every clinical, operational, and financial area, and to our patients to do better and be better—because people’s lives depend on it.
Navesh Kandiyil, M.D., MBA, FACHE, is senior vice president of coding commercialization at IKS Health.
