For years, hospital finance teams have run revenue cycle on a familiar loop: a claim goes out, a claim comes back denied or underpaid, and staff spend the next several weeks working it back. That loop was manageable when denial rates held fairly steady and reimbursement was reasonably predictable. Neither of those things is true anymore, and the gap between how revenue cycle is typically run and what today’s payer environment actually demands is widening fast.

Denials are climbing, and they are climbing for reasons that have little to do with how hard revenue cycle teams are working. The pressure showing up in the numbers is driven by shifts in payer behavior, patient mix, and administrative complexity that no amount of appeals staffing can fully offset. A reactive model for denials is no longer enough. 

The numbers make the case on their own. Kodiak Solutions, which benchmarks revenue cycle performance across more than 2,300 hospitals, found that providers on its platform lost more than $48 billion in 2025 to final denials and uncollected patient balances, a 25% increase over 2024. Clinical denials tied to prior authorization and medical necessity accounted for nearly all of that jump, and initial denial rates have now risen for five straight years.

Experian Health’s 2025 State of Claims survey tells a similar story. Forty-one percent of providers now report denial rates above 10%, a figure that has climbed every year since the survey began in 2022, well past the 5% to 10% range HFMA considers a healthy benchmark.

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