Hospitals and health systems can absolutely outsource specific revenue cycle functions rather than the full cycle. Modular or partial RCM outsourcing is common — especially for high-complexity functions like coding, denial management, prior authorization, and underpayment recovery where specialized expertise delivers the most value.
Underpayment recovery in hospital billing is the process of identifying and appealing claims where payers paid less than the contracted rate. Industry estimates suggest hospitals lose 1–3% of net revenue annually to undetected underpayments — representing millions of dollars for most health systems.
Hospitals measure revenue cycle performance through key metrics including net collection rate, days in accounts receivable (AR), first-pass denial rate, cost to collect, time to file rate, and bad debt as a percentage of gross revenue. Best-in-class health systems track these by payer, service line, and facility.
The top revenue cycle challenges for hospitals in 2025 are rising denial rates from commercial payers, prior authorization volume increases, staffing shortages in billing and coding, underpayment from payer fee schedule discrepancies, and the complexity of managing RCM across multiple EHR and billing systems.
Learn how hospital revenue cycle management works across patient access, coding, claims, denial management, and patient collections.
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