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.
Most physician practices see measurable improvement in clean claim rate and denial rate within the first 30–45 days of outsourcing. Significant AR recovery and collection rate improvement typically appears within 60–90 days, as the vendor works through existing backlog and establishes new workflows.
Most physician practices see measurable improvement in clean claim rate and denial rate within the first 30–45 days of outsourcing. Significant AR recovery and collection rate improvement typically appears within 60–90 days, as the vendor works through existing backlog and establishes new workflows.
Outsourced physician billing services typically cover claims, denials, AR, and eligibility. See what to outsource fully, partially, or as full-cycle RCM.
The average physician practice denial rate is 9–10%, according to HFMA benchmarks. Best-performing practices maintain a physician practice denial rate below 4%. A denial rate above 10% typically signals systemic issues in eligibility verification, coding documentation, or front-end registration workflows.
Outsourcing medical billing for a physician practice typically costs 4–9% of monthly collections, depending on specialty, volume, and scope of services. Most practices find this less expensive than maintaining a full-time in-house biller when all overhead costs are factored in.
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