What’s Driving Revenue Leakage and What Practices Can Do About It

The Big Picture in 2026

In 2026, revenue leakage is no longer a back office inconvenience. It has become a material financial threat for medical practices and health systems.

Industry estimates indicate that 3 to 5 percent of total net revenue is lost each year due to preventable revenue cycle breakdowns. For many organizations, that loss represents the difference between financial stability and sustained pressure.

Several external forces are intensifying the problem:

• Expiration of enhanced ACA subsidies
• Tighter Medicaid eligibility requirements
• More aggressive payer utilization management
• Growing administrative and documentation demands

Together, these shifts are creating what many providers describe as a revenue cliff. Cash flow is becoming harder to protect even when patient volume remains steady.

What Is Driving Revenue Leakage Right Now

Across client environments, revenue leakage tends to fall into a few consistent categories.

Rising Claim Denials

Denial rates above 10 percent are becoming common rather than exceptional. In some specialties, rates are significantly higher due to:

• Increased scrutiny from Medicare Advantage plans
• Stricter commercial payer rules
• Expanded documentation requirements
• More aggressive prior authorization enforcement

Each denial triggers rework, delays reimbursement, and increases administrative cost.

Front Desk Errors That Escalate

A significant portion of lost revenue originates at the front end of the patient encounter.

Small registration errors such as:

• Incorrect patient demographics
• Outdated insurance information
• Missed authorizations
• Incomplete eligibility verification

often result in denials that are difficult or impossible to correct after the visit. What appears to be a minor intake issue can become a permanent loss of payment.

Coverage Shifts and Increased Self Pay

With enhanced ACA tax credits ending, more patients are losing coverage or moving into high deductible plans.

As a result:

• Uninsured rates are increasing
• Patient financial responsibility is rising
• Uncompensated care is projected to grow by $7.7 billion nationally

Practices are collecting a larger share of revenue directly from patients, which requires a fundamentally different approach to billing and engagement.

Underpayments and Coding Gaps

Even when claims are paid, they are not always paid correctly.

Common contributors include:

• Missing secondary diagnoses
• Incomplete or insufficient documentation
• Incorrect E and M coding levels
• Failure to capture all billable services

Small error rates compound quickly. A 1 percent coding inaccuracy on $200 million in annual billing represents $2 million in lost revenue.

Staffing Constraints in Billing Operations

Revenue cycle teams remain under significant strain.

• Approximately 63 percent of providers report staffing gaps in billing and collections
• Appeals are delayed
• Follow up cycles lengthen
• Accounts receivable aging increases

Even well run practices are losing revenue simply because they lack the experienced staff needed to keep pace with payer demands.

What We Are Seeing Across the Industry

A Shift from Fixing Denials to Preventing Them

Appeals are expensive and time consuming. More organizations are recognizing that preventing denials at the source delivers far greater return than managing them after the fact.

Expanded Use of Nearshore RCM Support

Nearly 70 percent of hospitals are planning to expand revenue cycle partnerships, particularly with nearshore teams in Latin America, to improve collaboration, coverage, and efficiency.

Practical Adoption of AI and Automation

Technology is moving beyond basic assistance toward operational impact. Automation and AI are helping organizations identify issues earlier, standardize workflows, and reduce human error.

Higher Patient Expectations Around Billing

As financial responsibility increases, patients expect clearer communication, simpler payment options, and greater transparency throughout the billing process.

A Message from Gene Spirito

Vice President, Strategic Partnerships:

"February reinforced an important reality. The biggest threats to revenue cycle performance in 2026 are execution gaps, not new regulations."

Across client environments, the same issues continue to surface:

• Inconsistent prior authorization processes
• Documentation that does not fully support billed services
• Workflow handoffs that break down between teams
• Excessive reliance on manual steps

Organizations that are performing well are prioritizing process discipline, tighter coordination, and thoughtful automation.

What Revenue Leaders Should Review This Quarter

This is an ideal time to assess:

• Authorization consistency and governance
• Documentation defensibility
• Rework and appeal volumes
• Staffing constraints and bottlenecks
• Workflow handoffs between departments

In most organizations, the largest opportunities for improvement exist in the gaps between teams, systems, and processes.

Final Thought

Revenue cycle performance in 2026 comes down to one core principle.

Execution matters more than ever.

Practices that tighten workflows, reduce manual steps, and prevent problems early are the ones protecting margins in an increasingly challenging environment.

Learn how ADS supports smarter, stronger revenue cycle management.

Frequently Asked Questions

What are the biggest revenue cycle risks right now
Authorization gaps, documentation weaknesses, and workflow breakdowns that lead to denials and delayed payment.

Why does cash flow feel tighter even with steady volume
Operational drag from rework and manual processes slows reimbursement and increases cost to collect.

Where should practices focus first
Authorization governance, documentation accuracy, and reducing rework before claims are submitted.

Explore more revenue cycle insights from ADS.
https://www.adsc.com/revenue-cycle-management