Elevating Hospitals’ Revenue Cycle Management Processes

It’s likely your hospital revenue cycle management (RCM) team is under more pressure than ever to sustain financial health in a rapidly shifting industry. They’re not alone. Recent data shows that many hospitals struggle to maintain a viable bottom line, with average denial rates nearing 10% and net days in accounts receivable (A/R) often exceeding 45 days. These RCM-specific metrics highlight why CFOs view RCM optimization as critical—every day spent chasing denied or underpaid claims translates directly into lost revenue and higher administrative costs.

Financial concerns remain top-of-mind for healthcare executives—an issue reflected in the American College of Healthcare Executives (ACHE) annual survey, where financial challenges ranked second among the top issues confronting hospitals. In this environment, a major roadblock to stronger RCM performance is suboptimal reimbursement from payers.

Low insurance reimbursement and high reliance on government payers

A significant proportion of hospital revenue comes from government payers such as Medicare and Medicaid. In fact, 94% of hospitals report that at least half of their inpatient days are covered by these programs. Yet, the Medicare reimbursement rate often falls well below actual costs—just 82 cents per dollar spent in 2022. This shortfall widens the gap your hospital must bridge just to break even, let alone fund critical initiatives like cybersecurity, workforce development, and patient experience improvements.

Even though Medicare is scheduled to increase inpatient and outpatient rates by 2.9% for 2025, many healthcare finance experts argue that this adjustment is insufficient. With labor, supply, and technology costs continually rising, incremental bumps in reimbursement can feel like a drop in the bucket compared to the ongoing operational demands.

Commercial insurers and denials: The other side of the coin

While public payers present one set of challenges, commercial insurance carriers are equally complex. Routine claims denials—often generated automatically—can force your RCM team to expend significant time and resources on appeals. According to a 2023 study, hospitals spend nearly $20 billion a year contesting claims that should have been reimbursed at the time of initial submission.

For every denied claim, a skilled billing worker or RCM professional must:

1. Interpret the denial letter and cross-check it against clinical documentation.
2. Gather supporting data—lab results, physician notes, imaging, and more.
3. Compare the treatment plan to third-party standards of care.
4. Determine if an appeal is warranted.
5. Draft the appeal letter with detailed clinical and billing justifications.

Even a highly efficient denial management specialist might generate only six appeal letters a day. That barely makes a dent when large health systems handle tens of thousands of unpaid claims every year. Consequently, denied claims can remain stuck in A/R for weeks or months, negatively impacting your cash flow and tying up staff time that could otherwise be spent on proactive claim prevention and revenue cycle optimization.

Keeping pace with evolving standards of care

The American Medical Association (AMA), the Centers for Medicare & Medicaid Services (CMS), and other regulatory bodies frequently update coding guidelines and standards of care. As a result, your RCM team must continuously monitor these changes to avoid coding errors and ensure compliance. Any oversight can lead to an increase in denials, underpayments, or even penalties—ultimately resulting in longer A/R days and higher write-offs.

The ripple effect of RCM struggles

Beyond denied claims and lower reimbursement, broader healthcare trends only magnify RCM complexities:

Aging population

More patients with chronic conditions mean higher claim volumes—and potentially more denials due to complex coverage determinations.

Skilled revenue cycle professionals are in short supply, which increases the cost to collect and slows down critical processes like denial appeals and payment posting.

Staff burnout

Burdensome administrative tasks can lead to high turnover, further straining hospitals’ ability to maintain efficient workflows.

These issues also jeopardize community access to care. Nearly 200 U.S. rural hospitals have closed in the last two decades, and more than 25% of current rural facilities are at risk of closing. When hospitals cannot remain financially sustainable, entire communities lose local healthcare access.

The potential of agentic process automation

In the face of growing administrative costs and shrinking margins, agentic process automation (APA) emerges as a game-changer. According to high-performing hospitals profiled by Becker’s Hospital Review, investing in AI and automation for critical functions like RCM can reduce denial rates, speed up claim adjudication, and boost the bottom line in a sustainable way.

AI-powered events and summits in 2025—such as the AI in Health Care Summit, AI in Healthcare Forum, and the Healthcare IT Connect Summit—underscore the industry’s momentum toward more advanced automation solutions. APA goes beyond traditional robotic process automation (RPA) by integrating artificial intelligence to achieve a truly connected, adaptive revenue cycle. AI agents can understand context, learn from data patterns, and collaborate across different workflows.

How agentic process automation transforms RCM

Denial management

AI agents can quickly assess whether a denied claim is worth appealing and generate an appeal letter in minutes.

Automated coding and billing

By scanning documentation against coding rules, AI agents help reduce errors and improve first-pass claim acceptance.

Predictive analytics

Advanced algorithms can flag claims at high risk of denial, allowing RCM teams to address issues proactively.

Compliance monitoring

AI agents can track coding standards and coverage rules from agencies like CMS, alerting staff to updates that could otherwise lead to denials.

A recent Deloitte analysis found that AI and automation could free up to 50% of revenue cycle professionals’ time, enabling them to shift their focus from repetitive tasks to higher-value activities like complex case analysis and coding accuracy. This not only reduces administrative overhead but also lowers net days in A/R—a key metric CFOs watch closely to gauge cash flow health.

Building long-term sustainability and strong governance

Selecting an APA platform with strong governance and guardrails is vital. Tools that offer built-in compliance features, robust data security, and transparent audit trails can help you manage patient data responsibly and maintain confidence among regulators, payers, and patients alike. By automating coding checks and monitoring payer rules, your hospital can lower denial rates and recapture otherwise lost revenue.

Automation Anywhere is the leader in agentic process automation, offering an ecosystem of AI-powered solutions that can be tailored to your specific RCM needs. From pre-claims processing to final adjudication, an integrated approach to agentic automation supports every phase of the revenue cycle.

Soaring into the future

If you’re ready to refocus your RCM staff on tasks that truly require their expertise—like resolving complex claims or enhancing payer relationships—while significantly reducing manual work, it’s time to consider APA. By harnessing agentic automation, you can accelerate payment, decrease denial rates, lower A/R days, and cut down on administrative expenses, all while elevating patient and staff satisfaction.

With the right technology partner and a clear strategy, you can reduce the pressures on your RCM team and give wings to long-term financial stability—even in the face of today’s complex reimbursement landscape.

Learn more about how Automation Anywhere can help your hospital soar on our healthcare solutions page.