The Margin Killers You’re Not Measuring

Hospitals have digitized. They have automated. They have consolidated. But despite more than a decade of transformation in revenue cycle operations, most health systems are still losing efficiency in one costly corner: the complex claims that do not fit inside commercial or Medicare billing templates. These edge cases such as Veterans Affairs encounters, workers’ compensation claims, TRICARE submissions, and motor vehicle accidents, consume disproportionate resources and often delay payment for months.

This is not an isolated problem. According to the Medical Group Management Association (MGMA), more than 40 percent of practices report rising payer complexity, particularly when working with military, government, or accident-related coverage. These are the very claims most EHR-driven workflows are ill-equipped to manage.

A 2024 Crowe RCA benchmarking report found that while complex claims represent just 10 to 15 percent of total volume, they account for more than 30 percent of follow-up activity. They are three times more likely to result in a denial, often require multiple resubmissions, and routinely exceed 45 days in accounts receivable aging. For many hospitals, especially those with thin margins, this is not an edge case. It is a material exposure.

The regulatory environment is making things worse. According to a 2023 GAO report on VA Community Care, nearly 20 percent of veterans referred into the VA’s Community Care Network experience care delays due to misrouted billing or eligibility mismatches. In some cases, veterans were improperly billed by providers because the system defaulted to commercial insurance rather than correctly routing through the VA. These breakdowns not only delay payment but undermine trust and damage the provider-patient relationship.

Revenue cycle leaders can no longer afford to treat these claims as isolated exceptions. They require dedicated infrastructure.

The industry is beginning to respond. A recent Advisory Board analysis highlights a trend among large health systems investing in purpose-built RCM platforms, many of which leverage payer-specific automation, predictive AI, and outsourced support to reduce friction. These investments are not about replacing staff. They are about redirecting effort toward the claims most likely to yield resultsand away from those that drain time and burn out teams.

That is the focus of next week’s feature: a Q&A with Mike Esworthy, Chief Strategy Officer at EnableComp. Esworthy outlines a playbook for s, olving the complexity problem with intelligent technology and domain-specific partnerships. His message is blunt. General-purpose automation is no longer enough. Hospitals need systems designed for the edge cases that eat their margins.

For CFOs, revenue cycle leaders, and digital health strategists, this is not a back-office discussion. It is a core strategy for protecting financial performance and ensuring operational resilience in the most unpredictable corners of the payer landscape.

Next week, we publish Esworthy’s full breakdown. The following week, we close the loop with an editorial analysis of the structural shifts now reshaping complex claims management, and what leaders must do to stay ahead.