Revenue cycle sustainability demands more than cost-cutting

There’s a new playbook emerging for revenue cycle success in an era of tightened margins and accelerated transformation — and revenue cycle leaders are feeling the pressure to adapt.

“Cost is a huge challenge, margin compression is real, and everyone is measuring cost to collect. But you can’t manage solely on cost to collect without suboptimizing revenue,” Kevin Boren, East Region CFO for Essentia Health Duluth in Duluth, Minn., shared during a roundtable discussion held during HFMA’s Annual Conference.

Increasingly, revenue cycle leaders are navigating a dramatic uptick in denials, underpayments and takebacks, a diminished revenue cycle talent pipeline and pressures to strengthen operational efficiency.^a Savvy leaders know: Revenue retention requires new approaches. Leaders in this space are adopting new tools, strategies and partnerships to strengthen revenue integrity while using advanced technologies to protect financial performance.

“Health systems cannot cut their way to sustainability,” said Matt Leshy, provider practice leader for Signature Performance, which works with healthcare organizations to strengthen financial and operational performance through revenue cycle advisory, technology-enabled managed services and administrative solutions.

“They must protect and grow revenue while using technology responsibly, addressing workforce constraints and creating more accountable partnerships,” Leshy said.

In this HFMA Executive Roundtable discussion, sponsored by Signature Performance, six revenue cycle management and finance leaders share their top challenges associated with revenue cycle transformation and lessons learned.

The discussion centered on four themes:

• Moving beyond cost cutting to protect and grow revenue
• Applying AI where it delivers measurable value
• Addressing persistent workforce constraints
• Creating more transparent, accountable partnerships for revenue cycle success

What are the most pressing revenue cycle challenges your organization faces?

Kenneth Hogue: Everything is evolving so fast. You may lower claim denials but experience a rise in takebacks. You have to fight not only to capture revenue for the services your organization delivers, but also to keep it.

We also have labor challenges. For revenue cycle, we can teach people out of school some of the more basic skills, and our IT team can support them with AI tools.

Adam Conley: As a critical access hospital, our focus is on maintaining enough margin to ensure we will still be here in the future. How will changes coming from H.R.1 [also known as the One Big Beautiful Bill Act] impact self-pay and charity care? Can we continue to grow service lines and meet our community health needs assessment goals?

Dennis Jones: As much as we concentrate on protecting revenue — and we are fighting with insurance companies every day — looking at costs is so important, too. Across the country, health systems’ revenues are increasing pretty consistently year over year. The problem is, so are operating costs. Whether a hospital or health system has a positive or negative margin depends largely on its operating costs.

How are you prioritizing solutions?

Desmond Jackson: What’s top of mind for us is, ‘Can we leverage AI and technology in a way that does not increase hiring costs?’ Serving a rural area, we’re in kind of a labor desert, and we don’t have a pipeline of revenue cycle talent. We have to be strategic about how we use technology in the revenue cycle.

Jones: We’re looking at AI to improve efficiencies to bring operating costs down, not really to replace workers. Anything we can do to improve efficiencies in the revenue cycle is essential. There is an operating cost to fighting denials, and if you outsource this work, that’s 20% of claim reimbursement that goes to vendor partners. We’re looking at AI to make the claims process clean the first time.

Jeff Costello: While we definitely look at cost to collect, we also are very technology hungry. We measure ROI on all of the tools we implement. If an automation tool increases cost-to-collect, but the ROI is worth it, then we’ll go for it.

Conley: It’s impossible for us to cut our way to sustainability. There aren’t enough people and contracts to cut. We have to grow our way to sustainability; capture more margin and more footprint. What can we bring that hasn’t been offered in our area? Those considerations help shape our approach to prioritizing solutions.

Jones: Thinking about build-versus-buy technology decisions, a lot of systems are in the position of evaluating whether to wait for Epic to come up with a tool. Epic might take 18 months or longer to develop the specific solution we need, while all these smaller companies are knocking on our door with solutions right now. But I think there’s value in waiting. For spot solutions, I could invest in a short-term fix. But we invested in Epic because it’s stem-to-stern. Over the long haul, I think it will pay off to stay with a consistent platform.

What are the ways in which you’re addressing revenue cycle staffing challenges, including through partnerships or with the help of technology?

Costello: In our market, we can’t hire problems away. There’s just too much need and not enough revenue cycle talent available. We are open to how we close gaps in revenue cycle staffing, whether locally, overseas or with the help of AI. We’ve just got to get the job done.

Whether we insource or outsource staffing, the relationship needs to be tight. We’re talking with our insourced and outsourced talent every week. I routinely ask our revenue cycle vice president: ‘What grade would you give that relationship on a scale of ‘A’ to ‘F,’ and what would it take for that relationship to be an ‘A’?’ I want all of our staffing relationships to be ‘A’ relationships. If the problem is us, we fix it. If it’s the vendor, they fix it or we move on.

Hogue: Organizations can’t just say, ‘I’m outsourcing staffing. I trust my partner.’ That’s where a lot goes sideways. Trust but verify. It needs to be a regular two-way conversation, not, ‘We only talk if there’s a problem.’ Leaders need to audit the services their organization receives to ensure their partner is actually doing what it has been scoped to do.

Continuity is so important when it comes to revenue cycle staffing and vendor relationships. If someone on the vendor’s team has moved on, I would rather the vendor tell me. What I don’t want is no communication, then four weeks later I’m saying, “Something’s changed.” That person may have been the glue. If the health system has to surface the problem, that’s not client management.

Matt Leshy: Partnerships can create real leverage, but they can also create new complexity if incentives are not aligned. When a partner’s operating model rewards short-term profitability over long-term outcomes, the hospital often absorbs the downstream cost: inconsistent service, governance friction, diminished institutional knowledge and slower improvement. 

We believe the most successful partnerships share one core trait: aligned incentives that reinforce transparency and sustained performance. 

Jones: When it comes to the impact of AI on revenue cycle staffing, I don’t worry about losing in-house revenue cycle staff to AI. In fact, I think AI-driven layoffs are going to affect offshoring companies more. I might lose a couple of staff members to retirement and not replace them because AI can absorb that work. But I’ve been to Mumbai. At 7 p.m., you see thousands of people pouring into buildings to do repetitive, high-volume, sometimes low-balance work. That’s the AI target.

Conley: I don’t think AI is going to replace a ton of jobs, at least not where I sit. What it’s going to do is lead to the replacement of people who don’t know how to use it. You have to know what you’re doing with AI so that it can speed things up; improve efficiency.

What steps are you taking to unlock more revenue, including as new payment models are introduced?

Kevin Boren: We’ve found that ambient listening can improve documentation quality. I think that’s a frontier for all providers to explore. I also think with AI, you can get more efficiency from your clinical workforce, which is critical in rural areas in particular.

We’re also concentrating on optimization of coding processes — including with AI — as a way to protect and grow revenue. That’s always needed in healthcare revenue cycle. When it comes to HCC [hierarchical condition category] coding, the more value-based contracts you have, the more important accurate HCC coding is going to be.

Conley: Adoption of value-based care contracts is accelerating across the industry. This puts pressure on organizations to improve clinical documentation so you can hit the metrics in value-based contracts and get the increased levels of payment. It’s also important to engage physicians and clinicians early regarding why the quality of clinical documentation matters and what they can do to strengthen documentation.

I do think ambient listening will help us with value-based payment model performance. It’s also an innovation that will likely improve patient satisfaction. If a provider is looking at you and not at the computer because ambient documentation is running in the background, that will naturally help patients feel more cared for in the moment. So far, that’s the feedback we’ve gotten since implementing this tool.

Jones: I’ve seen amazing AI tools, like emergency department technology that can evaluate, in less than a minute, whether a patient has suffered a stroke. If you can diagnose quickly, you can start treatment quickly. It’s great for the patient, and it can potentially reduce length of stay, which ultimately increases throughput and revenue. AI can bring margin gains outside of its use in revenue cycle.

Conley: From a revenue protection standpoint, having the in-house expertise to make sure you’re getting paid what you’re supposed to under your payer contracts — looking for actual contract variances — or outsourcing this work is vital. It strengthens the ability to access that information in a timely manner, because all payer contracts have time limits for appeals. This isn’t a new area of focus, but it’s becoming more prevalent as payers implement AI to deny claims, initiate takebacks or downcode.

Have you entered into any partnership models for improving revenue cycle performance, such as joint ventures? If so: Have they delivered on expectations?

Jackson: We’ve entered into joint ventures for clinical or operational services, but not for healthcare revenue cycle services. In the revenue cycle, we did partner with a vendor who helped manage our revenue cycle vendor relationships. The goal was to leverage their proprietary database to help us get better rates, negotiate contracts and eliminate redundant invoices. From an efficiency standpoint, we discovered over time that this approach wasn’t going to work for us long term. Initially, they give you all the savings. But over time, we found that we were paying them the money we were supposed to be saving.

Hogue: Too often, vendors are willing to offer significant discounts during the initial implementation phase. However, when the contract is up for renewal, they attempt to increase rates substantially, even though your organization played a key role in helping develop and refine the service. If a vendor leverages a successful pilot with your organization to acquire additional clients, that contribution should be recognized. Contract structures should include tiers that reward early adopters and innovation partners, along with reasonable caps on renewal increases.

Boren: We’re doing some small JVs [joint ventures] in for-profit businesses. I think it’s hard for smaller organizations to put in place the governing infrastructure to manage these relationships. But JVs are an important component of the work we do because we’re not good at everything. You’re generating value you wouldn’t otherwise have through these partnerships, which makes these types of engagements worthwhile. We think we’ll do more JVs in the future, but we have to structure them in the right way.

As a health system, you have to be ready to partner where it makes sense. Sometimes, that might look like having a for-profit subsidiary set up for partnerships.

I’ve found that when you look at your financials with a complete open-book perspective, which is kind of inherent when you’re in a JV, it’s an effective way of aligning incentives and outcomes. And there are no surprises because you’re watching and managing the business as it’s happening.

Leshy: Healthcare revenue cycle teams are best served by partners that deeply understand the hospital’s unique constraints and priorities, tailor solutions rather than forcing one-size-fits-all delivery and share risks and rewards so that success is tied to outcomes, not effort alone. In our experience, a key strategy for optimal performance is to select a partner that provides a comprehensive, integrated portfolio of services.This reduces the administrative burden of coordinating multiple vendors. It also enables clear accountability across the value chain. 

Conclusion

For revenue cycle leaders, the message is clear: Sustainability will require a disciplined balance between reducing cost to collect and protecting the revenue organizations have already earned. That means evaluating AI and automation by measurable impact on operational efficiency and margin protection. It also means strengthening the fundamentals, from managing payer contract performance to ensuring the organization has a clear view into where revenue is being lost or left uncollected.

Just as important, leaders must bring greater governance to external partnerships and a willingness to adjust course when relationships no longer deliver expected value. In an environment where payer behavior, labor constraints and technology are changing quickly, revenue cycle success will depend on leaders who can connect innovation with accountability. Ultimately, revenue cycle sustainability will belong to organizations that look beyond cost-cutting and build the capabilities to protect, recover and grow revenue over time.

Panelists

KEVIN BOREN,
FHFMA, MS, MBA, is East Region CFO for Essentia Health Duluth in Duluth, Minn.

ADAM CONLEY,
CHFP, CRCR, CPA, is CFO for Southwest Health System in Cortez, Colo.

JEFFREY P. COSTELLO
is CFO for Beacon Health System, Inc., in South Bend, Ind.

KENNETH HOGUE
is chief revenue cycle officer for United Health Services in Binghamton, N.Y.

DESMOND JACKSON,
DBA, MBA , PMP, is vice president, revenue cycle for Monument Health in Rapid City, S.D.

DENNIS JONES,
MSOL, is associate vice president, revenue cycle, single billing office, for Jefferson Health in Philadelphia.

MATT LESHY
is provider practice leader for Signature Performance. Leshy served as a moderator for this discussion.

About Signature Performance

Signature Performance is a boutique healthcare advisory and managed services firm focused on improving revenue cycle performance for providers and public sector organizations. We help healthcare leaders accelerate cash, strengthen revenue integrity, and reduce administrative burden by integrating advisory, technology optimization, and operational execution into a unified delivery model. In an environment defined by workforce shortages, regulatory complexity, and increasing financial pressure, we deliver practical, scalable solutions that drive measurable outcomes. As a boutique firm, we provide a high-touch, partnership-driven experience backed by deep industry expertise that is focused on delivering measurable results that are sustainable, not just immediate. Visit www.signatureperformance.com.

_{This published piece is provided solely for informational purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions by participants are those of the participants and not those of HFMA. References to commercial manufacturers, vendors, products, or services that may appear do not constitute endorsements by HFMA.}

Footnotes

a. Williams, J., “Battle of the Bots intensifies over denials,” hfm, February/March 2026.