Providers managed to secure claims payments from insurers more quickly in 2025, but ultimately missed out on substantially more revenue due to a rise in clinical denial activity that was already elevated in 2024, according to a full-year look at more than 2,300 hospitals’ and 350,000 physicians’ revenue cycle data.
Among these providers, the average time to insurance payment declined from 57.4 days in 2024 to 55.2 days in 2025, and was accompanied by a 2.3-day improvement in median accounts receivable days. Other metrics of payment speed also improved from year to year among providers on Kodiak Solutions’ platform, whose data were included in the recently published benchmarking analysis.
However, “better cash flow did not convert into yield maximization, or net revenue improvement, in 2025,” the revenue cycle vendor wrote in its report. “In fact, revenue leakage, or revenue that providers could have collected, increased dramatically” by about 25%, with the analyzed hospitals together missing $48.4 billion in 2025.
Fueling the increase was a rise in denial rates and particularly an uptick in clinical denial rates, which are tied to prior authorizations or medical necessity determinations.
Median final denial rates rose from 2.5% in 2024 to 2.7% in 2025, and was comprised by increased rates of average initial denials. Average clinical initial denial rate rose from 2.4% to 2.6%, while providers’ average success in overturning those dipped from 42.7% to 42.1%.
Among commercial net revenue leakage, the increase in leakage was present across both inpatient and outpatient care. Kodiak noted that the inpatient claims are of greater consequence to hospitals and were under broad siege—for inpatient claims across all payer types, requests for information initial denial rates rose over 10%, clinical initial denial rates rose over 12% and final denial rates increased over 14%.
"As we head into early 2026, we’re seeing a clear divergence in healthcare revenue cycle performance," Matt Szaflarski, vice president of revenue cycle intelligence for Kodiak Solutions, said in an email. "Payors are paying cleaner, simpler claims faster, but the harder work is getting harder—with clinical initial denials continuing to rise and providers increasingly being asked to ‘prove’ medical necessity, which is driving higher final denials."
Beyond payer activity, Kodiak’s report also shines a light on the covered patients’ share of a care payment.
Insured patients in 2025 were responsible for 7.3% of their bills, up from 2024’s 6.8%. However, they also paid less of what they owed, with insured patient yield dropping from 45.1% in 2024 to 42.4% in 2025. Providers’ median bad debt rate also rose, from 1.1% to 1.3%.
Szaflarski noted that the trends land amid the payer-mix curveballs of Medicaid disenrollment and other components of the One Big Beautiful Bill Act, which are expected to increase self-pay.
What's separating the top-performing providers in the company's dataset "is consistency: highly disciplined operations, the ability to pivot quickly, and effective use of technology and workforce models to diversify [accounts receivable] ownership—all of which allow leaders to protect yield and collect as close to 100% of booked net revenue as possible, even as market conditions shift,” he said.
The trends outlined in the report have been front of mind for hospitals in recent years as insurers work to stem elevated member utilization and stagnant government rates in Medicare Advantage (where Kodiak noted denial activity was steepest).
Executives, in earnings calls and statements accompanying quarterly performance reports, have almost ubiquitously pointed to increased denial activity as a meaningful revenue headwind. Hospitals are estimated to spend tens of billions of dollars per year trying to overturn denials, and a recent poll of revenue cycle management leaders highlighted payer behaviors supplanted internal hurdles like staffing as the top-cited threat to revenue growth.