Understanding and Preventing Revenue Leakage in Healthcare

Doctor stressed about revenue leakage issues at her medical practice.

What Is Revenue Leakage in Healthcare? 

Revenue leakage refers to the loss of potential revenue because of problems within a practice’s revenue generation processes. It can show up in different ways in a practice and may not be noticed until it’s too late. It starts off as a slow bleed and eventually highly impacts a practices financial stability.  


What Is the Impact? 

Providers from any background and specialty come across the effects of revenue leakage at some point in their professional career. Less money coming in means costs may need to be cut in areas across the practice and puts the practice at a competitive disadvantage. Some critical areas that may feel impacted include staffing, patient care, practice growth, and overall goals.  

What Are the Causes?

Coding and Billing Issues

The recording of patient encounters and subsequent diagnoses, treatments, and procedures must be accurate to avoid revenue loss. Incorrect documentation can result in services not being billed or being billed at a lower rate than they should have.  

Not assigning the correct CPT and ICD-10 codes can cause issues such as undercoding, which in the case of revenue leakage in a healthcare setting, can have lasting effects on revenue and a patients treatment plan in the future. 

Coverage Issues

Failure to verify patient insurance eligibility or obtain pre-authorization can result in revenue leakage that could have easily been prevented.  

Furthermore, contractual disputes between medical practices and insurance payers can exacerbate coverage issues. These disputes often arise when there is disagreement regarding the terms of the contractual agreement between the two parties. Disagreements may arise from fee schedules, reimbursement rates, coverage limits, or how contract language is interpreted.  

Underpayments from insurance companies can equally reck havoc on a practice’s financial status. These types of coverage issues can occur when information was not input correctly either on the practice or insurance companies’ side when going through their coding and billing processes.

Compliance Issues

All types of challenges can result from not adhering to healthcare regulations, billing requirements, or payer policies. 

Legal and regulatory consequences can be very serious depending on the violation’s nature and severity. A practice may face fines, penalties, sanctions, or legal action from healthcare regulatory organizations or government agencies. This may also then lead to a loss of accreditation or credentialing, which can then limit who a practice can work with and what a practice can participate in.  

Public compliance issues can tarnish the reputation of a medical practice. Patients, staff, and the community may lose trust in the practice, which could result in less business and lower income. Rebuilding a medical practice’s reputation can be extremely challenging no matter the compliance issue.  

Bad Debt Issues

Bad debt in medical billing is when unpaid balances for healthcare services are not expected to be collected or recovered. This happens when patients are unable to or are unwilling to pay their medical bills 

Practices often need to collect payment from patients that are causing them bad debt. This process can require reaching out to patient’s multiple times and in some cases, legal action may be necessary. These actions can put a strain on the relationship between the patient and the healthcare provider. 

Staff Issues

Front office staff start the revenue cycle by taking in patient appointments, demographics, and insurance information. Incorrect information at the beginning can impact the revenue cycle later on and cause issues for any additional billing staff who have to handle it.  

Although the billing software may be top notch, if your billing staff is inexperienced with medical billing in any way, it could be detrimental to how effective your process really is. It may also not be obvious to the naked eye how much revenue is falling through the cracks, even by experienced billing staff, without closely analyzing the processes in place.  

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Proactive Safeguards for Revenue Leakage 

Accuracy in the Details

Being accurate in all revenue cycle areas helps maximize revenue and prevent any loss of revenue. This involves ensuring that all patient information, from patient registration to claims processing and payment collection, is handled with precision and care. The attention to detail throughout the whole patient lifecycle could make or break the financial stability of a practice. 

Verify Insurance as Soon as Possible

When a practice neglects to confirm patient information, it risks encountering claim denials or delays in reimbursement. Insurance issues may still arise later, but by taking action now, you can reduce potential obstacles. Take control while you can to minimize future challenges.  

Pay Attention to Key Medical Billing Metrics

Monitoring days spent in accounts receivable helps practices gauge the efficiency of their cash flow management. By improving or keeping an eye on the turnaround time, cash flow predictability can be improved and ensures there are sufficient funds for related costs.  

Your claims denial rate could point you in the direction of what part of your medical billing process is having problems. For example, you may find a trend that frequent denials are coming from specific payers or certain types of services, which may highlight a need for improvement.  

Working with a user friendly financial dashboard within your practice management software makes keeping track of these important metrics simple.

Make Payments Easy

Easy payment solutions ensure that patients don’t have to deal with a complicated situation that could cost a timely payment. This improves the patient experience overall and encourages prompt payment collection without the need for being pushy.  

Protect Your Practice from Revenue Leakage When You Partner With Benchmark Solutions


Revenue cycle management is something that takes skill and patience to grasp, which can understandably cause difficulty for many. When you work with the expert RCM team at Benchmark Solutions, you no longer need to worry about revenue leakage being a major problem. Contact us to learn more about our commitment to preventing revenue leakage and how we can help your practice optimize its earnings!


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