State of the healthcare revenue cycle
Five data-driven themes that will impact revenue cycle performance in 2026 and beyond.
March 31, 2026
Introduction
Welcome to Kodiak’s first-ever “State of the healthcare revenue cycle” report. Shakespeare said, “What’s past is prologue.” If the Bard was correct, that means the healthcare industry’s revenue cycle performance in 2025 set the stage for the industry’s revenue cycle performance this year and beyond.
This “State of the healthcare revenue cycle” report is based on aggregated and normalized revenue cycle data from the 2,300 hospitals and 350,000 physicians that use the Kodiak Platform and Kodiak Revenue Cycle Analytics to manage their net revenue and monitor their revenue cycle performance. Kodiak’s revenue cycle team used that data to calculate more than a dozen revenue cycle key performance indicators that quantified providers’ revenue cycle performance in 2025. The team compared those KPIs with those from 2024 to determine what direction they’re headed as hospitals, health systems, and physicians move into 2026.
Five themes emerged from that analysis:
- Cash flow improved
- Yield maximization dropped
- Claim denials were highly variable
- Top performers separated from the pack
- Patient financial responsibility rose
Five sections in this report support each of those themes with data from Kodiak Platform and RCA users. This report concludes with an “Operators playbook,” based on lessons learned from top performers, for other provider organizations that want to improve their revenue cycle performance in 2026 and beyond. To learn more about this report, the Kodiak Platform, Kodiak RCA, and Kodiak’s suite of Revenue Cycle Intelligence tools, please contact our healthcare revenue cycle team.
Section 1: Cash flow improved
The analysis of revenue cycle data from Kodiak Platform users revealed that payors paid provider claims faster in 2025 than in 2024, and, as a result, providers’ accounts receivable improved. The following four revenue cycle performance metrics support that trend.
Last year witnessed measurable efficiency gains on the balance sheet side. Providers moved more accounts, and payors paid faster. That compressed A/R risk, especially on clean claims.
Section 2: Yield maximization dropped
Some bad news tempered the good news on cash flow, according to the results of the analysis. Better cash flow did not convert into yield maximization, or net revenue improvement, in 2025. In fact, revenue leakage, or revenue that providers could have collected, increased dramatically. The following seven revenue cycle performance metrics illustrate the situation.
Section 3: Claim denials were highly variable
The question is, how can all the small increases in claim denial rates lead to such a big increase in net revenue leakage? The answer is twofold: who’s doing the denying and for what care, according to the Kodiak revenue cycle team’s analysis of Kodiak Platform and RCA data for this report.
In other words, not all claim denials are the same in terms of dollar value. Commercial payors typically pay higher reimbursement rates than other types of payors, and claims for inpatient care typically are higher than claims for outpatient care. When a commercial payor denies a claim for inpatient care, the potential hit to net revenue is magnitudes higher than a denied outpatient claim by any payor.
Below are the initial and final denial rates for inpatient and outpatient care by five payor categories in 2025:
Across all payor categories, the RFI initial denial rate for inpatient care rose more than 10%, the clinical initial denial rate for inpatient care rose more than 12%, and the final denial rate for inpatient care rose more than 14%.
Because denied inpatient and outpatient claims by commercial payors are more valuable in terms of net revenue, they’re the leading source of net revenue leakage. Further, net revenue leakage from these two sources rose in 2025. Again, net revenue leakage is the percentage of net revenue lost to payor denials and uncollected payments from patients.
The analysis for this report also revealed high variability in important revenue cycle performance metrics between Medicare, or traditional Medicare, and managed Medicare, or Medicare Advantage. The chart below compares the mean 2025 performance between the two payor categories on initial denials, A/R greater than 90 days, and final denials. Last year, Medicare Advantage health plans denied more claims and paid more slowly than traditional Medicare.
Hospitals, health systems, and medical practices provide the same level of care for the same diagnoses to the same patients regardless of their insurance status, their type of insurance, or their ability to pay. The fact that this analysis uncovered wide variations in revenue cycle KPIs by payor categories suggests that payors’ claims-paying behaviors and practices are highly variable. That unexplained variation puts billions of dollars in provider net revenue at unnecessary risk, especially when considering that revenue leakage is concentrated in higher-value settings and health plans.
Section 4: Top performers separated from the pack
As the previous section of this report demonstrated, payors’ claims-paying behaviors and practices were highly variable in 2025. That financial malady won’t clear up overnight in 2026. However, some providers were able to cope with it better than others, setting themselves up for continued success this year.
The Kodiak revenue cycle team’s analysis for this report uncovered significant differences in performance between the median for all Kodiak Platform and RCA users and the top quartile of all users on six critical revenue cycle KPIs. In fact, the gap between top performers and everyone else grew in some cases.
The analysis suggests that top healthcare revenue cycle performers excelled at all three stages of the revenue cycle continuum. They combined faster clean-claim throughput with denials containment and front-end patient-pay discipline. In doing so, they minimized their net revenue leakage more effectively than Kodiak Platform and RCA users as a whole.
Section 5: Patient financial responsibility rose
The revenue cycle management skills of Kodiak Platform and RCA users, whether they’re median or top-quartile performers, will be put to the test by patient responsibility in 2026 if the past two years are any indication. Patient responsibility is the share of net revenue for which an insured patient is contractually obligated to pay.
The analysis conducted by Kodiak’s revenue cycle team for this report revealed two diverging trends: Patient responsibility is rising, but patients are paying less of what they owe. The chart below displays the two trends:
Insured patients were responsible for 7.3% of their healthcare bills last year, up from 6.8% in 2024. But insured patients only paid 42.4% of what they owed in 2025, down from 45.1% the previous year. It’s a double hit on providers’ net revenue leakage.
One way providers are minimizing the negative impact on net revenue leakage is by asking patients to pay more up front before providers render medical services. Overall, Kodiak Platform and RCA users got better at that last year, but they have a long way to go to meet the POS cash collection rate of the top 25% of users on this revenue cycle performance metric.
Even with better POS cash collections, the gap between what patients owe and what providers collect is growing. That, in turn, fuels bad debt and tightens operating margins.
Operators playbook: What worked in 2025
The Kodiak revenue cycle team’s analysis for this first-ever “State of the healthcare revenue cycle” report uncovered five trends that collectively defined providers’ revenue cycle performance in 2025. Only one of those trends—improved cash flow—was positive. The balance—less yield maximization, highly variable payor behaviors, gaps in provider performance, and rising patient responsibility—was worrisome and will likely challenge providers this year.
The question is what can providers do about it? The answer lies in what top performers are doing. What are top performers doing that most other hospitals, health systems, and medical practices aren’t?
In working with many of these top performers, the Kodiak revenue cycle team has observed numerous common characteristics and approaches. The following checklist captures the best practices of the best and serves as an operators playbook for other provider organizations seeking to transform their revenue cycle performance.
Practice tight accounts receivable discipline.
- Sustain focus on days not final billed.
- Sustain focus on time to insurance payment.
- Sustain focus on one-month lagged cash to net revenue.
Direct denials containment where it matters most.
