This is shaping up to be another challenging year for healthcare system finances. It is not exactly beach reading. But neither is missing payroll.
The 2026 Costs of Caring Report from the American Hospital Association (AHA) spells it out:
- Hospital expenses rose by 7.5% in 2025.
- About 56% of hospital costs are tied to service lines where reimbursement falls short of (or is less than) the cost of delivering care, including behavioral health, obstetrics, infectious disease, and burns and wounds.
- Hospital costs to care for patients grew twice as fast as hospital prices. In 2025, total hospital expenses grew 7.5%, more than twice the rate of growth in hospital prices. Hospital expenses for supplies increased 9.9% and drugs increased 13.6%.
- In 2025, workforce costs rose 5.6% from the previous year.
And health systems are just beginning to feel the effects of the new Medicaid cuts, which are predicted to have a devastating effect on finances, even threatening the futures of more than 440 hospitals.
Here is the part that gets overlooked when finance leaders go hunting for savings. The single cheapest source of money a hospital has is not a new service line or a round of cuts. It is the revenue it has already earned and simply has not collected yet. One of the few levers hospitals can actually pull right now is improving their RCM to collect more of what they are already owed while spending less to do it.
Poor RCM Costs Hospitals Twice
It is said that it takes money to make money, but the Cost of Caring report makes it clear just how much hospitals have to spend simply to get insurers to pay them what they are owed:
- In 2025, hospitals spent nearly $18B on overturning claims denials.
- In 2025 they spent $43B trying to collect payments from insurers for care already delivered.
- In 2024 the average hospital employed 64 staff for billing and administration (6.5% of total employment).
Hospitals are, in effect, penalized twice: once for uncompensated care, and a second time for the money and effort spent proving they should be paid for the care they already gave. It is the financial equivalent of paying for the privilege of asking to be paid. Organizations cannot afford to let denied claims go unchallenged, but appealing those denials by hand just adds to the burden.
From Scorekeeper to Strategist
For most of its history, the revenue cycle has been treated as a back office function that tallies what already happened. That is the mistake. The revenue cycle is the richest, most current source of intelligence a health system has about how it actually gets paid, which payers behave how, which denials recur, and where the leaks are before they become floods.
Used that way, AI stops being a faster calculator and becomes a strategic instrument. It reads patterns across thousands of claims, flags the denial that is about to repeat, and tells leadership not just what happened but what is likely to happen next. The title on the door may not have changed, but the job quietly did. The revenue cycle is evolving from scorekeeper to strategist, and the teams doing the work are far better at it, and far less burned out, once AI takes over keeping score.
This is the reframe that matters for finance leaders: you are not buying automation to shave costs. You are building a source of strategic intelligence that happens to also collect your money faster.
Playing the Long Game
The house usually wins because the house never stops keeping score. Health plans understood this early and built accordingly. Hospitals can play the same long game, and they have every reason to, because the intelligence sitting inside their own revenue cycle is theirs to use.
But it takes a foundation. It is hard to plan the voyage when you are bailing water, and it is hard to think strategically about revenue when the data underneath it cannot be trusted. This is not a slow cooker you set and walk away from. It is a discipline, which is most of the work worth doing. The systems that treat their revenue cycle as strategy rather than paperwork will be the ones still standing, and still helping patients, even as the pressure mounts.
About Brian Robertson
Brian Robertson is Founder and CEO of VisiQuate, a provider of AI-driven revenue cycle intelligence and action for healthcare. With over 34 years in healthcare, management consulting, and technology development, Brian’s journey began with co-founding MedeAnalytics, where he served as COO, CTO, and Chief Innovation Officer, developing foundational healthcare revenue cycle analytics.
