Denial Rates Up? The Revenue Cycle Ripple Effect of Healthcare M&A
M&A and the Denial Surge: The Overlooked Link Squeezing U.S. Hospital Margins
In 2025, U.S. healthcare sits at an inflection point. M&A is accelerating as providers scale to compete—while claim denials soar, draining billions and straining revenue cycle teams. These trends are intertwined: without revenue cycle alignment, consolidation can amplify denial risk.
The Denial Surge
- ~1 in 5 medical claims denied on first submission
- 19% of in-network and 37% of out-of-network claims rejected
- 57% of RCM leaders report denial rates >10% (nearly 2× pre-pandemic)
- Medicare Advantage denials up 56%; commercial plan denials up 20% in two years
- $19.7B spent annually appealing denials; 22% of providers lose $500K+ in unrecouped denials
Why Integration Is a Double-Edged Sword
The industry has averaged 250+ hospital mergers annually in recent years, and 65% of providers expect more. Consolidation promises efficiency—but without RCM alignment, mergers can spike denials.
| M&A Driver | Revenue Cycle Impact | Example |
|---|---|---|
| IT system integration | Claim errors, payment delays | 1 in 5 first-pass denials |
| Contract misalignment | In-network denials, cash disruption | 19% of in-network claims denied |
| Centralized billing/outsourcing | Temporary denial spikes | 57% report denials >10% |
| Staff learning curve | Coding/doc errors | $19.7B appeals burden |
| Loss of visibility | Missed denial patterns | Denials up 20% YoY |
Why Denials Rise Post-M&A
- Stricter payer policies & AI audits: Algorithmic scrutiny magnifies documentation gaps and overutilization—especially during system conversions.
- Fragmented workflows: Multiple EHRs, billing platforms, and contracts slow authorizations and increase submission errors.
- Staff disruption: Turnover and new tools/processes raise coding and documentation mistakes.
- Delayed contract reconciliation: Misaligned fee schedules and terms persist for months, driving preventable denials.
The Compounding Fallout
- Cash-flow strain and liquidity risk
- Write-offs and bad debt escalation
- Patient dissatisfaction from unclear bills and delays
- Regulatory exposure from inconsistent billing practices
What Leading Systems Are Doing Now
- Pre-merger RCM assessment: Audit infrastructure, payer contracts, edits, and coding practices; map gaps and harmonize early.
- Unified denial management: One dashboard for tracking, appeals, and payer communications; real-time analytics for a 360° view.
- AI-powered pre-checks: Predictive flags for at-risk claims; automated eligibility, auth, and documentation verification.
- Workforce resilience: Upskill and onboard to integrated platforms; routine documentation audits and refresher training.
Case in Point: MGA’s Role
Modality Global Advisors helps health systems reduce preventable denials by up to 30%, integrate RCM post-M&A for full visibility, strengthen payer negotiations with clean data, and train frontline teams to recognize and neutralize denial patterns in real time.
M&A won’t slow—and neither will denials. Align your revenue cycle with your growth plan before the first claim is denied under your new structure.
Ready to hard-wire denial prevention into M&A? Talk to MGA at hello@modalityglobal.com.
