Reducing Denials in Independent Physician Practices: Strategies for Financial Stability

For independent practices, every denied claim represents more than just lost revenue. It’s time, resources, and effort that could have been spent elsewhere. Yet, denials are increasing at an alarming rate, with 69% of healthcare leaders reporting an increase since 2021.

This growing problem comes with serious consequences. Hospitals alone face an average yearly loss of $5 million due to denied claims. For independent practices, the financial hit can be just as, if not more, severe, especially considering that 24% of denied claims are never recovered, even though 95% of them are preventable.

To stay financially stable, independent physician practices need a smarter, more proactive approach to denial management.

Why Denial Rates Are Hitting Independent Practices Harder

According to a recent survey, the top three reasons for increased denials are lack of data insights (62%), outdated manual processes (61%), and staff training gaps (46%). While these issues can exist within all healthcare organizations, independent practices are particularly vulnerable.

Without the large billing departments or dedicated RCM teams that hospitals typically rely on, independent practices are left to manage denials with limited resources, outdated systems, and staff who are already stretched thin. Independent practices then lose more valuable time and resources trying to correct claims, each costing an average of $25.20 to rework.

When those costs add up, they eat into already-tight margins. And while large health systems may have the bandwidth to absorb losses, independent practices don’t. Every denied claim represents a potential revenue loss and cash flow disruption that independent practices cannot afford to overlook.

The Imbalance Between Payers and Providers

For years, providers have been navigating an increasingly complex reimbursement system. Payers continue to introduce new policies, adjust coverage requirements, and delay payments, making it harder than ever for independent practices to keep up. Some payers even use denials strategically, slowing reimbursements and adding administrative burdens. 

But it’s not only providers feeling the pressure; payers are struggling with rising medical costs as providers increase service charges to offset revenue losses from denials. This has further exacerbated the tensions between payers and providers, resulting in additional disruptions to the RCM cycle and leaving independent practices caught in the middle.

Instead of working against one another, payers and providers need better alignment, because fewer denials mean fewer disputes, faster reimbursements, and stronger financial stability for both parties. 

So, how can independent physician practices take back control?

Denial Management Strategies for Independent Practices

The financial stability of independent practices depends on a proactive approach to denial management. Those who track, categorize, and analyze denials can identify causes and adjust their workflows accordingly to prevent denials before they occur. Meanwhile, having a clear, structured process for appealing rejected claims can help recover lost revenue. Well-documented claims, proper coding, and timely resubmissions make all the difference in getting second-attempt approvals.

AI-driven solutions make it easier to be proactive. By integrating automation and machine learning into the revenue cycle, practices can automatically flag potential errors before claims are submitted, improve coding accuracy and documentation compliance, and optimize workflows to speed up approvals and payments.

For independent practices that may not have the resources in-house, outsourcing to an RCM partner like Knack RCM can provide access to flexible solutions, backed by RCM experts in their specialty, along with advanced tools. Reducing denials becomes more manageable, more strategic, and more effective.

Want to reduce denials and improve financial stability? Contact Knack RCM today.