Cost containment
- According to MGMA, 41% of medical practices cite margin and cost containment as their top priority amid rising labor costs, supply inflation, and stagnant reimbursement.
- AHA data shows hospitals were reimbursed just 83 cents on the dollar for Medicare patients in 2023, contributing to $130 billion in underpayments from Medicare and Medicaid combined.
- Key RCM levers for margin protection include faster A/R follow-up to reduce A/R days and bad debt, clean claims and denial prevention to accelerate cash, and engaging an external RCM team to lower the cost to collect.
- Smarter RCM goes beyond collections to capture hidden losses through technology without capital spend, denial prevention, payer negotiation support, and scalable staffing models that minimize idle labor.
- A scalable RCM partner brings specialty-trained billing talent from day one and replaces variable in-house staff expenses with predictable fees, while delivering measurable improvements in collections and payer yield.
According to the Medical Group Management Association (MGMA), 41% of medical practices cite margin and cost containment as their top priority. Rising labor costs, supply inflation, and stagnant reimbursement — particularly in Medicaid, where payments lag behind Medicare rates according to the Medicaid and CHIP Payment and Access Commission — have left physician groups squeezed from all sides.
Whether independent or hospital-owned, practices face shrinking margins and mounting pressure to deliver more with less. Yet amid these constraints, one of the most underutilized levers remains within reach: the revenue cycle. When optimized, revenue cycle management (RCM) contains costs, accelerates cash flow, and protects margins.
The margin challenge in today’s market
Independent practices often operate lean by necessity, leaving little room for inefficiencies. Hospital-owned groups, on the other hand, face higher overhead and the burden of navigating system-wide complexities. In both settings, even minor breakdowns in billing or workflow can cascade into costly errors downstream.
Current reimbursement models trail far behind skyrocketing expenses. Kaiser Family Foundation (KFF) data shows physician payments under Medicare’s fee schedule have stagnated despite inflation. According to the American Hospital Association (AHA), hospitals were reimbursed just 83 cents on the dollar for Medicare patients in 2023, contributing to $130 billion in underpayments from Medicare and Medicaid combined.
RCM’s role in margin protection
A strong revenue cycle strategy can stabilize cash flow and reduce unnecessary costs. Key levers include:
- Accounts receivable (A/R) management: Faster follow-up reduces A/R days and lowers the risk of bad debt write-offs.
- Cash acceleration: Clean claims, denial prevention, and timely resubmissions keep revenue flowing, reducing delays.
- Cost to collect: Engaging an external global RCM team lowers overhead compared to the higher fixed costs of in-house staff.
Broader cost wins through smarter RCM
Many providers overlook revenue opportunities by focusing only on common variance reports. The most effective modern RCM goes beyond collections, capturing hidden losses and unlocking savings, such as:
- Tech without capital spend: Accessing automation and analytics without upfront investment.
- Denial prevention: Reducing rework and the labor costs of fixing avoidable errors.
- Payer negotiation support: Improved RCM data identifies underpayments and informs smarter contract decisions.
- Scalable staffing models: Flexible support teams adjust to demand, minimizing idle labor and over-hiring.
Why a global RCM partner makes sense
Partnering with a scalable RCM team brings specialty-trained billing talent from day one, reducing onboarding demands and errors. With predictable fees, RCM partners stabilize costs by replacing in-house staff expenses — like overtime, turnover, and recruitment — with a consistent solution aligned to claim volumes. Knack RCM also delivers measurable improvements in collections and payer yield, making it easier to preserve margins while scaling sustainably.
Final takeaway
Though margin pressure isn’t easing anytime soon, your revenue cycle can serve as a powerful line of defense. In today’s environment, marked by rising costs and stagnant reimbursement, a high-performing RCM strategy is one of the most effective ways to protect your practice’s long-term financial health. By focusing on cash acceleration, denial prevention, efficient A/R management, and scalable support, RCM can help build lasting financial resilience.
Talk with Knack RCM about protecting your margins through smarter RCM.
Sources
- MGMA. 5 big challenges for medical practices.
- Medicaid and CHIP Payment and Access Commission. Evaluating the effects of Medicaid payment changes on access to physician services. 2025.
- Kaiser Family Foundation. What to know about how Medicare pays physicians.
- American Hospital Association. Costs of caring.
Frequently asked questions
How many practices say margin and cost containment is their top priority?
According to MGMA, 41% of medical practices cite margin and cost containment as their top priority, driven by rising labor costs, supply inflation, and stagnant reimbursement.
How underpaid are hospitals for Medicare patients?
According to the American Hospital Association, hospitals were reimbursed just 83 cents on the dollar for Medicare patients in 2023, contributing to $130 billion in underpayments from Medicare and Medicaid combined.
Which RCM levers most directly protect margins?
Faster A/R follow-up reduces A/R days and bad debt write-offs, clean claims and denial prevention accelerate cash flow, and engaging an external global RCM team lowers the cost to collect compared with the fixed costs of in-house staff.
How does smarter RCM capture savings beyond collections?
Beyond collections, effective RCM accesses automation and analytics without capital spend, prevents denials to cut rework, uses improved data for payer negotiation support, and applies scalable staffing models that minimize idle labor and over-hiring.
Why does a scalable RCM partner help with cost containment?
A scalable partner brings specialty-trained billing talent from day one and replaces variable in-house expenses like overtime, turnover, and recruitment with predictable fees aligned to claim volumes, while delivering measurable improvements in collections and payer yield.