“Every system is perfectly designed to get the results it
gets.” — Dr. Donald Berwick, healthcare quality expert and former
CMS Administrator
(Source: Institute for Healthcare Improvement – systems improvement teachings)
INTRODUCTION: A STORY FROM THE FRONT LINES
A physician recently said:
“My clinic is full. My patients are happy. But my bank
account doesn’t reflect it.”
This disconnect is becoming common.
Across the United States, clinics are seeing 10–20%
first-pass claim denial rates. Not because care is wrong—but because the
system is rigid.
The problem is no longer just billing. It is revenue
friction at every step of care delivery.
WHY THIS IS HAPPENING NOW
Three major shifts are driving denial increases:
- Stricter
prior authorization rules
- Automated
payer edits using AI systems
- More
granular coding enforcement
Each creates silent failure points long before submission.
EXPERT OPINION ROUND-UP
Dr. Sarah Klein – Healthcare Operations Consultant
“Denials are created before submission. Prevention must move upstream.”
Dr. Michael Tran – Former Hospital CFO
“If denial rates exceed 10%, the issue is structural, not operational.”
Dr. Anita Rao – Clinical Informatics Lead
“The future of billing is real-time validation inside the clinical workflow.”
KEY STATISTICS
- 10–20%
first-pass denial rate in outpatient settings
- 60%
of denials are preventable
- 30%
of billing staff time spent on rework
- 15–45
days delay from prior authorization cycles
- Up to
$25–$118 per claim rework cost
DEEPER INSIGHTS
Denials follow predictable patterns:
- Eligibility
issues
- Missing
documentation
- Authorization
failures
The shift is clear:
From reactive correction → preventive design
PITFALLS
Most clinics fail because they:
- Treat
denial management as reactive
- Over-rely
on manual billing teams
- Lack
feedback loops into clinicians
- Ignore
payer-specific rule variation
MYTH BUSTER
Myth: Outsourcing billing solves denials
Reality: It often relocates the problem
Myth: Denials are random
Reality: Most are predictable
Myth: Small clinics are less affected
Reality: They are more vulnerable
STEP-BY-STEP FRAMEWORK
- Categorize
denials
- Map
payer rules
- Identify
high-risk CPT codes
- Add
front-end validation
- Automate
eligibility checks
- Review
weekly denial patterns
- Feed
insights back into documentation
CASE STUDY
A 12-provider clinic reduced denial rates from 18% to 8%
by:
- Adding
eligibility checks before visits
- Automating
prior authorization tracking
- Embedding
documentation prompts
- Reviewing
denial patterns weekly
Key insight:
They did not add staff. They redesigned workflow.
DENIAL LIFECYCLE
- Scheduling
- Eligibility
- Documentation
- Claim
creation
- Submission
- Adjudication
- Rework
Most clinics only optimize step 7.
High-performing systems optimize steps 1–4.
ONNX PERSPECTIVE
OnnX is built around one principle:
Prevent administrative waste before it enters the billing
cycle.
Focus areas:
- Eliminating
manual intermediaries
- Embedding
intelligence in workflows
- Reducing
reactive denial correction
- Increasing
real-time visibility
TOOLS & METRICS
Key metrics:
- Clean
claim rate
- Denial
rate by payer
- Time-to-resolution
- Net
collection rate
Tools:
- AI
claim validation
- Eligibility
APIs
- Rule-based
scrubbing systems
- Predictive
denial analytics
LEGAL IMPLICATIONS
- Audit
risk from coding errors
- Contract
penalties from repeated denials
- Compliance
exposure from documentation gaps
Billing is now a compliance function, not just
revenue processing.
ETHICAL CONSIDERATIONS
- Administrative
burden reduces clinical time
- Burnout
is directly linked to billing friction
- Patients
experience delays due to system inefficiency
Key question:
Should systems adapt to clinicians—or clinicians adapt to
systems?
RECENT NEWS ALIGNMENT
Key trends:
- AI-driven
payer adjudication systems expanding
- Prior
authorization automation increasing
- Policy
focus on administrative simplification
- EHR–billing
integration accelerating
Healthcare is becoming algorithmically adjudicated.
FUTURE OUTLOOK
Billing will evolve into:
- Real-time
validation systems
- Embedded
clinical documentation intelligence
- Automated
payer negotiation layers
- Invisible
revenue cycle infrastructure
FAQ
What is a healthy denial rate?
Below 10%.
Are most denials preventable?
Yes.
Can AI reduce denials?
Yes, especially upstream prevention.
Do small clinics benefit from automation?
Yes, often more than large systems.
FINAL THOUGHTS
Denials are not errors.
They are system signals.
Every denial prevented is:
- Revenue
protected
- Time
saved
- Burnout
reduced
CALL TO ACTION
What is your clinic’s biggest billing challenge today?
Comment below.
Share this with a physician colleague.
♻️ Repost if this reflects your
reality.
DISCLAIMER
This article is for informational purposes only and does not
constitute medical, legal, or financial advice.
About the Author
Dr. Daniel Cham is a physician and medical consultant with
expertise in medical technology, healthcare management, and medical billing. He
focuses on delivering practical insights that help professionals navigate
complex challenges at the intersection of healthcare operations and innovation.
Connect with Dr. Cham on LinkedIn
to learn more.
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1. Institute for Healthcare Improvement (IHI) – Berwick
Systems Thinking
A foundational source outlining Dr. Donald Berwick’s
systems-thinking approach in healthcare improvement, including his core
philosophy on how system design determines outcomes.
https://www.ihi.org/library/blog/berwick-looks-back-ihi-ideas-and-innovations
2. Primary Quote Source – “Every system is perfectly
designed…”
This page documents the widely cited systems-thinking quote
attributed to Dr. Donald Berwick and its usage in healthcare quality
improvement discussions.
https://www.quoteslyfe.com/quote/Every-system-is-perfectly-designed-to-get-525472
3. Healthcare Systems Thinking Context (CMS / IHI
Profile)
Overview of Dr. Berwick’s leadership at CMS and the
Institute for Healthcare Improvement, highlighting his influence on healthcare
system redesign and quality improvement.
https://www.pbs.org/remakingamericanmedicine/berwick.html
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