Claim denials and uncollected patient bills cost U.S. hospitals and physician practices $48.4 billion in net revenue in 2025, according to Kodiak Solutions. That is a 25.0% jump from roughly $38.7 billion the year before, and clinical denials, not paperwork errors, drove nearly all of the increase.
Kodiak Solutions tracks claims and payment data from more than 2,300 hospitals and 350,000 physicians on its platform, and published the finding in its State of the Healthcare Revenue Cycle report in April 2026. The report breaks the loss into pieces that a billing team, in a hospital system or an independent practice, can check against its own numbers. Independent practices do not appear in Kodiak's totals as a separate line item, but they negotiate with the same payers, under the same prior authorization rules, as the hospitals and physician groups the report tracks.
The rates behind the dollar figure
The median final denial rate, the share of claims a hospital writes off after exhausting appeals, rose from 2.5% in 2024 to 2.7% in 2025, Kodiak found. The average initial denial rate, measured across facilities rather than as a share of every claim filed, moved from 11.4% to 11.6% over the same period. Neither number moved by a wide margin on its own, which is part of why the total built up gradually instead of showing up as a single event tied to one payer or one policy change.
Clinical denials, not paperwork, drove the increase
Kodiak attributed nearly all of the 2025 increase to clinical denials, the category covering medical necessity disputes and missing prior authorizations. The average clinical denial rate rose from 2.4% in 2024 to 2.6% in 2025. Denials tied to requests for more information moved from 3.4% to 3.6% over the same stretch, a smaller but consistent increase.
An earlier Kodiak analysis of full-year 2024 claims, covering 2,100 hospitals and 300,000 physicians and published June 3, 2025, found the same clinical categories moving in different directions inside 2024 itself. Denials tied to authorization issues fell 7.7%, even as medical necessity denials rose 5.0% and requests for more information rose 5.4%. Read together, the two releases describe payers approving more authorization requests up front, then denying more claims after the fact on necessity or documentation grounds.
Where commercial payers leak the most
Kodiak's data separates net revenue leakage by care setting for commercial payers, the category covering employer and marketplace plans rather than Medicare or Medicaid. Outpatient claims leaked more revenue than inpatient claims in both years, and the gap widened in 2025.
| Metric | 2024 | 2025 |
|---|---|---|
| Commercial inpatient revenue leakage | 5.4% | 6.6% |
| Commercial outpatient revenue leakage | 8.9% | 10.3% |
| Median final denial rate | 2.5% | 2.7% |
| Median bad debt rate | 1.1% | 1.3% |
Source: Kodiak Solutions, State of the Healthcare Revenue Cycle report, April 2026.
The median bad debt rate, the share of net revenue reclassified as uncollectible rather than still in collections, rose from 1.1% to 1.3% over the same year. Kodiak's denial appeal overturn rate, the share of appealed denials that end in payment, slipped from 42.7% in 2024 to 42.1% in 2025. A larger volume of denials met a slightly lower success rate on appeal.
That overturn rate is close to a separate figure TechTarget cited from Premier Inc., which found that about half of all initially denied claims are eventually overturned and paid after appeal. The claim does not disappear when a payer denies it the first time. It comes back as hours of rework for a billing team, work that would not exist if the claim had cleared on the first submission.
The same pressure shows up in patient collections
The 2024 Kodiak analysis also measured what hospitals collected from insured patients on their own share of a bill, such as a deductible or copay. That collection rate fell to 34.5% in 2024, down from 37.6% in 2023, a drop of roughly three percentage points in one year. Days in true accounts receivable, the time a claim sits unpaid after later corrections are factored in, grew 5.2% year over year over the same period.
A falling collection rate and a rising AR-days figure describe the same problem from two angles. Money that should arrive within a normal billing cycle is arriving later, or not arriving at all, and both trends moved the wrong direction in the same year that denial rates also climbed.
What a practice can check against these numbers
None of Kodiak's figures come from a single independent practice. They average results from a platform covering more than 2,300 hospitals and 350,000 physicians. A practice comparing its own report against them is looking for direction, not an exact match: whether its initial denial rate sits closer to 11.6% or well below it, and whether its appeal overturn rate holds near 42% or trails behind it. The clinical share of denials, the fastest-growing category in Kodiak's data, is worth tracking separately each quarter.
A billing team that already runs a monthly denial report can add three lines to it without new software: the clinical share of denials, the appeal overturn rate, and the collection rate on patient responsibility after insurance pays. Kodiak's data shows all three moving against providers in 2025, by amounts small enough on a single month's report to miss and large enough, added up nationally, to reach $48.4 billion.
The two Kodiak releases, five months apart, measured different years and slightly different samples, yet they agree on direction. Denial rates rose. The clinical share of those denials rose faster than the administrative share. Collections on what patients owe fell. A practice that pulls these same figures from its own billing system each month has a working answer to whether it is tracking with the national data or diverging from it, before the gap shows up as a missed payroll or a stalled equipment purchase.
Sources
- TechTarget, "Hospitals lost over $48B from claims denials, uncollected bills," April 2026
- TechTarget, "Initial claim denial rates put revenue cycle in tough spot," June 3, 2025
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