By Ronda Ash, MHLW, CPC, CPMA, CHC, CIHFA, Vice President of Coding
As healthcare braces for 2026 regulatory and reimbursement changes, physician practices find themselves at a critical juncture. Reimbursement pressure, staffing costs, and rising operational expenses are forcing medical groups to rethink how they operate and sustain profitability.
The recent MGMA Stat report highlights how practice ownership dynamics are shifting across the industry, but one thing remains consistent: shrinking margins is a challenge for independent, system-owned, or private equity physician groups.
To maintain stability, practices must not only control costs but also strengthen the one lever still within their control – streamlining revenue cycle management (RCM) to efficiently convert care into revenue.
The current landscape: ownership and margin pressure
The MGMA Stat report showed that 85% of medical groups did not change ownership in the past 12 months. Despite overall ownership stability, the ground is shifting. In fact, the share of physicians in private practice has fallen steadily and now hovers near 40%, while system ownership and private equity investment continue to expand. Additionally, hospitals and health systems are no longer just acquiring; they’re also divesting, “right-sizing,” or spinning off outpatient assets that can’t meet their financial targets.
These ownership trends reflect the mounting economic strain across the industry as practices of all sizes grapple with costs that outpace reimbursement, leaving tighter operating margins every year.
Labor remains the dominant expense, often accounting for more than half of total costs, and the battle to recruit and retain qualified staff continues to drive up wages. Many groups report higher patient volumes but no improvement in collections, an indication that reimbursement simply isn’t keeping pace, forcing organizations of all types to do more with less.
Looking toward 2026: key market pressures
The upcoming CMS rules and payment model adjustments are expected to continue reshaping how providers are reimbursed, particularly for outpatient and physician services. Ongoing value-based care initiatives, changes in quality reporting, and reimbursement realignments could further reduce margins for fee-for-service models.
At the same time, revenue cycle staffing shortages will remain a stubborn challenge, likely driving up wages, especially for billing and coding professionals, as well as front-office staff. These shortages can also create major disruptions to billing efficiency, ultimately leading to reduced cash flow.
Add inflationary pressures, technology upgrades, and compliance demands, and it’s clear that many practices are heading into 2026 with less flexibility and higher financial risk. For organizations already operating on thin margins, even a modest reimbursement cut could tip the balance.
These challenges reinforce one critical point: financial success in the year ahead won’t depend solely on who owns a practice, but on how effectively they manage revenue.
Why optimizing the revenue cycle is non-negotiable
When reimbursement is unpredictable and costs are rising, the ability to capture every dollar earned becomes the most controllable source of margin protection. Yet many organizations still treat RCM as administrative rather than a strategic function.
A streamlined, data-driven revenue cycle can transform financial performance in four key ways:
- Margin protection: Even modest reductions in denials or underpayments can yield substantial returns. By improving charge capture, documentation accuracy, and coding compliance, practices can reclaim thousands in revenue that would otherwise be lost.
- Cash flow stability: Predictable collections are essential to fund operations, investments, and payroll. A strong RCM operation shortens days in A/R, reduces write-offs, and ensures faster collections.
- Labor cost efficiency: Automation, standardized workflows, and scalable infrastructure help reduce manual rework and administrative time. Together with analytics, these tools not only improve efficiency but also relieve pressure on overburdened teams and position the organization to grow without adding significant overhead.
- Payer pressure resiliency: As payers become more aggressive with audits, denials, and underpayments, maintaining clean documentation, coding integrity, and audit‑ready processes helps reduce the risk of surprise claw‑backs and ensures you capture the full value of services rendered.
In an era of shrinking reimbursement, a well-tuned revenue cycle can make the difference between a practice that stays independent and one that must sell or merge to survive.
Key levers for strengthening the revenue cycle
Below are some of the most powerful levers your practice should target:
| Lever | What to Focus On | Potential Payoffs |
| Denial & rejection prevention | – Root-cause analysis – Front-end edits – Automated scrubbing – Payer-specific rules – Pre-authorization workflows | – Lower write-offs – Fewer rework cycles |
| Clean claims & coding optimization | – Up-to-date fee schedules – Correct modifiers – Coding audits – Training – Charge capture completeness | – Higher first-pass pass-through rates |
| AR management and follow-up | – Aging buckets – Scalation workflows – Automation of dunning – Analytics-driven prioritization | – Faster collections – Fewer stale accounts |
| Patient responsibility collection | – Transparent estimates – Point-of-service collections – Payment plans – Digital payment portals | – Reduced bad debt – Improved patient satisfaction |
| Analytics & monitoring | – Real-time dashboards – KPI tracking: denial percent, days to payment, cost per claim, net collection rate | – Faster ability to react to trends or slippages |
| Workflow automation & digital tools | – Eligibility automation – AI coding assistance – Payment posting tools | – Lower manual overhead – Fewer errors |
| Staff training and accountability | – Continuous education – Role-based metrics – Compliance audits | – Sustained gains – Reduced regression |
| Outsourcing / shared service models | – Complex tasks: appeals, AR follow-up, or to gain scale | – Gained expertise – Shared fixed costs |
For many organizations, partnering with an experienced RCM partner can provide the scale, technology, and expertise needed to achieve these gains faster – without the overhead of building everything in-house.
A three-phase approach for the year ahead
To prepare for the financial and operational pressures of 2026, practices need a structured roadmap for revenue cycle optimization. This three-phase approach offers a practical framework for diagnosing challenges, implementing improvements, and sustaining long-term performance.
Phase 1: assess and diagnose
- Start with a revenue cycle audit to identify patterns in denials, AR aging distribution, payer mix, and underpayments.
- Benchmark metrics against MGMA or industry standards to determine where revenue is leaking.
- Identify ‘quick wins’ such as common denial codes and engage your stakeholders to create a plan and map new workflows.
Phase 2: optimize and automate
- Deploy automation and front-end tools to streamline eligibility verification, claim submission, and payment posting.
- Integrate AI-assisted coding to reduce manual workloads and error rates.
- Use data-driven analytics and dynamic dashboards to monitor performance, highlight opportunities, and measure goals.
Phase 3: sustain and scale
- RCM optimization isn’t a one-time project – it’s an ongoing process.
- As reimbursement models and payer policies evolve, use analytics to track performance and adjust strategies.
- Evaluate outsourcing or partnership models to access specialized expertise and scalability as your needs change.
The bottom line
The MGMA ownership data makes one thing clear: change is accelerating. While not every practice is selling, the forces driving consolidation, including margin pressure, regulatory complexity, and operational strain, are unavoidable.
Ownership status alone doesn’t determine financial success. The practices that will thrive in the year ahead are those that treat the revenue cycle as a strategic asset rather than a back-office task. By tightening processes, embracing automation, and acting on data, organizations can reclaim margin, strengthen cash flow, and maintain the flexibility they need to thrive.
It’s time to think of revenue cycle optimization as a linchpin strategic lever for financial viability.
Health Prime can optimize your organization’s revenue cycle. To learn more, please send us an email or visit us at hpiinc.com.
As Vice President of Coding at Health Prime, Ronda Ash leverages her deep expertise in healthcare compliance and law to help clients achieve accuracy, efficiency, and peace of mind in their revenue cycle. With a master’s degree in healthcare law (Nova Southeastern University, summa cum laude) and a bachelor’s in business administration (Northwood University, with honors), Ronda ensures coding integrity and regulatory adherence across all Health Prime programs. Her leadership in auditing, compliance, and reimbursement strategy helps clients minimize risk, reduce denials, and optimize financial performance.
