The Big Three: Why Financial Performance Depends on Patients, Providers, and Payors—Together
Laboratories, diagnostic organizations, and other healthcare providers are navigating rising costs, shifting reimbursement models, increasing administrative complexity, and changing patient behavior simultaneously. Margin pressure is no longer episodic—it’s structural. Against this backdrop, we presented at this year’s Executive War College, “The Big Three: Patients, Providers, and Payors,” which delivers a clear message: financial performance does not improve in silos.
True revenue cycle optimization depends on understanding how value is created—and lost—across patients, providers, and payors concurrently, and on using data and technology to align these stakeholders without optimizing one at the expense of the others.
A Holistic View of Value Creation
High-performing healthcare organizations take a holistic approach to revenue cycle management (RCM). They recognize that value manifests in multiple forms: accelerated cash flow, reduced friction, improved operational efficiency, and stronger patient and provider relationships. Data is the connective tissue that makes this possible.
The challenge is scale and speed. Payor policies and reimbursement rules are complex, constantly changing, and increasingly adjudicated algorithmically by payors using AI and machine learning. Meanwhile, provider organizations still rely heavily on linear, often manual processes that struggle to keep up.
The result? More denials, more rework, and more dollars trapped in accounts receivable.
The Growing Disconnect Between Patient Responsibility and Patient Payment
One of the most consequential trends reshaping revenue performance is the widening gap between what patients owe and what they pay. For example, XiFin data shows that between 2023 and 2025, patient responsibility increased from 26% to 30% of total claims, while patient payments as a percentage of total reimbursements declined from 12% to just 9%.
This divergence is not accidental. Policy changes, including the removal of most medical debt from credit reports, have fundamentally altered patient payment behavior. While patient-friendly in intent, these shifts have reduced traditional payment incentives, particularly for balances under $500, where using a collection agency is rarely cost-effective.
This, however, isn’t a downstream collections problem. It’s an upstream issue with patient experience and financial clearance.
Organizations seeing success are moving patient financial conversations earlier by:
- Providing accurate, real-time out-of-pocket estimates
- Enabling pre-payment and flexible payment options
- Offering multi-channel communication (text, email, portal, paper)
- Using SMS texting strategies to maximize digital engagement
Text messaging has emerged as a powerful lever when integrated thoughtfully into the dunning cycle, accelerating patient payments while reducing mailing costs and friction.
In addition to using SMS texting to communicate patient responsibility estimates, deliver electronic links to patient statements and balances, and expedite patient payments, SMS texting can also be used to more effectively collect patient demographic and insurance information when it is missing or incomplete. XiFin is currently beta-testing a new SMS texting capability for correspondence that is designed to alleviate administrative burden and accelerate the collection of missing information.
Provider Performance: The Most Underutilized Financial Lever
Referring and ordering providers exert an outsized influence on financial outcomes and profitability, yet many organizations lack visibility into which provider relationships create value—and which dilute it.
Without this visibility, high-volume referral sources can unintentionally drive negative margin contribution—where incremental volume increases operational cost, denial rework, and cash flow lag without a corresponding increase in realized revenue
Three recurring drivers of underperformance consistently emerge:
- Incomplete or inaccurate front-end data
- Disproportionately high denial rates
- Unfavorable test mix or payor mix
When orders arrive with incomplete or incorrect patient demographic data or diagnosis codes, clean claims become impossible. Errors cascade through billing, delay reimbursement, frustrate patients, and consume staff time. Analytics at the provider and even individual-physician levels allow organizations to pinpoint root causes and intervene early.
This rework materially increases operating expense; industry data shows a significant share of RCM staff time is consumed by correcting errors, denials, and follow-up—activities that do not generate incremental revenue but erode margin.
Provider engagement is the turning point. Self-service portals that allow offices to correct errors electronically convert error resolution from reactive to preventive. Real-world results include:
- Reductions from 10,000 billing errors per month to fewer than 150
- Claim processing times dropping from 120 days to under 20
- Significant reductions in unbillable rates without adding staff
These outcomes reinforce a powerful lesson: engagement drives better behavior. By aligning provider performance to financial outcomes (e.g., denial cost, net collection yield, and time-to-cash), organizations can rationalize referral relationships—prioritizing high-quality volume while remediating or reshaping underperforming sources to protect overall profitability.
Payors: Published Policy vs. Actual Behavior
Even when contracts are clear, payor behavior often isn’t. New products, evolving medical policies, network changes, and service-specific coverage limitations routinely show up as:
- New denial types
- Shifts in denial rates
- Unexpected reimbursement variances
- Longer payment cycles
Without timely visibility, organizations risk excessive appeals, write-offs, and inappropriate patient billing.
Effective organizations pair denial trend monitoring with expected vs. actual reimbursement analytics, using historic modeling to identify discrepancies early. This insight fuels stronger collaboration between revenue cycle, contracting, market access, and sales teams—and strengthens negotiation leverage and policy compliance.
Why AI Is No Longer Optional in RCM
Across patients, providers, and payors, one theme dominates: complexity has exceeded manual capacity. Historically, organizations scaled by adding people, improving efficiency, and standardizing policies. With payors now leveraging AI in their daily operations, complexity is increasing exponentially.
For providers, AI changes the equation by enabling intelligence at scale:
- Automating insurance capture and validation
- Estimating patient responsibility with greater accuracy
- Prioritizing denials by payment probability and value
- Interpreting ambiguous payor responses
- Generating appeal documentation with human oversight
Rather than replacing staff, AI reallocates expertise—freeing skilled teams to focus on exceptions, relationships, and strategy instead of rework.
From Metrics to Meaningful Action
Data alone isn’t enough. High-impact organizations use analytics to tell a story that drives action:
- Leading and lagging indicators
- Clear hypotheses
- Conclusions that guide decision-making
Key performance indicators span all three stakeholders:
- Patients: bad debt, pre-payments, dunning effectiveness
- Providers: clean claim rate, profitability, payor and test mix
- Payors: denial trends, policy changes, pricing discrepancies
When these metrics are connected—and transparent—they support faster, more confident decisions.
The Bottom Line
Optimizing financial performance requires more than incremental improvements. It demands integration across the entire revenue cycle and alignment across patients, providers, and payors.
Organizations that succeed:
- Engage patients early through preferred communication channels
- Invest in provider relationships and self-service tools
- Monitor payor behavior with precision
- Use AI to match intelligence with complexity
- Turn analytics into coordinated action
Aligning the “Big Three” isn’t just a best practice; it’s a prerequisite for long-term financial resilience. Get a copy of the EWC presentation.