Rural hospitals face a serious problem as money slips through the cracks faster than they can track it. Most revenue leakage happens inside your own walls, in processes you can fix without closing departments or cutting staff.
Watching your hospital lose money every month is frustrating. Charges disappear before they reach claims. Patients show up without coverage. Plus, your team pays vendors for services you never bill to insurance.
Even policy changes like HR1 (The One Big Beautiful Bill Act) cut Medicaid funding and reduce coverage, pushing your margins even thinner.
You can't budget properly when revenue keeps slipping away. Your team wastes time tracking down missing charges. Before long, you start doubting whether your hospital can survive without cutting the services your community needs.
At ITS, we've seen how the right health IT systems help rural hospitals identify revenue leaks and fix broken processes.
In this article, we'll cover topics that include:
After reading, you'll learn where revenue leaks hide and what steps you can take to protect your income without cutting services.
Where Is Our Hospital Actually Losing Money?
It's easy to assume your financial problems stem mainly from external factors, such as lower reimbursement rates. However, Cody Canon, ITS Director of Healthcare IT, sees something different.
“Every hospital, whether it’s a large regional network or a small critical access hospital, is hemorrhaging money through all these different processes,” Cody explains.
The real damage comes from inside your revenue cycle.
How do you fix it?
- Start with a revenue cycle audit. Walk through every step. Start at patient registration, then end at payment. Look for charges that never make it onto claims. Spot denials you could have prevented, and notice write-offs tied to missing paperwork.
- Review your expenses carefully. Doug McCoy, CEO of Eastern Plumas Health Care (EPHC), leads a team that examined every expense line. During one of their examinations, they found contracts for services they no longer used. The hospital still automatically paid for these. They learned that a heavy reliance on traveling staff was driving their expense base higher.
These fixes don't change how you deliver care. They remove waste and tighten your financial controls.
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Why Are Some Charges Never Making It onto Our Bills?
Some of the costliest leaks hide in workflows. No one has time to trace them properly.
Here's a real example from Eastern Plumas Health Care:
The hospital uses LabCorp as its reference lab. Staff send a specimen for testing. They enter the charge for that test on the claim.
The problem appears with reflex tests. The first test shows something unusual. LabCorp automatically runs a second test and bills the hospital for both tests.
The hospital pays both bills. However, the second test never makes it onto the hospital's claim to the insurance company.
The result is clear. The hospital pays for a service but never bills for it.
Cody calls these issues "hidden little loopholes where you need to go in and look at problems." They only show up when you compare what you pay vendors against what you bill to insurance companies.
What can you do to address this? Ask your finance team to pull twelve months of payments to reference labs, then pull twelve months of lab-related charges and revenue. Compare those numbers. If they don't match up, you've found a leak to fix.
Turn Quality Programs into Revenue Sources
Many states offer quality incentive programs that reward preventative care. The barrier is tracking the data and reporting it correctly.
Eastern Plumas Health Care aligned its providers, software, and workflows to participate at scale. They went from reporting just one or two quality measures to planning for seven or eight next year. Each metric can be worth around $400,000 to the organization.
McCoy explains that another major focus has been improving the revenue cycle from end to end, with the goal of reducing AR and preventing bad debt.
When you fix processes like proper patient notifications, the impact is real. Doug reports, "You've got a million dollars that's a potential exposure risk for bad debt, and all that really took was just making sure that we shored that process up."
For many rural hospitals, state and federal grant programs, along with state quality incentive programs, can offset significant revenue losses without cutting services.
Will Fixing These Problems Add More Work for Our Doctors?
Rural doctors are already stretched thin. Many doctors drive long distances and juggle multiple electronic health records from different facilities.
The key is supporting clinicians, not burdening them. On that note, Cody's IT team focuses on "at the elbow" support:
- Pre-training happens before a physician's first shift.
- Real-time help arrives during system go-live.
- Ongoing coaching shows providers time-savers inside the EHR.
At Eastern Plumas Health Care, the team also rolled out AI-powered provider documentation. Doug reports that it saves physicians 1 to 1.5 hours per day. That time helps them close charts faster and avoid staying late into the evening.
Additionally, the technology improves documentation quality and charge capture at EPHC.
At this point, it’s best to ask yourself a simple question: “Where can technology give your clinicians time back while improving billing accuracy?”
As you can see, these investments protect both revenue and morale.
How Can We Keep Patients from Losing Coverage?
Another revenue leak happens outside your hospital walls. Patients lose coverage and show up in your emergency department as uncompensated care.
HR1 changes eligibility checks from once a year to every six months. In Eastern Plumas Health Care's region, up to 12% of patients could lose coverage.
The hospital responded with two moves:
- Community education sessions. The team hosts sessions that explain benefits in plain language. They walk through what's required to keep or gain coverage. In these sessions, they involve partners such as banks and attorney groups.
- Cross-train internal staff on eligibility. High-performing staff started learning eligibility work. This allowed the hospital to help more patients with renewals without adding new employees.
Helping patients stay covered protects them and your revenue. It reduces the number of people who only show up in the emergency department when their condition is acute and expensive to treat.
What Should You Do Right Now?
The largest HR1 cuts are expected to hit in 2027–2028. That gives rural leaders a short window to prepare.
Treat 2026 as the year to align processes and resources. To achieve better system flow, there are three key things you should focus on:
- Rebuild revenue cycle configurations so every legitimate charge gets captured.
- Scale participation in quality incentive programs.
- Ensure your EMR produces the operational data your managers need.
These projects take months and involve several departments. Starting early makes all the difference.
Read: Benefits of Working with an MSP in the Healthcare Industry
Your Hospital Doesn't Have to Choose Between Survival and Service
Rural hospitals like Eastern Plumas Health Care are proving something important. You can protect revenue without cutting services.
Diagnose your leaks first, then fix broken processes. Support clinicians with the right tools. When you do these things, you build a stronger organization. You also protect your cash, your staff, and your community.
For over 20 years, Intelligent Technical Solutions (ITS) has helped businesses identify and fix the hidden technology gaps that cost them money. Our team understands both healthcare operations and the IT systems that support them.
We've worked with organizations across the country to strengthen their infrastructure, improve their processes, and protect their revenue without disrupting patient care.
Ready to invest in the IT service you deserve? Schedule your free IT consultation with one of our experts and see what predictable IT costs look like.
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Frequently Asked Questions
Q: What is revenue leakage in rural hospitals?
A: Revenue leakage happens when hospitals provide services but fail to bill for them. It also happens when hospitals lose money through broken processes.
Q: How much money do rural hospitals typically lose through revenue leakage?
A: The amount varies by hospital size and processes. For example, Eastern Plumas Health Care expects over $4 million in annual funding losses under HR1, which makes reducing revenue leakage even more critical.
Q: Can we fix revenue leakage without adding work for our clinical staff?
A: Yes, most revenue cycle fixes happen behind the scenes. With the right technology and support, you can reduce clinician workload while improving charge capture.
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