Build a Stronger Bottom Line with our Hospital Budgeting Toolkit 

Budget season can put health system leaders in a difficult spot. Costs must come down and every dollar has to be justified. But with denials rising, payer demands intensifying, and patient needs growing more complex, no option feels like the right one.

As Dr. Jerilyn Morrissey, Chief Medical Officer at CorroHealth, explained in a recent webinar, many organizations are asking the wrong question: “How can we spend less?” The better question is: “How can we manage costs strategically while protecting revenue?“   

To move forward, hospitals need financial models designed, not just to reduce expenses, but to sustain growth over the long term. Organizations must look to re-think annual strategies to improve financial performance in 2026. Additionally, implementing a budgeting checklist and assessing denials can safeguard financial sustainability and preserve high-quality patient care.  

As health system leaders prepare for the year ahead, consider the following:  

• Beware of “denials avoidance”: Many hospitals pursue a “denials avoidance” strategy by downgrading patients to observation status. On paper, it lowers denials rates. In reality, it means giving up millions in appropriate and compliant reimbursement and ceding ground to payer tactics.  
• Invest in documentation integrity: Typically, about 60% of contracted payments flow in without issue. The remaining 40% depends directly on how well UM, CDI, denials management, and payer escalation are executed. Without steady, intentional investment in these functions, many hospitals would be at risk. With targeted, ROI-focused investments, however, that gap can be closed, bringing hospitals much closer to capturing the full value of their contracts.    
• Break the silos in the revenue cycle: UM, CDI, and denials teams often operate in silos with disconnected metrics and limited communication. Dr. Morrissey posted a simple litmus test: Do your directors of case management, CDI, and appeals even know each other’s phone numbers? If not, chances are your hospital is leaving revenue on the table. When these functions work together, the impact multiplies.  
• Push back on payers: Even the strongest UM, CDI and denials program can’t eliminate payer friction. To protect both today’s reimbursement, tomorrow’s revenue streams and the patient, hospitals must be prepared not only to defend individual claims but also to escalate disputes strategically.  

The pressures on hospitals are not abating. Margins will remain tight, denials will continue to rise, and the Medicare Advantage population will keep expanding. But hospitals are certainly not powerless. By rethinking their approach—combined with the right resources—they can safeguard financial sustainability while keeping patient care at the center. 

Additional Resources to Consider: