AI: The lifeline hospitals need during financial crises

U.S. hospitals and health systems are in a revenue crisis. About four in 10 are losing money¹ and many others are working with operating margins under 1%,² all while juggling increasingly complex patient cases, staffing shortages and federal funding cuts. This financial situation isn’t just unsustainable; it’s a direct threat to patient care. If hospitals close, patients may lose access to vital services, clinicians and nurses will be displaced and communities will lose major employers. A hospital means more to communities than just another business, especially in a country challenged by the needs of an aging population. What can hospital leaders do to weather this rough financial storm? Are there untapped sources of revenue that can help ensure not only survival but long-term resilience and growth?

Like other industries, there has been a lot of discussion about the role that artificial intelligence (AI) plays within hospitals’ revenue plans. But will AI be yet another technology hospitals reactively invest in based on vendor promises, or does it also hold the promise of a healthier outlook?

The answer is becoming clear: AI is emerging as a powerful engine for financial growth in healthcare. By unlocking clinical insights hidden in vast troves of existing data in electronic health record (EHR) and billing systems, AI is enabling hospitals to recover revenue they’re already earning — but not capturing — through more accurate and efficient medical coding for reimbursement.

This AI helps ensure hospitals are fairly paid for the care they’ve already delivered. And when even a small percentage of recovered revenue can translate into millions of dollars, potentially tipping the scales into financial stability, adopting AI becomes less a strategic option and more a financial imperative.

The revenue every hospital is leaving on the table

Hospitals should be properly reimbursed for all the care they provide to patients. But that often falls on the shoulders of overburdened healthcare providers and clinical documentation integrity (CDI) teams. Doctors and nurses spend hours of their day documenting patient care in EHRs, which are translated into codes to bill for each test or treatment. Naturally, with this volume of data — 30,000 data points per patient chart to reference against 150,000 ICD-10 codes — some work may go undocumented or incorrectly recorded, meaning missed revenue for the hospital. But even the smallest percentage of missed or incorrect diagnoses matters. Collectively, they can add up to tens of millions of dollars being left on the table.

CDI teams are crucial to capturing revenue and quality of care scores. They carefully pore over thousands of patient records and billing codes to correct any gaps and identify revenue for the services delivered. Even when hospitals achieve impressive accuracy rates — more than 90% — there is still a gap that remains uncaptured. This gap represents a major opportunity. Human reviewers, no matter how skilled, are limited, especially when facing the ever-growing volume and complexity of clinical data.

That’s where AI comes in. By augmenting healthcare teams, AI can uncover missed opportunities and elevate results beyond what human effort alone can achieve, in addition to reducing overall healthcare costs with automation. Healthcare workflows are filled with manual abstraction processes, from coding to CDI, appeals, registries and more. Clinical AI has the power to streamline those processes with automation, leaving hospital teams to focus on more skilled, more fulfilling levels of work. The improved efficiency across these key workflow areas helps reduce overall healthcare costs.

How AI unlocks new revenue

Clinical AI analyzes 100% of data within 100% of patient charts and flags potential discrepancies or missed opportunities that impact revenue and/or quality measures for human review. Far from replacing CDI professionals, AI acts as a powerful force multiplier: enabling teams to analyze more records, uncover more revenue and do it all with greater speed and accuracy.

Looking closer, clinical AI has been particularly powerful in capturing revenue from less common diagnosis codes. Though CDI teams typically capture the top 40% of frequently missed codes, like sepsis or respiratory failure, AI helps catch the rarer codes that can account for up to 60% of lost revenue. This achieves two aims: it reduces the burden on CDI staff and empowers them to practice top of license, and it helps ensure all the care delivered is billed to payers. It’s a win-win for hospitals.

Ensuring ROI in uncertain times

For hospitals facing financial strain, any new investment must deliver a clear and immediate return. The most effective clinical AI solutions are designed for precisely this reality, offering a low-risk, high-impact path to financial improvement. These can be inserted at a stage of the revenue cycle that offers clear attribution paired with a contingency-based pricing model. Instead of requiring upfront costs, this approach ensures that payment is only made when measurable revenue is recovered, aligning incentives between vendor and provider and minimizing risk. When implemented thoughtfully, AI can strengthen financial performance and mission sustainability.

Hospitals may not be able to control the external forces putting pressure on their margins, but they can take control of how efficiently they capture the revenue they’ve already earned. Clinical AI offers a powerful, proven lever to strengthen financial performance, helping organizations do more with the resources they have. By surfacing revenue that would otherwise go uncaptured, AI can help hospitals move beyond today’s narrow margins and toward a sustainable future.

References

1. Kaufman, K. and Swanson, E. February 26, 2025. Implications of the National Hospital Flash Report for hospital operations. KaufmanHall. https://www.kaufmanhall.com/insights/thoughts-ken-kaufman/implications-national-hospital-flash-report-hospital-operations.
2. Lagasse, J. May 2, 2025. Revenues and expenses up, margins down for nation's hospitals. Healthcare IT News. https://www.healthcarefinancenews.com/news/revenues-and-expenses-margins-down-nations-hospitals.