Becker's Hospital Review

22 RCM LEADER Cleveland Clinic's $15B revenue cycle and the 'unsustainable' problem it hopes to solve By Alan Condon C leveland Clinic's revenue cycle team collected more than $15 billion in U.S. net patient revenue in 2025, employs more than 3,800 FTEs and operates at a cost to collect of 2.92%. But despite those metrics, one costly problem continues to drag on resources across the health system and healthcare providers more broadly: the growing cost of preventing, appealing and overturning denials. "Rising denial rates create unnecessary costs and administrative burden and create friction for providers, payers, clinicians and — most importantly — our patients," Tracy Peffley, system vice president of revenue cycle management at Cleveland Clinic, said on a recent episode of the "Becker's Healthcare Podcast." "As an industry, we have an opportunity to move away from the reactive model that exists today toward a more collaborative one, bringing providers and payers together to simplify processes, improve alignment, reduce friction and waste, and work toward near real-time claim adjudication." e scope of the problem is significant. Cleveland Clinic faces a 15% incoming denial rate, inclusive of both initial and subsequent denials. In 2025, its revenue cycle team overturned 92% of those denials, bringing the net controllable loss to under 2%. But the journey from 15% to 2% runs through resubmissions, medical director reviews, peer-to-peer calls and appeals. "It's not sustainable. And frankly, it's arguably unsustainable for the payers, too," Dennis Laraway, executive vice president and CFO of Cleveland Clinic, told Becker's. "If both sides are watching the same report card — and the end result is that 13% of those denials are ultimately overturned — then that doesn't seem like productive friction for anyone." To close that gap, Cleveland Clinic has embedded two medical directors directly into its revenue cycle operations, including a medical director of documentation excellence, as well as a physician advisory program. e goal is to prevent denials before claims leave the building, not fight them aerward. "When we look at incoming denials and peel back the layers — why are we receiving these secondary and tertiary denials? — it's really about taking a more integrated clinical- revenue cycle approach," Ms. Peffley said. "Leaning in with our clinical providers lets us better prevent those denials and creates a better experience for clinicians, allowing them to stay focused on patient care rather than worrying about prior authorizations or peer-to-peer reviews. It's about leveraging one another's expertise, bringing financial operations and clinical care together in that delivery model for the patient. "ey have been pivotal in closing the gap between financial operations and clinical care, helping us use data more proactively and sit down with payers to compare what we're each seeing and work together to improve." Unsurprisingly, AI is central to that upstream strategy. Cleveland Clinic has focused initial AI efforts on inpatient coding, using a large language model to surface documentation and coding opportunities, with a human reviewer validating every result before claims go out. e system runs roughly 200 robotic process automation bots within its revenue cycle and recently created a dedicated technology and innovation domain within its operating model to accelerate further investment. "We're hyperfocused on the inpatient coding side and have seen real success there," Ms. Peffley said. "We have a partner we've been working with closely to ensure we're accurately coding, properly capturing quality and fostering accurate reimbursement." As some health systems cut revenue cycle jobs or restructure operations, Cleveland Clinic said its AI strategy is focused on augmenting staff rather than replacing them. About 40% of the health system's revenue cycle operations are outsourced. "AI is augmenting the inpatient coder's work, using a large language model to surface potential opportunities, with a human in the loop 100% of the time validating those opportunities before anything goes out the door," Ms. Peffley said. "We saw the same fear with computer-assisted coding and with RPA. People worried about losing their jobs. ey didn't. AI in inpatient coding is no different. It's augmenting the great work our coders do and leveraging their critical thinking at the top of their license." Health systems oen talk about how they are making sure physicians, nurses and other clinicians are operating at "the top of their license," but what does that look like for revenue cycle workers? It means having them focus on more complex, higher-dollar cases. at is especially important for Cleveland Clinic, which has one of the highest case mixes in the country. e next generation of revenue cycle leaders will need strong data literacy and digital fluency, empowering them to leverage automation while applying critical thinking and collaboration skills. "AI may improve efficiency and provide valuable insights, but it doesn't take the human out of the process," Ms. Peffley said. "Empathy, understanding and human judgment are essential in healthcare. At the end of the day, a patient is behind every claim, and we need to make sure we never lose sight of that." For Mr. Laraway, AI's long-term opportunity is not to help providers outmaneuver payers — or vice versa — but to help both sides build a more collaborative relationship. "If we can use AI productively to get behind the rules engines and create agreement — a contract between payer and provider — then 95% of claims should be auto pay. What we'll be arguing about with the payer is over what time period are you going to pay that claim," Mr. Laraway said. "Payers ramping up AI faster than we are, or us trying to "beat" each other's algorithms and edits — that's not the right game to be playing. "e real opportunity is to collaborate and align — to do the right thing, agree on standards for claim and chart reviews, and maintain revenue cycle integrity in a way that works for both sides. at can happen through retrospective audits, joint operating committees, and true partnership — not by putting patients and providers in the middle of all that friction." Ms. Peffley pointed to near real-time claim adjudication as the industry's real North Star. "How do we work smarter, not harder, to streamline this and drive greater efficiencies?" she said. "is is like a mountain, and it's going to take the entire community coming together to really change this. It's not right for the patient and it's not sustainable for the payer or the provider." n

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