Underpayments Are Killing Your Margins: How Finnastra Recovers Lost Revenue

For hospitals, the most dangerous revenue leak isn’t always the obvious claim denial. It’s the silent revenue loss from underpayments—payments that seem correct on the surface but are short by just a few dollars, or even thousands. These underpayments often go unnoticed, quietly eroding margins over time.

According to a recent HFMA (Healthcare Financial Management Association) report, up to 3% of hospital net revenue is lost annually due to payer underpayments. For a hospital with $150 million in yearly revenue, that equates to $4.5 million slipping through the cracks every year—money that should be funding patient care, staffing, and technology upgrades.

The problem? Most hospitals don’t have the tools or bandwidth to catch and challenge these discrepancies.

As a leading Hospital Billing Company, Finnastra ensures every claim is paid accurately and completely, helping hospitals recover millions in lost revenue through advanced analytics, payer contract reviews, and relentless payment audits.

Why Underpayments Happen—And Why They Go Unnoticed

Underpayments can occur for several reasons, often buried deep in complex payer contracts or shifting reimbursement policies. Common causes include:

• Incorrect contract terms applied by payers – Hospitals rarely have the bandwidth to manually verify each claim against contract specifics.
• Missed carve-outs or add-on payments – Especially common in high-cost services like surgeries, anesthesia, and behavioral health.
• Bundling errors – Payers incorrectly grouping services and paying less than the total contracted rate.
• Outdated reimbursement schedules – Especially with Medicaid, Medicare, and managed care organizations.
• Silent policy changes by payers – Hospitals are often notified too late, leading to months of revenue leakage.

The biggest issue? Hospitals typically focus more on denials than underpayments, so these discrepancies quietly drain revenue over time. In fact, a Black Book Research study revealed that 87% of hospitals don’t consistently track underpayment trends, leaving millions unrecovered.

The Financial Impact of Underpayments

When left unchecked, underpayments cause:

• Shrinking operating margins – Average hospital margins in 2024 fell to just 1.4%, meaning even a small revenue leak can push a hospital into the red.
• Budget shortfalls for critical programs, including technology upgrades and community outreach.
• Increased stress on CFOs and revenue cycle teams, who must balance payer negotiations with operational demands.

For example, one mid-sized hospital Finnastra partnered with discovered that 2.2% of its commercial claims were consistently underpaid, amounting to nearly $1.2 million in lost revenue annually—all unnoticed until our audit uncovered it.

How Finnastra Recovers Lost Revenue

Our Hospital Billing Services are designed to identify, challenge, and prevent underpayments with a proactive, systematic approach. Here’s how we do it:

1. Comprehensive Payer Contract Review

We start by dissecting every payer contract line-by-line, mapping out expected reimbursement rates for every service category.

• Detect hidden clauses and carve-outs that are often missed.
• Establish a benchmark for accurate claim payments going forward.

2. Automated Payment Auditing

Using advanced revenue cycle technology, Finnastra automatically matches every claim against the contracted rate.

• Pinpoints even small discrepancies instantly.
• Generates a report of variances by payer, department, and service line.
• Provides CFOs with real-time visibility into payer performance.

3. Aggressive Underpayment Recovery

When discrepancies are found, Finnastra acts quickly to recover revenue:

• Initiate payer disputes with detailed supporting documentation.
• Track every appeal to resolution—no revenue left uncollected.
• Typical recovery time: within 30–45 days of identification.

4. Preventative Payer Negotiation Support

We don’t just recover lost revenue—we stop future underpayments before they happen.

• Partner with your leadership during contract negotiations.
• Leverage data to push back on payer tactics.
• Provide quarterly performance reports that highlight payer trends.

Real-World Results: Millions Recovered

When you work with a dedicated Hospital Billing Company like Finnastra, the results are immediate and measurable.

Case Example:
A 200-bed community hospital was struggling with razor-thin margins. After a full Finnastra audit:

• We discovered $2.4 million in underpayments over an 18-month period.
• Our team recovered 92% of the lost revenue within four months.
• The hospital’s CFO gained actionable insights to renegotiate payer contracts, preventing further losses.

Result: The hospital’s operating margin increased by 2.1%, giving them the financial stability to hire additional nurses and expand their behavioral health services.

Key Questions Every Hospital CFO Should Ask

To determine if underpayments are impacting your organization, consider these questions:

• Are all payments being matched to contracted rates in real-time?
• Do we have visibility into payer-specific underpayment trends?
• How much revenue have we actually recovered from disputed claims this year?
• Are payer contract terms being reviewed regularly by an expert team?

If you can’t confidently answer these questions, your hospital may be losing millions without knowing it.

Why Hospitals Trust Finnastra

As a leading Hospital Billing Company, Finnastra ensures hospitals stop silent revenue leaks and build predictable cash flow.

Our Hospital Billing Services go beyond basic claim submission. We provide:

• Deep-dive payer contract analysis for accurate reimbursement.
• Automated underpayment detection tools to flag discrepancies instantly.
• Dedicated recovery specialists to handle disputes aggressively.
• Strategic reporting to empower CFOs with actionable insights.

This partnership allows your internal team to focus on patient care and operational excellence, while we safeguard your revenue cycle.

Protect Your Margins. Recover What’s Yours.

Underpayments don’t just hurt your balance sheet—they limit your hospital’s ability to grow, innovate, and serve your community. With Finnastra’s expertise, you can recover every dollar you’ve rightfully earned and prevent future losses before they start.

Ready to take control of your hospital’s financial future?
Contact Finnastra today to learn how our Hospital Billing Services can uncover hidden underpayments and reclaim lost revenue.

Learn more: Hospital Billing Services