The Money Isn't in Appeals. It's in Not Getting Denied.

health systems margin improvement physician groups tactics Oct 29, 2026

What It Costs You Monday — a 10-part series on healthcare margin at the operating level. Start with Part 1: The Opening. Previous: Part 5: Declining to Re-Buy. You're reading Part 6: Upstream of the Appeal.

Strategy five on the list reads: negotiate fair rates and terms, and dispute excessive downcoding and denials.

I want to take the denials half, because that is what comes out of physician practices — and because disputing them is the wrong place to spend your energy.

"People will tell you the centralized version is more efficient. Not getting a surgery done is wildly inefficient."

THE GAME IS WON BEFORE THE APPEAL

When you order surgery, can you get the authorization done on time? When you order an MRI in a hospital-based practice, can you get it authorized quickly?

That is the whole thing. And it is decided before anybody writes a word of an appeal.

Appeals are recovery work. They are necessary, they are never free, and a denial you successfully overturn still cost you the staff time, the delay, and often the patient's confidence. The denial you prevented cost nothing.

THE MODEL THAT ACTUALLY WORKED

We kept at least one person physically inside the clinic, part of that specialty.

Not a central pool. Somebody in the room where the work happens. And not a junior hire either — we took the best person in the front office and moved them into that role as those roles came available. You have to be very good at this.

Three things have to be in place:

Subject matter expertise. Knowing what this payer wants for this procedure, which is specialty-specific knowledge that takes time to build.
Access to clinicians. Being able to walk down the hall and ask a question rather than send a message into a queue.
Accountability. Tracking lives inside accountability — you need to know what is done and what isn't — but the structure is what matters, not the software.

As we consolidated, we lost control of that subject matter expertise. And that expertise is the driver of good authorization work up front.

THE ACCOUNTABILITY PART IS MORE SPECIFIC THAN IT SOUNDS

Here is the mechanism, and it is not a policy.

There is a difference between telling a manager you don't have the authorization done and telling a surgeon you don't have it done.

Proximity to the person whose work is blocked is what makes the system work. Not a dashboard, not a weekly report — the fact that the consequence of the thing not being done arrives in person, from somebody whose day you just ruined.

That is almost impossible to replicate from a central pool three buildings away, and it is the real reason the in-clinic model outperforms. Everything else is downstream of it.

THE EFFICIENCY ARGUMENT, ANSWERED

People will tell you the centralized version is more efficient. On a cost-per-authorization basis, it probably is.

Not getting a surgery done is wildly inefficient.

That is what happens when you don't have a good system in place, and it never shows up in the revenue cycle department's efficiency metrics. It shows up as an empty OR block, a rescheduled patient, and a surgeon who has stopped trusting the process and started having their own staff work around it.

AND ONE PART OF THIS IS NOBODY'S FAULT

Worth naming the larger thing happening around all of it.

The Blue Cross Blue Shield Association has attributed about $942 million in added spending across 2023 to 2025 to more complex inpatient coding — roughly 70% of it from secondary diagnoses — and links it to AI coding tools.

From the payer's chair, that is cost inflation. From the hospital's chair, it is revenue that was owed all along and never captured.

Both of those are true at once. And total system cost still goes up — which is exactly the point of this series. Nobody in that story is behaving badly. Coding accurately is correct. Capturing what you are owed is correct. And the pool still depletes.

You cannot fix that from one organization. You can make sure your own authorization work is good enough that you are not also losing the revenue you already earned.

FIVE QUESTIONS WORTH ANSWERING IN WRITING

What share of our denials were preventable at the point of order rather than appealable afterwards?
Who does our authorization work, and do they sit with the specialty or in a central pool?
Can that person get a clinician on the phone today?
When an authorization is not done, who finds out — a manager, or the physician whose case it blocks?
What does a cancelled case actually cost us, and does anybody who manages authorizations know that number?

The cheapest denial is the one that never happens, and almost nobody is organized around producing it.

Ready to talk about where your organization stands? Book a free strategy session · Connect with me on LinkedIn, where this series runs.

DR Advisors — Physician's Trusted Advisor