Articles

Healthcare Cost-to-Collect: The Hidden Costs Impacting Revenue

Sep 29, 2026

The Cost Story: Why Cost-to-Collect Is Killing Your Bottom Line

 

In our July article, Thin Margins & Rising Bad Debt: Should You Outsource Early-Out?, we discussed the pressures surrounding early-out recovery: razor-thin margins, rising bad debt, and increasingly difficult patient repayment. 

For many healthcare organizations, the question “Should we outsource?” is really a cost question in disguise. 

And three words can change the conversation: Cost-to-Collect (CTC). 

But understanding CTC requires looking beyond the expenses that are easiest to see. Labor matters. Technology matters. So do statements, payment processing, data enhancement, and dozens of other operational expenses. 

Then there is the cost that may never appear neatly on an expense report at all: revenue you had the opportunity to collect—but didn’t. 

 

What CTC Actually Measures 

 

Cost-to-Collect (CTC) is a revenue cycle efficiency metric that compares total revenue cycle cost with total patient service cash collected. HFMA’s current cost-to-collect guidance emphasizes consistent methodology and transparency around what expenses are included, because peer comparisons are only meaningful when the numerator and denominator are defined in the same way. 

A strong CTC isn’t simply about spending less. It’s about understanding what you spend—and what that investment actually returns. 

An older HFMA Ask-the-Expert article citing the Hospital Accounts Receivable Analysis (HARA) Report described 2% as a best-practice target after a decline from 3%; however, more recent public sources point to typical hospital and health-system cost-to-collect closer to the 3%–4% range, with top performers using automation, denial prevention, patient access discipline, and workflow redesign to push the metric lower without sacrificing collection yield. 

That last piece matters. 

A lower operating expense means very little if the organization is also leaving more collectible revenue behind. 

 

The Costs Hiding Behind Your CTC 

 

When healthcare leaders evaluate the cost of an in-house revenue cycle operation, labor is naturally one of the first expenses considered. Salaries and benefits are visible, predictable, and easy to assign to a department. But they are only part of the equation. 

Recruiting, onboarding, compliance training, quality assurance, management oversight, technology licensing, reporting, and vacancy coverage all contribute to the true cost of maintaining an internal operation. 

Then come the expenses attached to actually engaging patients and moving accounts toward resolution. 

  • Statements. Printing, postage, and digital statement delivery carry a cost with every communication cycle. 
  • Data enhancement. Address verification, insurance discovery, demographic enrichment, propensity-to-pay information, and other data services may be necessary to locate consumers, prioritize inventory, and determine the appropriate path to resolution. 
  • Payment solutions. Giving patients convenient ways to pay requires infrastructure. Patient payment portals, payment-plan technology, IVR solutions, text-to-pay capabilities, and other digital tools can carry implementation, licensing, portal, or transaction fees. 
  • Merchant processing. Every card payment carries processing costs that become increasingly significant at scale. 

Individually, these expenses may look relatively small compared with payroll. Collectively, they tell a much different cost story. And even this still doesn’t capture the entire picture. 

 

The Most Expensive Cost May Be the One You Never See 

 

There is another side of CTC that is harder to find on a financial statement: missed opportunity cost. 

Imagine an organization successfully reduces its revenue cycle operating expenses. On paper, efficiency appears to improve. 

But what happens if fewer accounts receive meaningful outreach? What if staff only have enough capacity to work the accounts immediately in front of them? What if aging balances sit untouched while teams manage today’s priorities? 

The organization may be spending less…It may also be collecting less. 

That lost revenue can surface throughout the revenue cycle: 

  • Lack of prioritization: Staff spend valuable time working accounts in queue order rather than focusing resources where they have the greatest likelihood of producing a return. 
  • Insufficient outreach: Limited staffing or technology can reduce call attempts, digital engagement, follow-up, and the number of meaningful patient contacts. 
  • Payment-plan management: Establishing a payment plan is only the beginning. Failed payments, expired cards, missed installments, and broken arrangements require continued monitoring and follow-up. 
  • Aged inventory: As teams focus on new placements and immediate priorities, older accounts can fall further down the work queue and become increasingly difficult to resolve. 
  • Denials management: Delayed or insufficient follow-up on denied claims can turn recoverable revenue into avoidable write-offs. 

These aren’t always captured as clean expense lines. But they absolutely carry a cost. 

The true cost of collecting isn’t only what you spend. It’s also what your operation allows to go uncollected. 

Staffing Still Changes the Equation 

 

The workforce behind all of these processes remains a major part of the equation. 

Healthcare revenue-cycle leaders continue to report workforce pressure, payer friction, denial complexity, and rising administrative burden. Guidehouse and HFMA found that 90% of executives said labor challenges further exacerbated revenue-cycle operations in 2024, and its 2026 survey again identified workforce as a top-five stressor. MGMA‘s practice-operations data also shows high turnover in front-office and business-operations support roles, reinforcing that patient-access and revenue-cycle staffing models can be difficult to stabilize. 

A vacant position, therefore, doesn’t only create recruiting and onboarding costs. 

It can also mean fewer accounts worked, fewer outbound contacts made, less payment-plan follow-up, aging inventory, delayed denial resolution, and ultimately fewer dollars collected. 

That is why evaluating an internal operation solely on its payroll can create an incomplete picture of performance. 

 

The Proof Is in the Performance 

 

Outsourcing doesn’t automatically make an operation more efficient, nor is an in-house model inherently more expensive. 

The better question is: Which model produces the strongest financial performance for the total resources invested? 

Established revenue cycle partners can provide staffing, training, quality assurance, compliance infrastructure, technology, analytics, payment solutions, data enhancement, and workflow management across a larger operational platform. Organizations can gain access to those resources without independently building, licensing, staffing, and maintaining every component themselves. 

Scale can also change how inventory is managed. 

Technology and analytics can help prioritize accounts based on collectability and patient behavior. Automated and digital outreach can supplement live representatives. Dedicated workflows can identify aging inventory requiring intervention. Payment arrangements can be monitored after they are established rather than disappearing into a queue until something goes wrong. 

The goal isn’t simply to replace internal labor with external labor. 

It’s to create an operating model capable of consistently moving more accounts toward resolution without allowing the cost of doing so to outpace the revenue being recovered. 

That distinction is critical when comparing models. A lower CTC paired with declining liquidation isn’t necessarily a win. Neither is a highly productive operation whose technology, transaction, staffing, and administrative costs consume too much of the incremental revenue it generates. 

Leadership needs both sides of the equation. 

 

Look Beyond the Percentage 

 

If your CTC is trending upward (or isn’t telling the story you expected) don’t stop at the percentage. 

Start asking what is actually inside it: 

  • What are you spending on staffing, recruiting, training, and management? 
  • What does it cost to generate and deliver statements? 
  • How much are you investing in data enhancement, payment technology, merchant processing, portal access, and transaction fees? 
  • How much inventory isn’t receiving adequate outreach? 
  • Are payment arrangements being actively managed? 
  • Are aging accounts receiving continued attention? 
  • Are denials being resolved before recoverable revenue becomes a write-off? 

And perhaps most importantly: 

How much revenue could your organization be leaving on the table because the resources simply aren’t there to pursue it?

Cost-to-Collect should tell more than a cost story. It should tell you whether the infrastructure, people, technology, and processes you’ve invested in are producing the financial return your organization needs. 

Because in today’s healthcare environment, the cheapest dollar to collect isn’t necessarily the goal. The goal is making sure collectible dollars aren’t being lost in the pursuit of cutting costs.

In the next installment of this series, we’ll explore why these pressures can be even more pronounced for rural hospitals and community health systems. 

Want a clearer understanding of what’s really driving your Cost-to-Collect? Let’s talk. 

Karie Bostwick

VP of People and Compliance

As VP of People and Compliance at Revenue Enterprises, Karie Bostwick oversees People functions including recruiting, training, onboarding, engagement and satisfaction. Additionally, she is responsible for compliance training, oversight and monitoring.

Karie has a long history of working in the revenue cycle support industry. Her skills span leadership, operations start up, policies and procedures development, operations workflow, budgeting and client management.

She is passionate about the experience of our people, patients and the Healthcare clients we serve and believes that a team of diverse, talented and motivated individuals working together toward a common goal can make a difference.

Robert Sterett

VP of Information Technology

As a transformational leader Robert Sterett has leveraged his 20 years of experience to build effective service lines and exceptional teams. In his role as VP of Information Technology at Revenue Enterprises, Robert excels at taking a unique, balanced, and strategic approach to technology leadership with people first for the best possible outcome. Using his experience from engineering, project management and service line management he takes a multi-faceted approach to ensure the right people are in the correct position coupled with the best technology to meet or exceed all expectations from security to compliance and business continuity.

Robert’s leadership style lends itself to building long term relationships and has consistently been a relied upon strength in many organizations. Over Robert’s time as an IT operational and project leader, he has spent significant time in both hands-on technology facing roles and client centric management roles to bring the best solutions that strive to meet the business and client needs.

Focusing heavily on his personal development skills and opportunities, Robert continues to foster coaching and mentorship relationships everywhere in his life, and the lives around him.

Douglas Dunbar

VP of Sales & Marketing

As VP of Sales and Marketing for Revenue Enterprises, Douglas Dunbar leads with a passion for building strategic partnerships, nurturing relationships, and upholding customer service excellence. In his role, Doug focuses on marketing and brand strategy, sales team leadership, and working closely with members of the management team to best serve company goals.

Doug has over 28 years of National sales and marketing call/contact center leadership, with 10 years of service specifically at Revenue Enterprises. Currently, Doug serves as part of Wyoming HFMA Chapter leadership and has held various roles in Colorado HFMA Chapter leadership for over 9 years.

In his spare time, Doug is very family oriented. Additionally, he loves traveling, cycling, golfing, fishing, hunting, and boating.

Kris Brumley, MBA

President & COO

As President & COO of Revenue Enterprises, Kris Brumley is a collaborative partner within the executive team and a leader for operational functions across the organization. Kris productively shares vision, drives innovation, and supports those around her in a way that elevates them and fosters continuous improvement and results. She has helped create a supportive environment for clients resulting in 98% client retention and a 65% NPS score for all clients and 75% for top clients by revenue.

Kris possesses an MBA in data analytics and has twenty-five years of experience in the healthcare industry, with 19 specifically in revenue cycle. She brings a wealth of customer service experience to her role and has worn many hats at Revenue Enterprises including Director of Business Development, EBO Division Director, and VP of Client Experience Management.

In her personal life, Kris is as busy outside of work as inside. She values spending time with her family, and enjoys fishing, hiking, traveling and interior decorating and design.

Timothy (Tim) Brainerd

CEO

As CEO of Revenue Enterprises for almost 20 years, Tim Brainerd leads by example. He promotes a shared vision and stewards a culture of Integrity, Passion, and Respect. He has assembled and empowered high-performing talent and teams to support customers, facilitate strategic planning and manage the capital of the company. Under his leadership, Revenue Enterprises has doubled in size three times over the past fifteen years while maintaining a culture of caring and gratefulness.

Tim has close to four decades of revenue cycle experience, including nineteen years with RSI
Enterprises. He has been a past president of Colorado Chapter of the HFMA and a presenting speaker on the topic of Leadership. He is a fifteen-year member of Vistage International, the world’s largest CEO coaching and peer advisory organization for small and midsize business leaders.

Raised in the Midwest, Tim values humble principles like being respectful, caring, passionate, self-reliant, and most importantly grateful. His most important lesson and the lesson he hopes to pass on in all relationships is living the Golden Rule–do unto others as you would have them do unto you. He is intentional in his choices and believes in making decisions, taking action, being accountable, and loving your neighbors.

Whenever possible, Tim spends his time with his wife of nearly forty years, his adult children, and his grandchildren. His hobbies include fishing, golfing, traveling as well as game nights and sharing great food with his family.