Healthcare Staffing Shortages and the Impacts on Provider Reimbursement

The healthcare industry is facing a critical staffing crisis, with workforce shortages reaching unprecedented levels across hospitals, clinics, and long-term care facilities. This strain has far-reaching implications – not only on patient care and operational efficiency, but also on provider reimbursement.

While much attention has been placed on the lack of physicians, nurses, and other frontline providers, a less visible – but equally impactful – crisis is unfolding behind the scenes: the shortage of qualified registration, coding, billing, claims management specialists.

When providers are understaffed in these critical revenue cycle roles, it can result in errors, delays in claim submissions, and consequently, a surge in denials – all of which negatively impact cash flow and the overall financial health of the provider. A recent report from the American Hospital Association (AHA) outlining the key trends impacting hospital financial stability in 2025 underscores the issue. According to the AHA, labor remains the single largest category of hospital spending.1 In 2024, total compensation and related expenses accounted for 56% of overall hospital costs.2 Billing professionals, like their colleagues on the clinical side, require heightened levels training, education, and qualifications for their staffing. Shortfalls in these areas undoubtedly lead to diminished reimbursement metrics and performance benchmarks.

Unsurprisingly, these financial pressures disproportionately affect rural hospitals that are increasingly strained by the onerous authorization and payment systems implemented by Medicare Advantage (MA) plans, which are rapidly expanding nationwide.3 A report by the Kaiser Family Foundation highlighted that prior authorization requests in MA rose to nearly 50 million in 2023 – a 43.9% jump from 2020.4 Despite this increase, hospitals are encountering more clinical denials and delayed payments for medically necessary services, often forcing them to rely on costly temporary staff or reduce service availability. The Health and Human Services, Office of Inspector General concluded that MA plans incorrectly denied up to 85,000 prior authorization requests in 2019 and rejected about 20% of properly billed and reimbursable claims.5

The average cost incurred by providers fighting denials is $43.84 per claim. Annually, this equates to an estimated $20 billion.6 To illustrate the staffing crisis in perspective, that number does not include the costs associated with clinical labor, which the American Medical Association estimates that staffing expenses add $13.29 per claim for a general inpatient stay and $51.20 to the claim-resolution cost of inpatient surgery.7

Staffing becomes even more difficult for rural facilities with limited technology and billing resources as MA burdens grow. Between 2020 and 2025, nearly 80% of rural providers reported higher levels of payor-related administrative tasks. Of those, half labeled the increase in workload as high or extremely high.8 These figures highlight how staffing deficits can disrupt the entire revenue cycle, preventing rural hospitals from providing prompt, high-quality care. In light of this, hospitals are required to offer increasingly competitive wages to retain and recruit staff. The AHA warns that without intervention, administrative staffing shortages could cost the industry billions in lost or delayed revenue.

As staffing challenges persist, proactive legal guidance is essential to ensure that your reimbursement strategies remain sound and sustainable. At Abril Law, we work closely with healthcare providers to mitigate the legal and financial fallout of these staffing issues. Whether it’s addressing denials, navigating underpayments, or advising on regulatory compliance, our team is equipped to help providers adapt and protect their revenue in this evolving landscape.

For more information on how Abril Law can assist you or your practice, contact us today at (305) 373-0901. Trevor Biglin, Associate, Abril Law, can be reached at tbiglin@abrilaw.com.

Article originally featured in the June 2025 Issue of the South Florida Hospital News and Healthcare Report: https://southfloridahospitalnews.com/healthcare-staffing-shortages-and-the-impacts-on-provider-reimbursement/

1 “Costs of Caring: AHA.” American Hospital Association, 30 Apr. 2025, www.aha.org/costsofcaring.

2 “Costs of Caring: AHA.” American Hospital Association, 30 Apr. 2025, www.aha.org/costsofcaring.

3 “The Growing Impact of Medicare Advantage on Rural Hospitals Across America: AHA.” American Hospital Association, Feb. 2025, www.aha.org/guidesreports/growing-impact-medicare-advantage-rural-hospitals-across-america.

4 Jeannie Fuglesten Biniek, Nolan Sroczynski. “Medicare Advantage Insurers Made Nearly 50 Million Prior Authorization Determinations in 2023.” KFF, 6 Feb. 2025, www.kff.org/medicare/issue-brief/nearly-50-million-prior-authorization-requests-were-sent-to-medicare-advantage-insurers-in-2023/.

5 “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns about Beneficiary Access to Medically Necessary Care.” Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services, 27 Feb. 2024, oig.hhs.gov/reports/all/2022/some-medicare-advantage-organization-denials-of-prior-authorization-requests-raise-concerns-about-beneficiary-access-to-medically-necessary-care/.

6 Michael J. Alkire, President and CEO, et al. “Trend Alert: Private Payers Retain Profits by Refusing or Delaying Legitimate Medical Claims.” Premier, Premier Inc, 9 Apr. 2025, premierinc.com/newsroom/blog/trend-alert-private-payers-retain-profits-by-refusing-or-delaying-legitimate-medical-claims.

7 Muoio, Dave. “Providers ‘wasted’ $10.6B in 2022 Overturning Claims Denials, Survey Finds.” Fierce Healthcare, 22 Mar. 2024, www.fiercehealthcare.com/providers/providers-wasted-106b-2022-overturning-claims-denials-survey-finds.

8 “The Growing Impact of Medicare Advantage on Rural Hospitals Across America: AHA.” American Hospital Association, Feb. 2025, www.aha.org/guidesreports/growing-impact-medicare-advantage-rural-hospitals-across-america.