What is a potential consequence of a high rate of claims denials for a healthcare organization?

A high rate of claims denials can lead to significant cash flow problems for a healthcare organization. When claims are denied, the organization does not receive payment for the services rendered, which can disrupt the financial stability of the organization. This situation necessitates additional administrative efforts to reprocess claims, appeal decisions, and rectify billing errors, thereby escalating administrative costs.

Moreover, the impact of reduced revenue due to denied claims can strain the organization's resources and create challenges in meeting operational costs, paying staff, and investing in services, ultimately affecting the quality of care provided to patients. Thus, the identification of claims denials as a potential threat is critical for maintaining effective revenue cycle management.