Solving Denials at the Source: Why Outpatient Clinics Need to Shift Left

By Monte Sandler, COO, WebPT.

Denials are on the rise across the healthcare industry, hitting outpatient rehabilitation clinics especially hard. Margins are tight, staffing is limited, and many clinics don’t have the resources or infrastructure that larger organizations do. This puts them at a real disadvantage when it comes to managing their revenue cycle.

Many clinics are simply trying to stay afloat. They’re scrambling to get bills out the door, then waiting to see what feedback comes from the payers. As a result, they end up with high rejection rates, high denial rates, and a significant amount of unpaid accounts receivable. It’s a reactive approach to turning visits into revenue, and it’s not working.

The Root Problem: Front-End Errors

At WebPT, we’ve analyzed our revenue cycle management data (RCM) across our base and found that 67% of all exceptions (rejections, denials, and unpaid accounts receivable) originate from errors made at the front end of the revenue cycle. This includes improper registration, patient eligibility issues, and a lack of prior authorizations.

These are preventable problems. And yet they show up repeatedly, as many clinics don’t have the tools or training to catch them early. The truth is, physical therapists went to school for physical therapy, not business. Many rehab therapy practices are built around that clinical mindset. In turn, the business side ends up being reactive and manual.

Solution: Shift Left to Move Upstream and Solve It

The best way to tackle denials is to “shift left.” That means identifying root causes and solving them earlier in the process, before the claim is submitted. Use data to do this. If you can access the right data, you can analyze it to understand the patterns. Then you can address the issues that are causing denials, rather than just reacting to them.

For example, train your front desk staff to verify patient eligibility before they are seen. Perhaps you need to ensure the patient is registered correctly, so that when the bill is sent, the payer recognizes them. Alternatively, you may need to check that prior authorizations are in place. Some of this is training. Some of it is process. Some of it is using technology. However, all examples require a shift from a reactive to a proactive approach.

Start With the Data

Everything starts with the data. Rejections and denials usually come from the clearinghouse. That’s structured data that you can organize in a meaningful way. Unpaid accounts receivable is a little more subjective, as it comes from the practice management system and the team’s follow-up work.

In many clinics, people are working on these claims one at a time. They’re so deep in the day-to-day that they can’t see the patterns. It requires a system that allows staff to flag the reasons for nonpayment, giving you data you can analyze.

From there, you can examine whether your patterns are associated with a person, a process, a provider, or a payer. The numbers tell the story. The data shows you what to fix, and in what order.

Avoid the One-Size-Fits-All Trap

One mistake clinics can make is over-indexing. Take prior authorization, for example. Every payer has different requirements. If you say, “I’m just going to get prior authorization for every patient,” that creates a new set of problems.

You need a flexible solution. One that looks at the payer and follows the right path for that patient. Otherwise, you’re creating unnecessary work and frustration.

Make It an Ongoing Practice

Remember, this is not a one-and-done effort. You don’t fix it once and walk away. Payer policies change. Staff turnover happens. Patients change insurance. You need to maintain this effort over time. This means regularly revisiting the data, retraining staff, and adjusting processes when necessary to account for changes. It’s not optional. It’s part of how you run a successful business in healthcare today.

The Bottom Line

Rehab therapy clinics can’t afford to be reactive. Denials are too costly, and the system is too complex. But by starting with the data, identifying root causes, and shifting left, clinics can stabilize their revenue cycle and focus more energy on delivering care.

The process isn’t easy. But it’s worth it. Because every time you prevent a denial, you’re one step closer to running a healthier, more resilient practice.