Hospitals Lose $132 Billion to Write-Offs

Bad debt and denied claims drove the losses, according to an analysis of hospitals using Kodiak's revenue cycle platform.

Updated on Nov. 9, 2026 in Healthcare

Bold flat-color editorial illustration of a tilted glass vessel spilling silver coins onto a plane beside a small wooden cross-shaped block, in deep red and cream. — U.S. hospitals lost an estimated $132 billion last year to write-offs for bad debt and denied claims, with revenue leakage rising nearly 18% from 2024. AI Illustration. Upload story photo >

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U.S. hospitals lost an estimated $132 billion last year to write-offs for bad debt and final claim denials. Revenue leakage rose nearly 18% compared with 2024.

Why it matters

Hospitals have operated on razor-thin margins since the COVID-19 pandemic due to surging operating expenses, growing administrative friction and rising uninsured and underinsured rates. The losses leave less room to fund care and staffing across the national healthcare system.

Revenue cycle technology budgets rose 7.6% to $69 billion this year, while final denial rates have plateaued at around 3% for three years. The $52 billion lost by Kodiak-platform hospitals is drawn from proprietary data, and the broader estimate's methodology was not detailed.

The players

Kodiak

Kodiak is a revenue cycle technology platform used by hospitals, whose proprietary data underpins the write-off analysis.

Peterson Health Technology Institute

The Peterson Health Technology Institute is a nonprofit that evaluates the cost and value of health technologies, including AI tools for prior authorization.

The details

Write-offs stemmed from bad debt and final claim denials, and Kodiak's analysis used proprietary data from hospitals using its platform. Prior authorizations have been a top use case for AI in healthcare, but a Peterson Health Technology Institute report found AI for prior authorizations has yet to reduce costs across the healthcare system as a whole.

2025: Hospitals lost an estimated $132 billion in write-offs.
February: Forrester released a report on revenue cycle technology budgets.
Earlier this year: Peterson Health Technology Institute released its report on AI and prior authorizations.

Market Landscape

Hospitals have operated on razor-thin margins since the COVID-19 pandemic, as operating expenses surged and uninsured and underinsured rates climbed. The write-off losses add a measurable revenue drain on top of those pressures, while revenue cycle technology spending rises to address them.

Patients with unpaid bills may face collection efforts, while higher administrative costs can translate into higher prices and premiums. Hospital finances under this pressure can affect staffing and service availability in local communities.

The takeaway

Revenue cycle inefficiency is a costly drag on hospital finances that technology spending alone has not yet resolved. Patients and policymakers should watch whether AI tools measurably reduce denials and write-offs over time.