Enhancing Financial Performance: An Application of Lean Six Sigma to Reduce Insurance Claim Denials

Health systems typically lose approximately 3% to 5% of net revenues annually due to insurance claim denials. While most denials can be appealed, the administrative burden of sorting through and appealing them can be time consuming and delays the revenue collection process. This article describes how the Lean Six Sigma methodology was used to improve the revenue cycle by reducing insurance claim denials for a leading pediatric hospital in the United States. The use of this approach is demonstrated through a case example focused on reducing denials by improving the hospital's Emergency Center registration process. Multiple pilot tests were performed to ensure the proposed changes sufficiently addressed the problem of missing/incomplete insurance information. Results indicated that the revised registration form reduced missing/incomplete fields by 67%. As a result, the revised form was implemented, which helped greatly reduce insurance claim denials. In addition to providing an example from which other health systems can learn to successfully implement Lean Six Sigma to enhance the performance of their revenue cycle, this work helped the hospital in which this research was performed improve its patient experience by making it easier for patients to complete their Emergency Center registration form.