Guest: Shawn McCardell, AVP of Revenue Cycle, Mercy Medical Center, Baltimore
Host: Praveen Chandran
Introduction and Guest Background in Revenue Cycle Leadership
Praveen Chandran
You're listening to The RC Executive Lounge podcast, the show where healthcare revenue leaders share real-world strategies, hard-earned lessons, and bold ideas shaping the future of revenue cycle. The views expressed by guests are their own and do not constitute endorsement of any specific product or solution.
Hi everyone, and welcome to the last episode of Season 2 of The RC Executive Lounge podcast series. I'm your host, Praveen, and I'm really glad you're all joining us today.
I'm very excited today to welcome a guest who brings something extremely rare to revenue cycle leadership: the instincts of an operator, the discipline of a Six Sigma Black Belt, and the strategic lens of private equity and venture capital.
Our guest is Shawn McCardell, Associate Vice President of Revenue Cycle at Baltimore-based Mercy Medical Center. Shawn brings more than 23 years of experience driving financial optimization across complex healthcare delivery networks. His expertise sits at a distinctive intersection, bridging legacy EHR architectures including Epic Resolute and Meditech with modern AI-driven automation, and pushing billing operations from reactive remediation to proactive front-end prevention.
He holds an MBA from Mount St. Mary's University, along with the Certified Revenue Cycle Representative and Certified Healthcare Financial Professional designations from HFMA, and an AI Governance certification issued just this past November.
What makes Shawn's perspective particularly compelling for me and for all of you is what he does outside his primary role. He serves as a specialized industry advisor to private equity and venture capital firms, pressure-testing health technology product roadmaps against actual buyer criteria and evaluating RCM acquisition targets. That vantage point, equal parts operator and investor, gives him a clarity about where the technology is real and where it is still hype that very few revenue cycle leaders can match.
Today we will talk about denial prevention, the shift from reactive to proactive revenue cycle operations, how he thinks about evaluating AI tools, and what health system leaders should be demanding from their vendors right now. Please welcome Shawn McCardell. Shawn, welcome to the show and thank you so much for joining us today.
Shawn McCardell
Thank you, Praveen, for having me.
Denial Management Framework, Cross-Functional Committees, and Priorities
Praveen Chandran
Fantastic, Shawn. Let's jump right into our first segment. Now, most organizations have claims denial management as a multi-year ongoing initiative. Tell us how does it work in your organization, and in general, how do you determine the priorities for this program? What is your framework with which you approach a program of the scale of claims denial management?
Shawn McCardell
So we institute a denial prevention committee that is cross-functional across many departments. We meet on a monthly basis and we really dive into all of the denials that are coming up. But it really stems from having that framework and having that collaboration across all the departments, because ultimately the back end could determine what's being denied and determine a root cause. But unless we have that relationship with our departments internally to help diagnose and then prevent those denials on the front end, having a committee in the back end looking at denials, you're really just working on your appeals. So focusing on that collaborative effort is what really makes it positive going forward.
Praveen Chandran
Makes sense. And Shawn, you have a very unique background. In addition to being the Associate Vice President of Revenue Cycle at Mercy, you also worked at other organizations. You have certifications, but most importantly, you work very closely with startups as well as venture capital and private equity. In your experience working across the spectrum, what have been some of the top reasons driving denials in an organization of the scale of Mercy? What patterns have you generally observed from the data?
Shawn McCardell
So generally it's the same things that you always see, which are eligibility problems, missing authorizations, documentation that doesn't support the service, coding mismatches, authorization mismatches. But really what stands out overall is just the preventable nature of these denials and how we can work upstream to prevent them. From an industry standpoint, over the last few years, we have been seeing an uptick in prepayment audits and postpayment audits, as well as a tendency for payers to really hone in on the areas where, from an operator perspective, we're not focused, which are those high-volume, low-dollar denials. Because they know that the cost to touch and collect those dollars is usually higher than the value of those dollars and those accounts. So we've seen a really big uptick in the low-dollar denials.
Root Causes, Industry Benchmarks, and AI-Driven Denial Rate Targets
Praveen Chandran
You said two things in your response that really caught my attention. First is the uptick in low-dollar denials. In fact, one of our previous guests just a few weeks ago spoke exactly about the need for operators to focus on low-dollar denials, because too many low-dollar denials could actually increase your yield significantly. So that's a great insight. But the second aspect that you talked about was very interesting for me, which is the preventable nature of these denials.
Now, when we spoke to other revenue cycle leaders at HFMA, MGMA, and other events, we hear that denials could range anywhere from as low as four to five percent to as high as twenty-three percent. Given the preventable nature of these denials that you have seen from data across all these different organizations, what do you think is a realistic target for denial rate for any organization, especially assuming they are going to be using agentic automation, or making appropriate operational changes as needed?
Shawn McCardell
So I would say my answer a few years ago before AI would have been in the four to five percent range would be what you would expect. But with AI, I think we can achieve, if you have a great process in place, around two percent or below, just because it allows you to not incur those denials that are timely filing or the low-dollar denials we spoke about. If you can have some AI to augment your staff and allow them to touch more accounts, you're automatically going to decrease those denial percentages. And I think you can cut it in half. If you were at four percent a year ago and you institute AI, you can reasonably look to cut that in half within the next year or two after you implement.
Praveen Chandran
And across the industry, what is a typical average that you have seen when it comes to denial rate?
Shawn McCardell
Average has been about four percent. And that's just from the fact that many organizations aren't at the same place when it comes to denials. Some have been doing it for many years and working as a committee. Other organizations are just starting that journey, but on average it's been about four percent.
Balancing Operations and Innovation in Denial Prevention
Praveen Chandran
Fantastic. Now, one thing that a leader such as yourself would face as a challenge is typically the competing priorities that your teams face when talking about a program like denial prevention. How do you determine the priorities between operational requirements and innovation requirements? Because your operations team is always going to walk up to you and say, "Shawn, you need to help me with this," while your innovation team will say, "Here are these two-X or five-X bets that could have a significant impact on denials, but it's going to take a few months or maybe even a year to implement." So it's the classic conundrum of short-term versus long-term, operations versus innovation. How do you tackle this challenge?
Shawn McCardell
So for us, operations is always the daily workload. We have to make sure that we're keeping up with our daily workload and our work queues. And if you have a good process in place, typically you're in that space already, so it becomes easier. And then what we do is we just focus on our high performers or subject matter experts and we do little pilots with them. What that does is it allows us to stress-test the new technology or the new process, and allows our high performers who are in it day in and day out to actually give feedback on that technology to then help us roll it out smoothly. And then they're your champions and cheerleaders who can be there for their teammates to make sure that adoption is there. Because we can have great technology and great processes, but it usually translates down to people, and getting them to adopt a new process means change management is always the most difficult piece of any project implementation.
Praveen Chandran
It's very interesting you spoke about change management as a challenge in particular. There's a segment later in this episode where we're going to be talking a lot about change management, so we'll definitely circle back to that.
Now, we started this segment by saying typically denial management is a multi-year program. So in a multi-year program, what do success targets look like for a specific year? Even across multi-year, you can keep optimizing a problem over and over. But for leaders such as yourself, when do you know you're close to achieving your long-term vision for this program? Or when do you start feeling like maybe the ROI is just not there, and maybe we can put it in maintenance mode rather than keep investing more and more?
Shawn McCardell
I will say I'm of the opinion that it's never going to go into maintenance mode. And that's not because we don't have a good process. That's because the payers change constantly. So the way I look at it is, any given year, once we're working on improvements and when we get down to that two to three percent denial rate and we're not really seeing any changes in our initial denial rate coming back, that means we're kind of stabilized. And then from there on out, any time we see any variation in the initial denial rate, that's when we dive in and take a look: is this a payer issue, is this a setup issue that we really have no way to change and we just need to work through the process to fix on the back end, or is this a new issue coming up? Maybe we missed a payer policy update. Maybe a payer is just denying it outright incorrectly. And then we dig into the root cause analysis and go through that entire process improvement again. And we just rinse and repeat every single month, every single year, because the reality is payers aren't going to stop denying, and anytime we figure anything out the payers will change on a dime on us.
A Recent Denial Prevention Initiative: Inpatient Appeals at Mercy
Praveen Chandran
Makes sense. Shawn, great set of insights on the denial management program. Thank you so much. For our audience, we're going to take a short break. When we come back, we're going to dive into a recent claims denial management initiative that Shawn and his team led. Please stay tuned.
Praveen Chandran
Welcome back, everyone. Thank you so much for staying with us. Shawn, let's dive right in. We talked about diving into a recent claims denial management initiative that you and your team led. Now, let's start with what challenge were you solving for? Please give us more insights.
Shawn McCardell
Absolutely. So when I came into Mercy, we had a process where our clinical staff were doing all of our inpatient appeals post-discharge. On the back end, we were finding a lot of write-offs to timely filing, and a lot of incomplete or not-well-thought-out appeals. And we worked to convince our leadership that we really needed to take a look at this process and improve it. So we brought in an outside resource to help us with that.
Vendor Selection, Buy-versus-Build, and Procurement Lessons
Praveen Chandran
And once you identified the challenge, you mentioned that you brought in external help with this process. How did you go about making that selection? Normally for any challenge there are two types of tension: one is the buy-versus-build model, but also your internal teams saying, "We've got this," versus an external vendor who has a lot of experience and can bring a unique perspective. What is your perspective on buy versus build, or going with an internal solution versus a partner?
Shawn McCardell
So my thought process on that is it really depends on where you are. If you've got a process that is just not working, sometimes it makes sense to rip the band-aid off and bring in an outside resource who can help you stabilize and then help you build that process back internally. And that's kind of what we chose to do in our situation. We took a look at the quality of the appeals that were going out, the timeliness of the appeals, and knew that the work it would take to fix that internally, we didn't have the time necessary. So it was better to bring in someone who could help from the start, work with our staff internally, and work with that vendor to then provide the feedback and framework necessary to improve the process going forward, and ultimately in a few years bring that back in house. I will also say there is definitely something to having knowledgeable staff members who, especially from a clinical appeals perspective, not only know the clinical piece but know the law piece, because that's the other thing we found: our clinicians in some instances were writing great appeals, but they didn't know the framework within which they needed to work and how they could escalate those appeals once we got the initial denial to other avenues.
Praveen Chandran
Makes sense. And Shawn, maybe this question is going to sound a little funny, but I'll still ask, because I've heard this complaint or challenge from a lot of executives. Consider this a follow-up to the previous question. You mentioned that you went with a vendor. I've heard from executives that on any given day they get tens, if not hundreds, of emails from vendors, because healthcare is a space where there are so many startups and so many vendors, small to large. And picking a vendor in itself has become a challenge, because even having a procurement team isn't solving the challenge of identifying the right vendor. Could you throw a little light on how you went about choosing this vendor, and what criteria, if any, that startups or others listening to this podcast can take away as the best way to approach an executive?
Shawn McCardell
Absolutely. From my perspective, it was networking and going to conferences, and not only seeing those vendors at the conferences, because you see a lot of them, so the more you see the more you know, but also connecting with my peers at those conferences and outside of those conferences to say, "Hey, what are you doing? What experience do you have with this vendor?" And that really allowed me to weed through the ones that either didn't fit what I needed or weren't getting very much positive feedback from my peers, and that led to the short list. Then I had to do my own due diligence from there. I would also say: challenge your internal staff's way of thinking. I've noticed that from an IT perspective, our resources internally aren't thinking outside the box. They're not thinking about what's out there. They're just focused, especially as an Epic shop, on what Epic is doing next. So don't always rely on them. Push them out of their comfort zone to help you evaluate vendors who are in the space. And especially with AI, you also need to make sure that from a governance perspective, you're working through your governance structure to make sure you can bring it in as quickly as possible.
Implementation Pitfalls and Measuring Initiative Success
Praveen Chandran
Makes sense. Now, when you went about with this implementation with the vendor, what did that look like? Were there any major pitfalls, surprises, or lessons that you would like to share? Typically with a project of this scale there's always something that comes across as, "Oh, we didn't plan for this." Were there any such moments, or on the flip side any aha moments where you found an insight you didn't even know until you started the project?
Shawn McCardell
Absolutely. Going into this project, we were not taking into account many of the various ways that payers can send their denials back to us. So we thought we had a pretty solid process with our department and the feedback they receive on a daily basis from the payers. But we didn't account for some of the paper correspondence that finds its way back into the organization. So we had to cast our net wide to all of the departments and all of the areas to find those letters that get sent back with denials on them that we hadn't really anticipated, and then worked to get those over to the vendor since they weren't in our normal workflow.
Praveen Chandran
That makes sense. And for a program of this scale, what has been the measurable impact so far? Or a better question really is: how did you think about tracking success for this program?
Shawn McCardell
So for this program, we had a benchmark of the success and overturn rate of our internal staff. That is what we're measuring against: the performance of our internal staff, knowing that when we did do an appeal and get it sent out, how successful were we? And we've been very successful. In the last six months, we've brought in over one million dollars in returned denials that we would not have brought in previously.
Praveen Chandran
So that sounds like a really fantastic outcome. Shawn, thank you so much for sharing so much detail about the project, the challenge, the vendor selection process, and how we were tracking success. With that, we are going to take a short break. When we come back, we are going to talk about an audience favorite topic, which is agentic AI, and we're going to hear all about how Shawn thinks about agentic AI in his organization in the short term as well as in the long term. Please stay tuned.
Agentic AI in Claims Denial Management: Near-Term and Long-Term View
Praveen Chandran
Welcome back, everyone. Shawn, let's dive right in. Now, irrespective of which event you go to, and you mentioned that you go to conferences, agentic AI has been the one buzzword that's constant across conference events over the last year to year and a half. So, as a leader at your level, what role do you see agentic AI playing in denials prevention or claims denial management when you look at the next twelve months versus the next three to five years?
Shawn McCardell
Absolutely. So I see the tools that we have now where agentic AI is doing the appeals assistance or doing the analysis and trying to work towards the root cause. But where I really see it going in the next five years is a fundamental change in the revenue cycle leadership role. We need to use agentic AI and all of the AI tools to help identify and streamline the process. It used to be where you would look at a report and make assumptions based on the report. Now you're going to get all of that fed to you, the assumptions made for you. And it's your job, as an operator, to understand how to use that agentic AI and those AI tools to hone in on the process improvements you're going to need to make, to put in your control charts, to ensure that when you're measuring everything and you see a blip, you can investigate that blip. You also need to use it to raise the level of your staff so they're working at their license, as they say in the clinical world, where they're not working on the routine, easy tasks. They're working on the hard stuff and allowing agentic AI to work on the really easy stuff. Because we're never going to take people out of the revenue cycle management process. We're always going to need them there, just like we're going to need them in the clinical setting, because healthcare is human.
Step-Function Improvements and the Case for RPA Alongside AI
Praveen Chandran
Makes sense. I think the last sentence that you mentioned really resonated with me personally, because for what it's worth, there are certain industries that are extremely human-centric, and I think healthcare is at the very top of the list. Now, looking at the same question from a slightly different lens: when you look at claims denial management, the processes, the tools, and everything, do you think there are areas where agentic AI can truly shift the game? Not just incremental improvements of five to ten percent, but really step-function improvements that can fundamentally change the way RCM teams function?
Shawn McCardell
Absolutely. If we can get it to work correctly on the front end, I think that's the biggest part, during registration, check-ins, and scheduling. If we can get the AI to do what we need it to do, which is check the patient's insurance, make sure they're eligible, check their benefits, check the payer policy, all at the time of scheduling or at the time of registration, we're essentially removing all of the bottlenecks and road bumps that happen later on in the process. And right now we're trying to work as far upstream as possible, but the limitation is we just don't have the bandwidth and the resources to do all of that work before the patient comes in or at the time of service. With AI, it can be done in an instant. The information can be surfaced right back to us so we can make the decision.
Praveen Chandran
That totally makes sense. And when you think about claims denial management, are there other technologies outside of agentic AI that you and your team are exploring that could help with reducing denial rates?
Shawn McCardell
I would say don't forget about bots and RPA, because there's still a place for that. With the expense of AI and paying for each token, you have to balance what really needs AI and what doesn't. What can a bot or RPA handle? That way, from a cost perspective, you're not wasting money on something all bright bells and whistles. If you're using AI to do something you could have done with a cheaper tool that gives you the same result, that's not efficient.
Praveen Chandran
Exactly. I think just to paraphrase for my own understanding: what you're essentially saying is to look at the operations process, and instead of trying to throw agentic AI at everything, look at which parts of the process are better off using RPA, because RPA is significantly lower cost but can potentially give you more or less the same result, versus certain parts that are pure agentic AI candidates where you're better off applying AI only to those. That's a great insight, Shawn. Let's take a short break. When we come back, we're going to talk about leadership in an RCM environment, navigating change management, and honing leadership skills for up-and-coming leaders. Please stay tuned.
RCM Leadership Metrics and Change Management
Praveen Chandran
Welcome back, everyone. Shawn, let's talk about RCM leadership. It's personally one of my favorite topics. Now, every leader, when they get to the office in the morning, there is one metric they obsess over, the first dashboard they look at. Is there such a metric for you?
Shawn McCardell
Yes. Mine is the initial denial rate, as well as eligibility accuracy. Knowing what I know about working upstream, those are the two things that I look at to see if we're out of control. And if I look at cash coming in and accounts receivable and look at them together, I can get a rough estimate of whether we're doing well or not. Do we have an improvement, or do we have a hiccup in the system or a process that we need to address? So for me, it's really looking at the clean claim rate, the initial denial rate, and eligibility.
Praveen Chandran
Fantastic. And now let's talk specifically about change management, because this was the one aspect that you mentioned earlier in the episode. There are always competing requests from your technology team and your operations team. For good or for bad, when you take a project, there are good chances that it has both technology components and operations components. I've very rarely come across an initiative that's pure operations or pure technology. Especially when you take up innovation initiatives, it will invariably result in operational process changes or even personnel changes. For such an initiative, if one part of the organization is giving you positive momentum, there's another part that is going to resist that momentum. How do you build momentum for change when implementing such initiatives, especially related to claims and denial management, across cross-functional teams?
Shawn McCardell
I will say again, it's doing those pilots. It's getting the line-level workers bought in and letting them drive the change. But from a cross-functional standpoint, it's also getting those leaders aligned, bringing them into the conversation, and, you wouldn't necessarily think about this, but bringing them into the conversation when you are looking at those tools, because you want to get them excited about the process and the project. You want their buy-in. And then the more they get bought in, the more they can tell their staff what we're going to be working on, and it kind of trickles down. But also, if you do that in the right setting with all the leaders, with your CFO and your CEO, then that buy-in is not only going down, it's going up. And the expectation from the top down is that this is something we need to focus on. Instead of trying to impart that change on your own, you leverage everyone below you and everyone above you to drive that change at the same time. That's where I've seen the most success: getting the buy-in of all the stakeholders, whether they're at the bottom or at the top. Because once you're all aligned, it's really easy to drive after that.
Praveen Chandran
Makes sense. And Shawn, if I may drill down on that for one moment. You can take the initiative that we talked about today, or any other initiative in the last one or two years. What has been the toughest cross-functional pushback you faced when trying to bring in change, and how did you navigate it?
Shawn McCardell
It has been AI, honestly, and it's been because of the fear of regular staff that they're going to lose their job. So what I've done is, at every staff meeting, we start by looking at all of the work that didn't get done, because I want to help them understand that the AI is not here to replace them. It's here to help them, to augment them, and to allow them to work on things that are intellectually a lot more stimulating than just doing routine clicking and data entry. And once they've seen that we're not here to replace them but to give them tools to make their jobs better and easier, it's helped. Now, I'm not going to say we don't tell them ahead of time that there could be an impact to two FTEs when we implement this process, but they know the process is going to take a while to implement and we're not going to reduce staff. We're just going to let attrition work. We have people who retire, people who leave, and then we don't necessarily need to hire them back. But on the flip side, we're also growing, and every time we grow, that normally means we need to add an additional resource. So if we can employ AI, we don't have to add those additional resources. It's a win-win for everybody: we help them reduce their workload and they focus on things that are more engaging for them, and we also get the benefit of the increased productivity from AI.
Praveen Chandran
I heard two very interesting insights from what you said. One is letting people do more meaningful work, which in itself has become a mission for a lot of leaders by utilizing agentic AI to make the work more interesting for existing staff. But number two, at least in healthcare, I've heard this misconception quite a bit that people are scared they're going to lose their jobs. But in reality, leaders tell me something very different: RCM is a team where the investments have not kept up with the demands. RCM teams are overloaded, and the backlog is so significant that even if AI absorbs some of the volume, the existing backlog will immediately absorb that capacity. So it is not that easy to let go of people. If anything, they always need more people, and that's what I heard hints of in your response.
Shawn McCardell
Yeah, absolutely. That's what we're seeing.
Leadership Advice and Closing Reflections
Praveen Chandran
Makes sense. And Shawn, this question is specifically important to pose to you given your experience not only as an operator but also as a Six Sigma Black Belt and through your involvement in private equity and venture capital. If you were to give one piece of advice to another CFO or RCM leader who is tackling denials management challenges in their organization, what would that be?
Shawn McCardell
I would say first and foremost, stop the bleed. Process improvement is great, and we need to get to the point where we're improving the processes, but on the back end we cannot let money leak out the door without preventing it. I take the approach that you need to stop the bleed first, just like in a medical emergency: you need to stop the bleed before you can diagnose what you need to do in order to affect the change. People always want to run into it and say, "Oh, we've got this tool, it can help on the front end." It's like, okay, but if you don't have a process on the back end to appeal what you're already getting denied, you're going to lose money because you've already incurred those denials. You've already lost that money. You need to fight to get it back. And then once you do that, that will help you learn all of the root causes driving those denials. Then you can build upstream. Typically, people want to jump in feet first into improving registration. Well, yes, we need to improve some parts of registration, but we also need to have a really solid process to not let that money leak out the door.
Praveen Chandran
Yeah, that makes sense. One last question to close out the episode today, Shawn, and hopefully this is a fun question. Inspiration for leadership can strike from anywhere, right? For some people it's an article they read in a magazine. For others it's a podcast or a framework they read about. For you, when you look at the last two to three years, has there been such a moment or such a book that significantly influenced your leadership thinking?
Shawn McCardell
I will say yes, but it's a very old book and a very old author. His name is Harvey Mackay. And he had a quote in several of his books and in one of his magazine articles. He said, "When you wake up every day, you have two choices. You can either be positive or negative. You can either be an optimist or a pessimist. And whichever you choose is going to shape your day." And for me, it's not just a philosophy at work. It's a philosophy in life. When you have an optimistic outlook on the day, when you wake up happy, when you choose to be happy every day, that just flows into everything else that you do. It flows into the work that you do. And you look at things not as an impediment, but as an opportunity. And when you start looking at things through the lens of an opportunity, then you can more easily craft a way through those issues. So to me, that's the thing that has changed how I've seen everything in the last few years.
Praveen Chandran
Shawn, our audience is going to walk away with so many insights on claims denial management from today's episode. First of all, thank you so much for sharing these amazing insights, especially considering that this is the last episode of Season 2. I know that our audience would already be looking forward to the launch of Season 3. So thank you so much for all these insights. But personally, the very last insight that you spoke about, in terms of being an optimist versus a pessimist every morning, is the insight that I personally take away from this episode. Thank you so much. And I really hope you would consider being back on the show in the upcoming seasons. Until then, thanks for joining us.
Shawn McCardell
Thank you, Praveen.
