Subrogation is supposed to recover money, not waste it. But across the healthcare industry, that’s exactly what’s happening.
Designed to return dollars to health plans and their members when a third party is responsible for medical costs, subrogation could be a strong financial lever for payers. Instead, it consumes enormous amounts of time, energy, and overhead, often without proportional results. After nearly 30 years in this space, I’ve observed that up to 60% of analyst communication time is wasted, tied up in voicemails, repeated outreach, and administrative back-and-forth.
This results in delays, missed recoveries, avoidable administrative spend, and a system that is operating well below its potential. Frankly, that’s not an option for healthcare payer operations anymore.
Streamlining communication increases bandwidth and capacity among team members by as much as 30% with a corresponding increase in quality of outcomes.
Let’s take a look at what’s slowing subrogation down, why it matters now more than ever, and how smarter, platform-enabled communication can fix it.
The hidden cost of manual communication in subrogation
At its core, subrogation is about recovering payments when a third party (someone other than the health plan or their member) is financially responsible for care. That might involve motor vehicle accidents, workplace injuries, premise liability, or product-related claims.
But while the function is legal, the process is operational. And that’s where most subrogation teams hit a wall.
The problem is communication
Because subrogation is a process involving multiple stakeholders like attorneys, lien resolution companies, payers, members, and property and casualty carriers, clear communication between parties is critical.
Unfortunately, subrogation still relies heavily on:
- Voicemails and fax machines
- Manual case updates
- Disconnected spreadsheets
- Repeated follow-ups to validate or gather missing information
In this game of phone tag, analysts spend up to 40% of their time trying to get responses from external stakeholders. And 60% of that effort doesn’t lead to actionable outcomes. It’s tied up in unanswered calls, dead-ends, and miscommunications.
That time doesn’t drive recoveries, it drives up cost.
Let’s quantify it:
- A team of 20 analysts with 25% wasted effort = 5 full-time salaries with no ROI
- Scale that to a payer with 100 analysts = $2 million+ in unnecessary cost annually
- All while recovery opportunities are missed, delayed, or compromised
In today’s cost-constrained landscape, that’s not sustainable.
The high-stakes impact of slow subrogation ops
Timing is everything in subrogation. Even as the industry shifts left, when communication is slow, incomplete, or reactive, payers risk missing the settlement window altogether, losing standing to assert their plan’s rights, or getting cut out of distributions by third parties.
You also increase administrative burden and strain member and provider relationships, which leads to higher abrasion and compliance risk.
And there’s a new challenge on the field: lien resolution companies. These firms are hired by plaintiffs’ attorneys to negotiate recoveries and slow the process even further. In many cases, their involvement doubles the recovery timeline with little change in financial outcome.
It all adds up to lower recoveries, longer cycles, and higher operational costs. And the well-being of members hang in the balance.
Why isn’t this fixed already?
Let’s be honest: subrogation gets overlooked.
It’s seen as niche. Legal-heavy. Less scalable than other areas of payment integrity. While AI gets deployed in prior auth and prepayment edits, subrogation is still running on spreadsheets and voicemails.
But subrogation is one of the only post-payment levers that directly recovers real dollars. Especially for self-funded plans, it plays a critical role in protecting assets and lowering the total cost of care.
If you’re recovering $5M annually through subrogation, and you reduce wasted time and effort by 30%, you’re not putting more dollars back into care, you’re also unlocking capacity to scale your efforts.
Two proven ways to modernize subrogation ops
While the industry tries to solve most things with more technology, this is actually a prioritization problem.
The tools to modernize subrogation already exist. Here are two that consistently deliver high ROI with low lift:
1. Structured data exchange
It’s time to stop chasing facts of loss by phone. Too much information is missed when it isn’t able to be surfaced by all necessary stakeholders. Structured data exchange allows stakeholders to share and receive case information automatically, without calls, emails, or wasted efforts from analysts.
It doesn’t require a new system. Plenty of payers are finding enormous benefits in tools as simple as a standardized Excel file shared between parties. Other options include secure file transfers with attorneys or carriers and real-time API connections to surface status updates.
This reduces manual outreach and helps to ensure that everyone from analysts to attorneys is working from the same source of truth.
2. Secure portal-based communication
Secure portals include authenticated access that safeguards sensitive information from unauthorized parties, while still facilitating a single source of truth for the facts of loss.
Within a secure portal, stakeholders can:
- Upload accident reports
- Acknowledge liens
- Submit payment updates
- Track case progress
No missed voicemails. No re-faxing the same form twice. No errors driven by miscommunication between multiple invested parties.
Portals like this are already in use across healthcare operations. The same portals that are trusted for clinical data and provider networks can be secured sustainably for subrogation. What’s not sustainable is continuing to spend six figures on unnecessary administrative effort while recoveries stall.
Subrogation as a cost-control strategy
In today’s landscape, administrative overhead is under a microscope. Medical loss ratios are hovering around 90%, and chief financial officers are looking for every lever that can create measurable savings without impacting care quality.
Done right, subrogation has the power to be that lever.
While subrogation may be a small percentage of overall spend, it’s one of the few areas where we can directly reduce cost without impacting care.
That’s what makes it such a powerful, and often underestimated, part of a payer’s financial strategy.
Let’s say your plan recovers $500,000 a month in subrogation. You cut 30% of your workforce cost by eliminating wasted communication. That results in $150,000 in monthly savings, or $1.8 million annually. And that doesn’t even account for the recoveries you’re currently missing due to late detection or delayed action.
The future of subrogation is platform-powered, people-first
Having the advantage in subrogation has long been seen as having the right legal playbook. But to modernize subrogation, we need to build the right infrastructure so that teams focus on the most high-value work that drives the most impact.
A modern subrogation platform should enable:
- Integration with claims and eligibility data
- Configurable workflows and rules
- Role-based access for attorneys, analysts, and partners
- Real-time status tracking
- Automated triggers for follow-up or documentation requests
- Reduced abrasion for members and providers
It’s not technology for technology’s sake. A modern subrogation platform ultimately empowers analysts to spend their time recovering value for payers and their members rather than chasing facts of loss.
With each of the 50 states maintaining their own subrogation regulations, plus evolving federal guidance, and emerging fourth-party lien resolution companies, payers must navigate a patchwork of compliance requirements that make effective communication and expert judgment more important than ever.
As regulations evolve and complexity increases, having a centralized, tech-enabled operation is both efficient and essential.
What happens if nothing changes?
Simply put, payer margins don’t allow for subrogation to continue in its trajectory. Streamlining communication is a must to keep subrogation programs alive. Without it, payers risk longer recovery cycles, lower return on investment, higher abrasion with members and providers, increased compliance risk, and greater fragmentation across the payment integrity ecosystem.
Beyond subrogation, the industry is moving toward an operating system approach, applying the capabilities that drive results in data mining and prepayment edits to every arm of payment integrity.
Investing in smarter communication and a platform-first approach can unlock more agile, accurate, defensible, scalable, and human-centered results for subrogation.
Streamlined communication is a big and easy win
We don’t need more emails. We don’t need more voicemail messages. And why are we still faxing? What we need is a better system.
Subrogation is operationally stunted, but it’s fixable with streamlined communication. And, as I see it, all payers will be streamlining communication within the next three years.
If your organization is still relying on voicemails, email threads, and word-of-mouth to coordinate multi-party legal recoveries, it’s time to take a hard look at what that inefficiency is costing you in dollars, time, and missed opportunities.
We already have the tools. What’s left is the commitment to change.
Ready to take the next step in optimizing your subrogation workflow? I have a simple solution backed by decades of industry experience. Let’s talk.
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