The Uncompensated Cost of Manual Prior Authorization Workflows

It’s widely recognized across health systems that prior authorization (PA) has become burdensome, with its impact extending beyond delays in care to broader system costs. According to an American Medical Association (AMA) survey, 94% of physicians say PA negatively impacts clinical outcomes, and 88% report it leads to higher overall healthcare use.

What is less widely understood is how these costs accumulate within health systems. PA is often treated as a single administrative requirement, but in practice, functions as a distributed workflow spanning multiple teams and systems. As a result, its costs extend across staff time, delays in care, and downstream utilization.

But not all of these costs are inevitable. While the PA process is complex, the way it is managed determines how costly that complexity becomes. By improving the coordination of PA workflows, health systems can significantly reduce operational burden and lower downstream costs.

Distributed workflows make costs difficult to calculate

PAs today require physicians, nurses, billing teams, pharmacists, technicians, and more to work together across clinical and administrative roles. A single PA involves a median of three staff members, according to research published in Health Affairs Scholar. Because responsibilities are spread across roles and systems, staff must coordinate across teams and follow up on submissions that may sit in queues or require additional information. 

The result is high operational burden. At a system level, PA consumes time equivalent to more than 100,000 full-time registered nurses annually. And because the work is so distributed, the true cost of this work is difficult to fully quantify. 

Manual processes increase administrative spend

The manual, fragmented way PAs are typically completed contribute to this work burden. Many organizations still rely on a mix of phone, fax, and payer-specific portals. Only about 40% of PA transactions are conducted fully electronically, according to the 2025 Council for Affordable Quality Healthcare (CAQH) Index.

The Index also found that manual administrative transactions cost more than twice as much as electronic ones. Across the system, those costs add up. The American Academy of Family Physicians estimates that physicians spend the equivalent of nearly $48,000 per year per physician interacting with health plans. At a broader level, PAs account for an estimated $35 billion in U.S. healthcare administrative spending.

Delays increase total cost of care

When patients receive a prescription, the expectation is that treatment can begin. But prior authorization requirements introduce uncertainty. Prescriptions may be held at the pharmacy while approval is obtained or filled without insurance. Infusions may be rescheduled or altogether cancelled while coverage is in limbo. Either scenario leaves patients confused about why they can’t get their medication or why it costs far more than expected.

PAs can also be denied for administrative reasons such as missing information or misalignment with payer requirements. When that happens, requests must be resubmitted and patients wait again. Many denials are never even appealed: Only 20% of physicians report that they always appeal PA denials.

As a result, timelines become unpredictable, leading to patient drop-off: 82% of physicians report that PA can lead to treatment abandonment, as patients who don’t know when or whether their treatment will be approved may disengage before therapy begins. Delays can also shift costs to patients, with 80% of physicians reporting that prior authorization leads to out-of-pocket spending. When those costs are higher than expected, patients may abandon treatment at the pharmacy, and therapy never begins.

These delays and abandonments mean patients may receive less effective alternatives, require additional visits, or experience worsening conditions. Among delayed cases, 62% require additional physician visits and 60% result in more severe symptoms or conditions. That increases the total cost of care across the system.

How better workflows reduce spend

Taken together, these dynamics can make PA feel like a problem that’s too big to fix. But these costs, while widespread, aren’t inevitable nor inherent to PA itself.

A significant share of the PA burden comes from how workflows are typically managed today. Studies show that when PA processes are better aligned and coordinated, outcomes improve. One study found that optimized workflows reduced authorization times by more than a third, with even greater improvements in more complex cases. The same study found that when provider submissions are better aligned with payer requirements, denial rates drop by 65%. When submissions match what payers expect, fewer requests are rejected and fewer need to be reworked.

In other words, a high share of today’s PA cost comes from operational friction, and that’s something health systems can address without waiting for broader policy changes.

Reducing prior authorization costs now

Now is the time to address the operational friction behind prior authorization. For one, the problem is growing: Overall medical administrative transaction volume increased by 10% from 2024 to 2025, and 65% of providers report that prior authorization volume has increased over the past three years.

In addition, new interoperability requirements are on the horizon that will require payers and providers to exchange prior authorization requests, documentation, and decisions electronically. Based on Fast Healthcare Interoperability Resources (FHIR), these standards are designed to allow for real-time, integrated workflows within the EHR. Only 20% of providers have begun implementation as of yet, but the industry as a whole will need to act to catch up fast.

The good news is that tools that automate processes, streamline workflows, and reduce delays are already available. Cinnamon was built to help health systems remove barriers between prescriptions and patients. By bringing prior authorization, affordability, and ongoing patient support into a single workflow, Cinnamon helps health systems move faster and reduce both administrative and financial burden.

The cost of prior authorization is not inevitable. Get in touch to find out how Cinnamon can help reduce unnecessary spend in your system.