AMA survey shows physicians, patients continue to be heavily burdened by prior authorization

The AMA survey shows prior authorization is still materially burdening care delivery, with 92% of physicians saying it negatively impacts patient outcomes, 95% citing delays in access to care, and 26% reporting adverse events. Another 32% said requests are often or always denied, while 88% reported higher resource use and unnecessary waste. The findings reinforce pressure on insurers and policymakers to streamline prior authorization rules, but the immediate market impact is likely limited.

Analysis

This is less a headline about patient frustration than a slow-burn margin transfer from providers to payers and the vendors that can automate the friction. The near-term losers are independent physician groups and post-acute operators, where prior-auth labor is pure overhead and denial rates convert directly into slower cash conversion, more resubmissions, and higher abandonment. Over the next 6-18 months, the biggest economic winner is not necessarily the insurer itself, but the software layer that sits between payer rules and provider workflow: companies that can reduce authorization touches, automate coding, and improve first-pass approval rates should see higher attach, lower churn, and potential pricing power.

The second-order effect is capacity leakage: when clinicians spend more time on admin work, throughput falls, which can worsen appointment backlogs and push patients toward higher-acuity settings later. That creates an asymmetry where hospitals and specialty care networks may see a mix shift to more expensive downstream utilization, even if nominal utilization is suppressed upfront. If regulators keep pushing electronic prior-auth standards, the near-term setup is counterintuitive: compliance costs rise first, and ROI is uneven until interoperability actually reduces denial and turnaround times.

The market may be underestimating how this becomes a policy overhang for managed care multiples. The public narrative is that automation is pro-consumer, but if evidence accumulates that prior auth is causing adverse outcomes, payers face potential mandate risk, reputational pressure, and higher appeals-related operating expense. The contrarian view is that this is not an immediate earnings hit for the biggest plans because they can absorb the friction; the real squeeze lands on smaller, less-automated insurers and on providers with weak revenue-cycle infrastructure.

Key Decisions for Investors

• Long EVH on a 3-6 month horizon: the operating leverage to workflow friction is attractive if payer/provider digitization accelerates; use pullbacks to build a position, with downside limited by recurring software revenue and upside from compliance-driven adoption.
• Long DOCS or another workflow-enablement name versus short a basket of labor-intensive outpatient providers over 6-12 months: if prior-auth burden persists, companies that reduce admin time should gain share while manual-heavy groups see margin compression.
• Short smaller managed care names with weaker technology stacks versus long larger, more automated incumbents on a 6-12 month pair basis: the thesis is that compliance and appeals costs scale nonlinearly for less efficient payers.
• For event-driven exposure, buy 6-9 month call spreads in healthcare IT names tied to automation/interoperability; the catalyst is incremental CMS standardization, with payoff contingent on actual adoption rather than policy headlines.
• Avoid adding to small-cap physician staffing and outpatient operator names until evidence appears that authorization turnaround times are improving; the risk/reward remains poor because admin burden acts as a hidden multiple headwind rather than a visible line-item expense.