Charity care is essential for hospitals to achieve their missions and, in some cases, maintain nonprofit status. Identifying eligible patients also prevents hospitals from wasting precious time and resources pursuing outstanding healthcare accounts receivable (A/R) that will never yield payment. However, managing charity care populations has always been challenging because it has traditionally required manual resources and reviews. Unfortunately, these challenges may intensify as more individuals become uninsured or underinsured amid patient premiums expected to increase by 18% in 2026—and enhanced premium tax credits still in limbo.
The good news is that scoring segmentation in healthcare collections—a data-driven approach to classifying healthcare A/R based on the likelihood of payment—helps hospitals identify charity-eligible accounts early, refine inventory, and improve operational efficiency.
The Challenge: Identifying Charity Care Early
Charity care, which refers to the services a hospital provides at no charge or a reduced charge to patients based on income and need, is only one part of uncompensated care. Bad debt is another. Bad debt refers to balances that hospitals have tried—and failed—to collect. This could be debt attributed to self-pay patients (i.e., those with no active insurance and those with active insurance who choose not to use it) as well as those with insurance who are unable or unwilling to pay. For example, patients may be unable or unwilling to pay when they have a high-deductible plan. When combined, charity care and bad debt equal the total amount of a hospital’s uncompensated care.
The American Hospital Association estimates that U.S. hospitals provide more than $42 billion in uncompensated care. However, this number can be misleading because it doesn’t show what portion of uncompensated care was preventable through better front-end revenue cycle management processes related to charity care screening. Ideally, hospitals would focus on tracking charity care closely and work proactively to find patients who qualify. Doing so not only benefits the community; it also helps the hospital present financial losses as purposeful support for those in need.
Without early identification of charity-eligible individuals, hospitals risk:
- Wasted follow-up effort and time on uncollectible accounts.
- Delayed or inaccurate charity write-offs.
- Poor financial forecasting and community benefit reporting.
- Paitent populations who don’t have an ability to pay, feeling harassed or helpless.
With early identification, hospitals can:
- Approve healthcare A/R write-offs more quickly
- Improve compliance with IRS 501(r) and state charity care regulations
- Model future charity care needs (especially as potential tax credits expire)
- Reduce administrative burden by refining pre-service workflows and avoiding unnecessary follow-up on healthcare collections
- Report accurate community benefit metrics to enhance public perception and bond ratings
- Target revenue cycle management outreach to high-risk populations
Inefficient and error-prone manual reviews don’t support early identification. Instead, organizations need scoring segmentation in healthcare collections—that is, structured, data-backed methods to prioritize accounts and streamline processing, particularly as patient volumes and financial aid policies evolve.
The Power of Scoring Segmentation in Revenue Cycle Management
Scoring segmentation in healthcare collections does exactly this. Using credit data, demographic trends, behavioral indicators—and in the case of Revenue Enterprises, proprietary patient scoring models and algorithms as well—healthcare organizations can use scoring segmentation to ‘score’ accounts by likelihood of payment to identify patients who can—and likely will—pay as well as those who may:
- Need financial counseling
- Qualify for charity care
- Require customized payment plans
When used proactively (i.e., before services are rendered), revenue cycle management teams can use patient scoring models to act before accounts become aged or move into costly bad debt that also negatively reflects on a hospital’s ability to manage finances efficiently and effectively. Early scoring segmentation in healthcare collections enables cleaner accounting, better forecasting, and more efficient allocation of staff time, all of which promotes financial stewardship and responsible management of both patient and organizational resources. With Revenue Enterprises’ scoring segmentation in healthcare collections specifically, organizations can transform a manual, reactive process into a proactive strategic advantage.
Scoring segmentation in healthcare collections is important year-round and especially during the first quarter when new insurance policies kick in as well as during the fourth quarter as organizations ramp up for the year ahead.
The Outcome: Clean Inventory and Focused Representatives
By filtering out charity-eligible and low-probability of payment accounts early, hospitals using patient scoring models maintain a clean, actionable inventory of outstanding healthcare A/R with genuine recovery potential. With Revenue Enterprises’ scoring segmentation in healthcare collections, revenue cycle management teams also gain real-time visibility into segmentation results. The outcomes?
- Better patient experience. Revenue cycle management representatives don’t pursue patients unnecessarily, which protects goodwill.
- Higher productivity. Revenue cycle management representatives spend time only on viable accounts.
- Improve financial performance. Pinpointed revenue cycle management efforts yield higher collections.
Revenue Enterprises provide real-time visibility into segmentation results, giving hospital teams confidence that their inventory is both clean and compliant.
Hire a Partner That Knows How to Deliver
Scoring segmentation in healthcare collections helps hospitals do more with less, maintaining financial integrity while upholding patient trust. With expertise in healthcare collections and segmentation, Revenue Enterprises is committed to ethical patient engagement, accuracy, and operational efficiency. If your organization is looking to improve segmentation and promote early charity care identification, contact Revenue Enterprises to learn more about how we can help refine your inventory for maximum efficiency and cleaner results.