Last week's surprise delay of ICD-10 implementation is a lose-lose-lose proposition for provider organizations: Costs will rise, physicians are likely to disengage, and the clinical benefits will be put off.
When the news broke early last week that the Senate passed and the president signed legislation that included a one-year delay for ICD-10 implementation, I could almost hear the collective groan coming from the healthcare finance community.
I have had many conversations about ICD-10 with CFOs and senior-level finance executives at provider organizations over the last 12 months. No one was expecting—or even hoping for—another delay, so I was sure the postponement to October 1, 2015, was unwelcome news to a lot of people.
When I checked in last week with several hospital and health system finance leaders, their reactions were exactly what I expected: frustration, disappointment, and concern over cost implications.
"To us it means increased cost," says Gary Akenberger, senior vice president, finance at ProMedica, a Toledo, OH-based health system with 2,268 licensed inpatient beds.
"It's anticipated that there will be a 30% to 40% reduction in productivity for the coders, so we've staffed up for that, and there is a shortage right now of coders where we are," he says. "What we are going to deal with is the cost of pushing this into next year. Some of that cost is just going to remain because of the additional time and resources that will be required. Training today for something that will happen more than a year from now doesn't have any value."
Ted Dudley, executive vice president and CFO at Catholic Medical Center, a 330-bed institution in Manchester, NH, is also concerned about what the delay will mean financially.
"We've already added staff in anticipation of going live this October," he says. "We've also entered into contracts with outside vendors, and, quite frankly, we'll have to go back and see whether or not there are opportunities to delay. Everyone has geared up—not only us, but the IT vendors and insurance companies."
"The other thing that we have is a few key folks that are looking to take us through this transition and then retire," Dudley adds. "We may not be able to keep all the key people we have currently because of the delay."
Dudley says the setback will also prevent provider organizations from benefitting from the greater specificity that ICD-10 promises to deliver, which could be used to identify clinical outliers in order to improve care and bring down costs.
"I think that one of the lost opportunities is that with ICD-10 we will be able to drill down a little more deeply in terms of what is actually costing the most and the variances between one facility versus another, so again there is a missed opportunity there," he says.
Losing physician engagement
Mary Ann Freas, vice president and CFO at Southwest General Health Center, a 358-bed institution in Middleburg Heights, OH, says she is "disappointed" with the decision to delay and is especially concerned it will have a negative impact on physician buy-in around the new coding protocols.
"Our organization has spent many hours and dollars preparing for the ICD-10 transition," she says. "We are in danger of losing momentum, particularly when it comes to physician engagement. This will be the second time the implementation has been delayed, and we are beginning to look like Chicken Little. Physician engagement is key to a successful transition, particularly since the single largest risk to successful implementation relies on additional physician documentation… If we are able to engage [physicians] in documentation needed for ICD-10 coding, the world will be perfect. However, to them, time is money, and the extra time it will take to educate themselves and to add the required additional documentation specificity may not be worth the effort."
Freas says Southwest General is in the process of determining its plans for handling the delay but adds, "I do not see a scenario where we would stop the implementation process. We have no way of knowing that this delay will not again occur before the October 1, 2015 deadline, so we need to be prepared. Successful implementation is vital to cash flow."
Mark Bogen, senior vice president and CFO at South Nassau Communities Hospital, a 435-bed acute care hospital in Oceanside, NY, also believes the biggest opportunity cost will be the loss of physician focus.
"Although [the delay] may help in certain aspects of the implementation as we are considering computer-assisted coding and a remote coding program to help recruit and retain coders, I believe that the momentum loss from working with the physicians will outweigh any benefits derived from the delay," Bogen says.
"We have been actively holding training sessions on ICD-10 for our voluntary staff and their office staff, and our coding folks at the hospital have been regularly attending clinical departmental meetings to review examples of hospital-based DRGs where the ICD-10 exposure may be significant. With this delay, the physicians will likely lose interest and focus, and rather than gaining a full year to enhance their education and knowledge of ICD-10, they will go into a hibernation mode. They now may even believe that there is a real possibility that there will be another delay or even a complete deferral of the adoption based on what they see as the success by the AMA and others in obtaining the delay until October 1, 2015."
Daniel Moncher, executive vice president and CFO at Firelands Regional Medical Center, a 236-bed institution in Sandusky, OH, is also frustrated with the legislation, saying, "I am very disappointed with the news. This is a necessary transition in U.S. healthcare, and we need to move forward with it and not keep delaying the implementation.…Personally and as an organization, we are anxious for the beginning of ICD-10 and would have preferred an October 1, 2014, start date."
"Our organization is prepared for ICD-10, and this delay will mean we cannot utilize the skill set we have trained everyone on for another year," he adds.
Although Moncher cannot quantify the exact cost of the delay, he says there is no doubt that it will add expense.
"This will increase our overall total costs of implementation," he says.