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ICD-10: Minimizing the Financial Hit

Rene Letourneau, for HealthLeaders Media, December 16, 2013

Testman says there will also be permanent IT costs associated with ICD-10, such as the maintenance of new tables that are being built now and will continually need to be updated.

"We will also be mapping between 9 and 10 indefinitely because not all payers are being forced to move to 10. Workers compensation, for example, will still be billed in 9, so there is the ongoing cost of maintaining that translation system," she adds.

Even with its extensive planning and training efforts, MemorialCare still expects to take a financial blow when ICD-10 rolls out.

"Our margins will be impacted," says Testman. "There is no question as we look at our 10-year plan that our margins will go down. Our hope is that over time we might see some improvement in that. As healthcare evolves with population health management, we hope there will be opportunities for growth as we take on more risk. There may be a chance to get some of that margin back."

Testman believes the greater specificity that will come with ICD-10's more granular coding protocols will ultimately help the industry improve its ability to care for patients, but she doesn't expect it to happen quickly.

"Hopefully, down the road, all that additional information becomes useful in managing populations, but I think it will take a while," she says. "Right now, it just feels like a burden with no benefit."

Minimizing barriers to implementation

Bruce Ritchie, vice president of finance and CFO at Salisbury, Md.–based Peninsula Regional Medical Center, a 288-licensed-bed institution with fiscal year 2013 gross revenues of $478 million, says his organization has an ICD-10 steering committee that has been meeting for years to prepare for the transition.

"The ICD-10 steering committee is now in its third year of meeting on a monthly basis. Our steering committee includes executive leadership and a strong project management team that is responsible for allocating resources and minimizing barriers to implementation," he says.

PRMC expects to sustain costs prior to and following the ICD-10 conversion, Ritchie says. Based on an ICD-10 expenditure analysis completed for PRMC by an outside organization, the system expects to spend about $911,000 to $1.05 million on the project.

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