Hospitals have just passed the two-year mark, although it's not a countdown most would celebrate. On Oct. 1, 2013, just less than two years away, ICD-10 will be the new standard for coding and billing, and hospitals will have to be compliant or face large setbacks to productivity and their bottom lines.
Hugh Kelly, vice president of sales and marketing of Avior Computing, and John Evensen, vice president of client development of Firstsource, recently spoke in a "Talk Ten Tuesday" webinar sponsored by ICD10monitor discussing the elements of a hospital's ICD-10 project plan that should be well underway, what hospitals need to do with payors and vendors and what the financial ramifications from all of this might be.
Mr. Kelly says if hospitals do not have a project plan that outlines how to coordinate its massive ICD-10 initiative, it better start now. There are several project plan templates available, such as AHIMA's model. He says AHIMA's model for ICD-10 project planning has 30 key steps, and right now, 19 should already be completed. Some of these steps include forming a steering committee, educating stakeholders, establishing a budget and instituting a change management program to help everyone adapt to this large-scale change. "You need a lot of institutional support because there will be resistance," Mr. Kelly says. "You're asking coders and physicians to change a core element of how they do their job."
According to Mr. Kelly, vendor and payor readiness has become a bigger issue as hospitals need those two parties to stay ahead of the curve as well. However, he says there are mixed results in terms of how ready those two stakeholders are for the ICD-10 transition. Payors appear to be well ahead of the curve in terms of managing their processes and preparing for testing with hospitals and other providers. Mr. Kelly suggests that hospitals consistently stay in touch with their IT vendors, as some may not have updates ready until 2013, less than a year before the "go-live." To make sure hospitals are doing their part from the IT side, they need to identify how many IT vendors they have and how many will directly affect ICD-10. "Hospitals have to have ample time for testing because testing won't go perfectly the first time," Mr. Kelly says. "The sooner you get that done, the more information you have to see where the risk is."
Hospitals want to make sure their ICD-10 project plans are in place to avoid putting revenue at risk, and even with preparation, Mr. Evensen says healthcare organizations could face a 2 to 3 percent decrease in top line revenue due to ICD-10. In order to offset those losses, he says hospitals need to cut costs by 10 to 15 percent in other areas. "The biggest expenses are pharmacy and staffing, but those aren't areas that can really be cut in today's environment," Mr. Evensen says. Instead, hospitals should be looking to correct inefficiencies directly within the revenue cycle. Mr. Evensen says Firstsource was able to help one organization save $2.2 million just by cutting costs and re-evaluating its revenue cycle management.
The financial implications of ICD-10 will most likely affect many hospitals, but Mr. Kelly says a hospital CFO additionally can help quell the effects through outsourcing. "One of the things a [hospital] CFO is most concerned about is cash and cash to the bottom line," Mr. Evensen says. "They understand they are going to have cash on hand to keep their doors open, and they don't want an increase in [accounts receivable] days." As hospitals realign critical staffing resources and train staff to implement and test the new system, he says outsourcing in non-clinical areas can assist in achieving those financial goals.
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Hugh Kelly, vice president of sales and marketing of Avior Computing, and John Evensen, vice president of client development of Firstsource, recently spoke in a "Talk Ten Tuesday" webinar sponsored by ICD10monitor discussing the elements of a hospital's ICD-10 project plan that should be well underway, what hospitals need to do with payors and vendors and what the financial ramifications from all of this might be.
Mr. Kelly says if hospitals do not have a project plan that outlines how to coordinate its massive ICD-10 initiative, it better start now. There are several project plan templates available, such as AHIMA's model. He says AHIMA's model for ICD-10 project planning has 30 key steps, and right now, 19 should already be completed. Some of these steps include forming a steering committee, educating stakeholders, establishing a budget and instituting a change management program to help everyone adapt to this large-scale change. "You need a lot of institutional support because there will be resistance," Mr. Kelly says. "You're asking coders and physicians to change a core element of how they do their job."
According to Mr. Kelly, vendor and payor readiness has become a bigger issue as hospitals need those two parties to stay ahead of the curve as well. However, he says there are mixed results in terms of how ready those two stakeholders are for the ICD-10 transition. Payors appear to be well ahead of the curve in terms of managing their processes and preparing for testing with hospitals and other providers. Mr. Kelly suggests that hospitals consistently stay in touch with their IT vendors, as some may not have updates ready until 2013, less than a year before the "go-live." To make sure hospitals are doing their part from the IT side, they need to identify how many IT vendors they have and how many will directly affect ICD-10. "Hospitals have to have ample time for testing because testing won't go perfectly the first time," Mr. Kelly says. "The sooner you get that done, the more information you have to see where the risk is."
Hospitals want to make sure their ICD-10 project plans are in place to avoid putting revenue at risk, and even with preparation, Mr. Evensen says healthcare organizations could face a 2 to 3 percent decrease in top line revenue due to ICD-10. In order to offset those losses, he says hospitals need to cut costs by 10 to 15 percent in other areas. "The biggest expenses are pharmacy and staffing, but those aren't areas that can really be cut in today's environment," Mr. Evensen says. Instead, hospitals should be looking to correct inefficiencies directly within the revenue cycle. Mr. Evensen says Firstsource was able to help one organization save $2.2 million just by cutting costs and re-evaluating its revenue cycle management.
The financial implications of ICD-10 will most likely affect many hospitals, but Mr. Kelly says a hospital CFO additionally can help quell the effects through outsourcing. "One of the things a [hospital] CFO is most concerned about is cash and cash to the bottom line," Mr. Evensen says. "They understand they are going to have cash on hand to keep their doors open, and they don't want an increase in [accounts receivable] days." As hospitals realign critical staffing resources and train staff to implement and test the new system, he says outsourcing in non-clinical areas can assist in achieving those financial goals.
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The Roles of Different Hospital Personnel in the Transition to ICD-10