ICD-10 transition could pressure smaller, resource-strapped hospitals

The conversion to ICD-10 diagnosis and procedure codes could put pressure on smaller hospitals facing a wide array of challenges this year and be particularly difficult in the short term for those with weaker balance sheets and lower cash reserves, according to a new report from Fitch Ratings.

The transition represents yet another stressor for resource-strapped hospitals, it said.

Under ICD-10, the number of diagnostic codes will increase by a factor of eight, but will ultimately provide more data for hospitals and other researchers to compare cost and quality. While any change of this magnitude will mean increased costs due to IT and training requirements, they should be “short term and manageable,” Fitch said.

Yet with not only providers but also payers making the switch, the biggest risk will be to payment delays. Hospitals in a stronger financial position should be able to weather any glitches, but those with less liquidity might have a harder time brushing off the disruption, Fitch said.

Still, all providers have had a long runway to prepare for the transition, which should help to mitigate any initial turbulence. The ratings agency believes most not-for-profit providers will be prepared to make the switch by the Oct. 1 deadline.

Follow Beth Kutscher on Twitter: @MHbkutscher