Dive Brief:
- A new Fitch Ratings report suggests that while hospitals can manage ICD-10, their credit could be hurt if they don't manage the resulting revenue cycle disruption adequately.
- The Fitch announcement points out that while providers and payers have had "ample time" to prepare for the big conversion, it's still likely that the conversion will lead to payment delays or disruptions.
- Fitch predicts that the "solid liquidity position" of most investment-grade hospitals should see them through the short-term effects of the transition. However, they note, revenue cycle disruptions due to ICD-10 could put rating pressure on hospitals with "weak liquidity positions and/or depressed profitability."
Dive Insight:
As we already know, ICD-10 implementation will be expensive in and of itself. But where the rubber really hits the road is a little further out, when hospitals become dependent on claims filed under ICD-10. The revenue "disruptions" Fitch mentions could be very substantial, and not every hospital will be equipped to handle them. Fitch is being relatively circumspect in terms of who is likely to see downgrades, but downgrades seem likely to come. If nothing else, hospitals won't make it through this stage without some serious battle scars.