At this point, you should be ankle-deep in ICD-10 preparations, which means you’ve probably spent a whole lot of time staring at your clinic’s finances and trying to figure out how the heck you’re going to cover the cost of switching. (And if you haven’t started prepping, here’s how to get started.) I’d love to provide you with a one-size-fits-all budget, but that’s just not possible. Every clinic’s ICD-10 transition will be just a bit different from the rest based on its specific needs and characteristics.
As a general rule of thumb, your ICD-10 prep budget needs to account for all the factors that will cost you time, money, or both (time is money, after all). These include:
- Technology upgrades or new software and/or hardware
- Staff training on coding and new technology
- Productivity loss during training, testing, and and the period immediately following the transition
- Temporary staffing to cover gaps due to preparatory activities and productivity lags
- Contract changes with vendors and payers
- New coding guides/superbills
Handy tools like the free Healthcare Information and Management Systems Society (HIMSS) ICD-10 Cost Prediction Tool account for many of your clinic’s variables, but even if you cover all your bases, you can’t guarantee your payers will be as prepared as you are—and that can spell trouble for your practice. If payers aren’t prepared to process claims containing ICD-10 codes, you’ll need a contingency plan to offset any cash flow delays. Your best bet is to have plenty of cash on hand (but not under the mattress) to keep your practice afloat. So get ready, get set, and get to saving three to six months’ worth of cash revenue.
Is saving that much money not an option for your clinic? Consider turning to your bank for a new loan or increasing an existing line of credit. Fair warning: If you go this route, you’ll need to assess your practice’s financial needs and work with a partner who understands the particulars of the healthcare industry. Keep in mind that lenders usually require lots of paperwork, including:
- three years’ worth of tax returns and year-to-date financials
- a current personal financial statement
- your most recent accounts receivable aging report
For more assistance regarding financial planning with your bank, check out this awesome list of ICD-10 cash flow tips from Wells Fargo.
However you acquire and allot your funds, be sure to nail down your plan soon. The transition to ICD-10 happens on October 1, 2015—just about six short months away. Will you be ready?