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Non-Profit Hospitals Face Negative Credit Potential From ICD-10 Conversion

Tue, 03/11/2014 - 9:49am

While the financial impact of the conversion to ICD-10 is expected to be manageable for non-profit hospitals, the potential for revenue cycle disruption may have negative credit reverberations, according to a new Fitch Ratings report.

"It is a challenging time as healthcare reform moves forward and other pressures, such as sequestration, inpatient volume declines, and reduced reimbursement, are being felt. ICD-10 conversion will bring additional costs at a time when hospital operations are already under pressure," said Gary Sokolow, Director in the U.S. Public Finance Group.

ICD-10 directly affects the central components of hospital reimbursement - coding, billing, and payment. Further complicating the change is the simultaneous transition of government and private payors to ICD-10.

While providers and payors have had ample time to prepare for transition to ICD-10 there is a heightened potential for payment delays and disruption. Fitch believes the solid liquidity position of investment-grade rated hospitals and health systems should help weather short-term pressure.

For more information, a special report titled 'Hospital Hot Topic: ICD-10 Conversion' is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research: Hospital Hot Topic: ICD-10 Conversion: http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=739015

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