The Smart Medical Practice

Practices Not Ready for ICD-10 May be Ripe for Takeover


Big FishTakeovers may be in the air for medical practices not fully prepared for the ICD-10 compliance deadline, but those takeovers may not be all that brutal or nasty. Consultant Paul Keckley, who serves as managing director of Navigant Center for Healthcare Research and Policy Analysis, predicts the takeovers will consist mainly of co-ventures and business partnerships, rather than outright acquisitions.

Joint ventures and mergers have already been par for the course this year between hospitals and physician practices looking to streamline compliance and management tasks. And major health plans have also begun their descent on medical practices and groups. Keckley’s predictions are further bolstered by the way many practices feel about ICD-10.

Are Practices Prepared?

Although the Oct. 1 compliance deadline is only months away, a number of small and medium-sized medical practices are nowhere near ready. A May 27 study found:

  • 30 percent of small and medium practices said no transition to ICD-10 should take place
  • 54 percent were highly concerned about the deadline
  • 50 percent were highly concerned about software upgrade costs
  • 65 percent were highly concerned about claims processing
  • 25 percent were unfamiliar with the new coding standards

Part of the transition involves the costly process of running duplicate systems for up to nine months to process claims made both before and after Oct. 1. Keckley predicts 25 percent of providers lack the capital to pull it off, resulting in missed deadlines.

The impact may be especially heavy on smaller practices, which are challenged by the administrative end of things to begin with. ICD-10 just adds another layer of burden to the mix.

Other Factors Pointing to Merger or Sale

Even if the transition to ICD-10 alone isn’t enough to prompt practices to merge or sell, they are simultaneously facing additional issues that drive up operational costs. Consistently meeting regulations, cyber security breaches and CMS compliance continue to eat up resources, increasing the likelihood smaller players will simply run out of them.

Being unprepared for the transition can result in a massive financial struggle, with dropped bills and denials. But any larger business that acquires the unprepared practice will be faced with the same issues unless they’re primed to absorb the problems.

Despite a newly introduced long shot bill and murmurs of a contingency plan from the Centers for Medicare and Medicaid services, the transition appears inevitable – whether practices are properly prepared or not.


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