Wednesday, October 7, 2009

The cost of the switch, briefly revisited

Prior efforts to estimate of the cost of switching from ICD-9-CM to ICD-10-CM compared the cost to that of Y2K remediation. In a post last year, we also highlighted the comparison.

The American Hospital Association estimates that the cost of Y2K was $8 billion for hospitals. Compare that to the Health and Human Services (HHS) estimate for switching to ICD-10-CM of $1.6 billion.

Now comes the experience of someone who lived through Y2K and now is preparing his hospital for the government-mandated switch.

Stanley Padfield, system director for health information management at four-hospital Lee Memorial Health System, Cape Coral, Fla, considers the cost of the switch to be higher than that of Y2K remediation.

An article describing Padfield's experience notes:

Padfield says tackling the ICD-10 challenge will prove more difficult than Y2K “because there are a lot more variables involved.” Plus, providers that fail to adequately prepare risk not getting paid promptly by Medicare and other payers.

So, the early experience is already that the ICD-10-CM switch will cost hospitals more than the $8 billion they spent on Y2K. Which dwarfs the HHS low-ball figure of $1.6 billion for the entire health care system to switch.

Even the optimistic RAND report that analyzed the cost of the switch could not come up with more than $7.7 billion in benefits to the switch.

So the early signs are that the costs of the ICD-10-CM switch to the health care system will far exceed the benefits.