ICD-10: Five Tips on How Your Bank Can Help

Original story posted on: March 24, 2014

As healthcare providers across the nation prepare for the upcoming conversion to ICD-10, projected financial impacts should be factored into planning efforts. As you prepare for the conversion, the magnitude of the coming changes that will affect your employees, your patients, and your bottom line should not be underestimated. There are practical expenses and potentially hidden costs you should be planning for today.

These five tips will help you identify items you need to consider and actions you need to take in anticipation of expanding capital and increasing cash flow flexibility, both of which could positively affect your practice both before and following the October conversion. Like many aspects surrounding the transition, to be fully prepared, it is prudent to address finances three to six months in advance of October.

  1. Understand Capital Needs –The complexity of the ICD-10 implementation will require software upgrades and extensive staff training in advance of the conversion. Your bank can construct term loans to address these capital expenditures.

  2. Arrange Working Capital –Understand the average time it takes to collect receivables, and expect the average time to lengthen significantly as practitioners learn the new codes. To backstop a longer receivables cycle, you should have access to three to six months of working capital reserves. Although you cannot control whether your payors will be ready and whether they will be fluent in the new codes, an expansion of your working capital line of credit will help your practice manage available cash reserves through a period of delayed receivables. In advance of the conversion, talk to your banker about how to obtain or increase an existing line of credit.

  3. Widen Your Cash Flow Window – Rather than writing checks to pay for monthly operating expenses, use a business credit card to stretch out payments. Some banks offer extended 50-day billing cycles, which can provide additional cash flow flexibility. To avoid interest payments, pay your credit card bill in full each month.

  4. Before You Meet with Your Banker, Prepare – Compiling essential documents before meeting with your bank will expedite the credit review and result in a fuller discussion of the practice’s financial needs. These documents should include tax returns for the prior three years for the practice and the principals, year-to-date interim financials, a current accounts receivable aging report, and an updated personal financial statement.

  5. Work with a Bank that Understands Your Needs – As the healthcare industry becomes more complex, it is important to work with a bank that understands the specialized financing requirements of healthcare practitioners. Some banks have specialized units dedicated to the healthcare professional. A knowledgeable banking partner who understands the full scope of your industry and operation – from posting and managing your receivables to establishing loans and lines of credit – can design financing plans that anticipate your short- and long-term needs.

About the Author

Lisa M. Enright is a senior vice president and manager of the HealthCare Practice Banking Division for RBS Citizens Financial Banking.

Contact the Author

To comment on this article please go to

Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.