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Cash Reserves: You May Need it for ICD-10 Transition.

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By Todd Greenberg, Member,  GSG Capital LLC

Healthcare providers may face disruptions in their claims payments even if they are all set to take on the new ICD-10 codes on Oct. 1, 2014. Although there has been a great deal of preparation for ICD-10 by software vendors,  clearinghouses and payers we really won’t know the true effect until the transition begins. Providers will still have to pay rent, staff payroll,  insurance and other obligations even if the transition does not flow as smoothly as projected. Experts are advising providers to continue operations as usual and think long term by investing in their practices (i.e. updating equipment and software).  However,  these same experts are recommending practices have up to several months’ cash reserves or access to cash through a loan or line of credit to avoid potential cash flow headaches. Many suggest that the best time for providers to discuss a loan or line a credit with their bank is when you are not desperate for funds. Therefore providers should be speaking to their banks now to make sure their lines of credit are in place and are sufficient to cover several months of cash flow needs. Another piece of advice is as practices keep their equipment and software current,  practices should fund these purchases through loan or lease financing. Because practices need to protect their access to cash before, during and just after the ICD-10 transition, it is not recommend that providers use cash on hand or use their bank lines of credit fund equipment or software purchases. By taking the precautionary steps now and structuring your financing approximately,  providers should be able to navigate through the transition effectively.

If you want more advice on structuring your financing or have equipment or software you need to fund,  please call on the expertise of Todd Greenberg at GSG Capital, LLC. 877-270-8306,


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