IT Vendors Feeling Sting of ICD-10 Delay

Healthcare providers that were diligently working towards the October 1, 2014 ICD-10 implementation deadline aren’t the only ones hurting from the one-year delay in the code transition.


Healthcare providers that were diligently working toward the October 1, 2014, ICD-10 implementation deadline aren't the only ones hurting from the one-year delay in the code transition. Information technology companies were also counting on the revenues associated with their customers' ICD-10 preparations and this loss of business is impacting their bottom lines. 

IT solutions and services vendor CTG this week announced its financial results for the first quarter of 2014 and revised its full year guidance based on the ICD-10 delay. During an April 22 conference call, the Buffalo, N.Y.-based company said that for several quarters its ICD-10 business has been growing as the October 2014 conversion deadline approached, but now that the date has been unexpectedly postponed by at least a year that business is drying up.   

"We literally had clients calling up and canceling open order requirements," said CTG Chief Executive Officer James Boldt. "Primarily because of the postponement in the ICD-10 date, we've lowered our solutions revenue guidance for the year by $5 million."

Legislation delaying ICD-10 passed by Congress and signed into law April 1 by President Obama caught CTG by surprise. "We didn't see this one coming," said Boldt, who reminded financial analysts on the earnings call that the Centers for Medicare and Medicaid Services has not yet officially established October 1, 2015 as the new ICD-10 deadline.  

"We assume that CMS will establish that as the date," he said, projecting that CTG's ICD-10 business will come back in about a year and in the meantime the company will probably have to furlough staff. "I can't leave people for a year sitting on a bench," Boldt added. 

Nashville-based HealthStream, which offers ICD-10 training products as a part of its workforce development solutions, also held an earnings call this week but was more guarded in predicting the impact the ICD-10 delay will have on its business. Though the company reported that ICD-10 activities contributed about $6.6 million to first quarter 2014 revenues--compared to $2 million in the prior year first quarter--executives would not speculate on the financial hit that HealthStream would take from customers who decide to put on hold ICD-10 training plans as a result of the deadline extension.

"In the 20 days since the April 1 postponement, customers have deferred contracting for ICD-10 solutions," said HealthStream CEO Bobby Frist. "Given the postponement, we're in active dialogue with customers to understand the impact of this postponement on their training plans. It is not clear how the postponement will impact our results of operations."  

As of March 31, Frist said that approximately 1.6 million healthcare professionals were under contract with HealthStream for its ICD-10 training solutions--an increase of about 400,000 subscribers over the previous quarter. But, that was prior to the April 1 law going into effect. 

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