The High Stakes of Buy-and-Bill - Capital at Risk vs. ROI in Bone Health Clinics
In bone health, therapies like denosumab (Prolia®) and romosozumab (Evenity®) can reduce fracture risk by up to 68% for patients with osteoporosis. Yet, the Buy-and-Bill drug distribution model forces clinics to navigate a precarious financial landscape, where the capital at risk far outweighs the return on investment (ROI).
These dynamic strains the revenue cycle, limit patient access, and underscore the need for a better approach. Osteoporosis affects over 10 million Americans, yet only ~20% receive guideline-recommended treatments due to access barriers (source: Bone Health and Osteoporosis Foundation, 2023). Through two example clinics—a moderate-sized practice and a small community clinic—we’ll explore how Buy-and-Bill creates financial burdens and why consignment-based distribution is the way forward.
Capital at Risk: The Upfront Financial Burden
Under Buy-and-Bill, clinics must purchase drug inventory upfront, store it, administer treatments, and wait 30–120 days for payer reimbursement. This ties up significant capital, exposing clinics to financial risks that can cripple operations.
Example 1: Moderate-Sized Bone Health Clinic
Consider a mid-sized bone health clinic administering 30 units of Prolia (at ~$1,200 per dose) and 10 units of Evenity (at ~$2,200 per dose, as a dual-dose injection) weekly, with weekly ordering to maintain inventory. The weekly inventory cost is:
Prolia: 30 units × $1,200 = $36,000
Evenity: 10 units × $2,200 = $22,000
Total weekly cost: $58,000
Over a year, this clinic could have $3,016,000 tied up in inventory at various points, assuming consistent weekly ordering and usage.
Example 2: Small Community Clinic
Now, consider a small community clinic using 5 doses of Prolia and 1 dose of Evenity weekly, also with weekly ordering. The weekly inventory cost is:
Prolia: 5 units × $1,200 = $6,000
Evenity: 1 unit × $2,200 = $2,200
Total weekly cost: $8,200
Annually, this smaller clinic could have $426,400 tied up in inventory at various points.
Both clinics face significant risks:
The mid-sized clinic diverts $58,000 weekly, while the small clinic ties up $8,200—both substantial sums that could otherwise fund staffing, technology, or patient services. For small clinics with limited credit, even $8,200 weekly can strain liquidity.
If claims are delayed, denied, or underpaid (e.g., due to payer step edits or biosimilar substitutions), clinics absorb the loss. A single denied Prolia dose costs $1,200; a denied Evenity dose, $2,200. For the small clinic, one denied claim could wipe out a week’s profit.
Independent clinics, especially smaller ones, lack the financial cushion of large hospital systems, increasing the risk of insolvency or consolidation.
The capital at risk in Buy-and-Bill—$3 million annually for the mid-sized clinic and $426,400 for the small clinic—creates a financial gamble that discourages many practices from offering these therapies.
Return on Investment: A Fragile Promise
The ROI in Buy-and-Bill comes from a small markup clinics apply when billing payers. However, this return is eroded by delays, administrative costs, and reimbursement uncertainties.
Moderate-Sized Clinic ROI
For the moderate-sized clinic, assuming a 6% markup:
Prolia: [30 units × $1,200] × 6% = $2,160
Evenity: [10 units × $2,200] × 6% = $1,320
Total weekly markup: $3,480
Annual potential ROI: $3,480 × 52 = $180,960
Small Community Clinic ROI
For the small clinic:
Prolia: 5 units × $1,200 × 6% = $360
Evenity: 1 unit × $2,200 × 6% = $132
Total weekly markup: $492
Annual potential ROI: $492 × 52 = $25,584
These returns are precarious:
Both clinics wait 30–120 days for reimbursement, tying up $58,000 (mid-sized) or $8,200 (small) weekly while awaiting $3,480 or $492 in markups, respectively.
Managing prior authorizations, coding, billing, and appeals require staff time. For the mid-sized clinic, an additional full-time employee ($60,000/year, or $1,154/week) cuts deeply into the $3,480 weekly markup. For the small clinic, even a part-time staff member (~$30,000/year, or $577/week) exceeds the $492 weekly markup, potentially resulting in a net loss.
Payer restrictions, like step edits or lower reimbursement for biosimilars, increase claim denials or underpayments, further shrinking ROI.
The moderate-sized clinic’s $180,960 annual ROI pales against its $3 million in capital at risk, while the small clinic’s $25,584 ROI is dwarfed by its $426,400 risk—and often negated by administrative costs.
The Revenue Cycle Disconnect
The Buy-and-Bill revenue cycle creates a vicious cycle, forcing clinics to front significant capital, manage inventory, and navigate complex payer processes while awaiting reimbursement. This disconnect has serious consequences:
Many clinics, especially small ones, avoid offering Prolia or Evenity due to financial risks, leaving patients untreated or referred to distant hospital systems.
Patients face delays or abandon treatment when local clinics cannot stock these drugs, disproportionately affecting rural and underserved communities.
Despite osteoporosis affecting over 10 million Americans, only ~20% receive guideline-recommended treatments (source: National Osteoporosis Foundation, 2023), as Buy-and-Bill discourages provider participation.
340B-Eligible Nonprofits and Manufacturer Discounts: Higher Margins, Persistent Risks
For 340B-eligible nonprofit clinics and those receiving manufacturer discounts, the Buy-and-Bill model offers higher margins through discounted drug pricing (e.g., ~40% less, or $720 for Prolia and $1,320 for Evenity), yielding a ~10% markup and boosting annual ROI to $1,206,400 for a moderate-sized clinic and $170,560 for a small one. However, both still face significant capital-at-risk burdens—$1.8 million and $255,840 annually, respectively—due to upfront inventory costs, while reimbursement delays, denials, and administrative overhead (e.g., $30,000/year for a part-time staff member) erode these gains, limiting their ability to serve patients and underscoring that neither 340B pricing nor manufacturer discounts resolve the core financial strain of Buy-and-Bill.
A Path Forward: Consignment as a Solution
The arrival of biosimilar denosumab offers a chance to rethink this broken model. A consignment-based distribution system, where manufacturers retain inventory risk and clinics bill only after administering drugs, could transform the revenue cycle:
The mid-sized clinic avoids fronting $58,000 weekly, and the small clinic eliminates its $8,200 weekly burden, freeing up cash for patient care.
Without upfront costs or reimbursement delays, the $3,480 (mid-sized) and $492 (small) weekly markups become more reliable returns.
With financial barriers removed, more clinics—especially small community practices—can offer Prolia, Evenity, and biosimilars, increasing treatment rates and reducing fractures.
· The unlocked capital—$3 million annually for the mid-sized clinic and $426,400 for the small clinic—could be redirected to expand osteoporosis care, such as hiring specialized staff, investing in diagnostic tools like DXA scanners, or launching patient education programs, enabling practices to prioritize this underappreciated chronic disease and address its low treatment rates.
Call to Action
Bone health clinics deserve a revenue cycle that supports their mission to improve patient outcomes. Providers should demand consignment-based models from manufacturers and join coalitions like the American Society of Osteoporosis Providers (ASOP) to advocate for change. Manufacturers can differentiate themselves by adopting consignment, attracting more clinics to stock their products and ensuring broader market penetration for stable revenue. Payers must recognize Buy-and-Bill as a barrier to equitable care and support consignment to align with value-based care, reducing fracture-related hospitalizations and long-term costs.
The contrast is stark: the moderate-sized clinic risks $3 million for a fragile $180,960 ROI, while the small clinic risks $426,400 for a mere $25,584. Buy-and-Bill is unsustainable. By embracing consignment, bone health clinics can unlock financial stability, expand access to life-changing treatments, and lead the fight against osteoporosis.
