Buy and Bill Working Capital for Neurology Infusions
Buy and bill working capital is the cash a neurology practice needs to purchase infusion drugs up front and carry that cost until payers reimburse the practice. For practices treating multiple sclerosis, Alzheimer’s disease and other chronic neurological conditions with high-cost biologics, that gap can tie up a significant amount of money.
This article explains why the drug float happens, how it affects cash flow and what financing options practices may use to manage it. It focuses on ongoing operating cash, not the cost of building an infusion suite. Drug purchasing, reimbursement and billing rules vary by payer and product, and nothing here is clinical, legal, tax, billing or compliance advice. Practices should work with qualified billing or compliance professionals on these processes.
How Buy and Bill Works
Under a buy-and-bill model, the practice purchases medication, stores it, administers it to the patient and then bills the payer for both the drug and the administration. The practice carries the cost of the drug from the time it is paid for until reimbursement is received.
Several factors can lengthen that gap:
- Supplier payment terms that require payment before claims are paid
- Prior authorization and documentation requirements
- Claim denials, underpayments or resubmissions
- Patient cost-sharing that must be collected separately
- Changes in payer policies or coverage
Because neurology biologics can be expensive, even a modest number of patients can create a large balance waiting to be collected.
Why Infusion Growth Strains Cash Flow
Growth makes the problem bigger. Each new infusion patient adds drug cost before adding collections. A practice that expands its infusion program can see profits on paper while bank balances shrink.
This is especially true when a practice adds a new therapy, opens additional chairs or brings on a payer with slower payment patterns. Owners who plan for the float before growth begins are often in a better position than those who discover it afterward.
Signs Your Practice Needs Buy and Bill Working Capital
- Supplier invoices are due before related claims are paid
- Payroll timing depends on when large reimbursements arrive
- The practice delays new infusion patients because of cash concerns
- Owners are using personal funds to cover drug purchases
- Accounts receivable from infusion services are growing faster than cash
If several of these apply, it may be time to look at a dedicated financing solution rather than relying on the operating account alone.
Financing Options for the Drug Float
Practices may consider several approaches, depending on their size, history and needs.
Working Capital Lines of Credit
A revolving line of credit lets the practice draw funds when drug purchases are due and repay as reimbursement arrives. Because the balance can rise and fall, a line can match the cycle of buy-and-bill more closely than a fixed loan. Our working capital solutions page describes how these facilities may be structured.
Term Loans for Permanent Working Capital
Some practices have a baseline level of drug inventory and receivables that never really goes away. A term loan can fund that permanent need while a line covers fluctuations. Conventional practice loans may be used for this purpose, depending on lender underwriting.
Combining Working Capital With an Expansion Project
If the practice is building or enlarging an infusion suite, it may make sense to plan the facility financing and the drug float together. Our article on neurology infusion center financing covers the build-out side of the project.
All financing is subject to lender review and approval, and nothing here is a commitment to lend.
What Lenders Look At
Lenders evaluating working capital for a neurology infusion program may review:
- Historical revenue and collections by service line
- Accounts receivable aging, especially for infusion claims
- Denial and resubmission patterns
- Supplier terms and typical purchasing volume
- Existing debt and overall cash flow
- The owners’ credit and financial strength
Clean, well-organized reporting can make it easier for a lender to understand the cycle and size a facility appropriately.
Operational Steps That Can Reduce the Float
Financing is only part of the answer. Practices may also improve cash flow by tightening authorization workflows, tracking claims closely, reviewing denials promptly and managing inventory so that drugs are not purchased well ahead of scheduled infusions. Qualified billing professionals can help identify where delays occur.
Some practices also review supplier payment terms periodically to see whether timing can be better aligned with reimbursement.
Planning Ahead for New Therapies
New infusion therapies can change the size of the float almost overnight. A therapy with a higher acquisition cost, a different dosing schedule or added monitoring requirements may increase the amount of cash tied up per patient.
Before adding a new therapy, owners may want to estimate:
- How many current patients may be candidates
- How drug costs will be paid and on what supplier terms
- How long authorization and reimbursement typically take for that therapy
- Whether existing credit facilities are large enough to absorb the added need
Talking with a lender before launch, rather than after cash becomes tight, can give the practice more options and time to arrange a facility that fits.
When Existing Debt Gets in the Way
If short-term borrowing used to cover past drug purchases is now straining monthly cash flow, restructuring may help. Our article on when to refinance a neurology practice explains how owners can evaluate that option.
Final Thoughts
Buy and bill working capital is a structural need for many neurology practices that offer infusion services, not a sign that something is wrong. Understanding the size and timing of the drug float, and putting the right financing in place before growth, can help a practice serve more patients without straining payroll or operations.
US Medical Funding helps neurologists manage infusion cash flow and other operating needs. Learn more about our neurology practice working capital options and our full range of neurology practice financing.
