The Appeal of Buying Medical Billing Leads for Growth
For medical billing companies looking to expand, buying medical billing leads can seem like a fast, cost-effective solution. In addition to hiring salespeople, attending trade shows, and using lead generation or appointment-setting firms, buying leads ranks among the top medical billing marketing strategies for companies aiming to grow their client base. The appeal of purchasing medical billing leads often lies in the low cost-per-lead pricing, typically around $100 per lead. This pay-for-performance model appears to be a low-risk option, as you only pay when you actually receive leads. Before we get to whether your company should buy medical billing leads, we first have to dive into what they are, how they are generated, plus their benefits and disadvantages.
How Buying Medical Billing Leads Works
To understand if buying medical billing leads is a good marketing strategy, it’s important to know how these lead services function. Most companies selling leads act as aggregators, generating leads from healthcare providers through digital marketing channels like pay-per-click and SEO. These companies conduct varying levels of qualification on the leads, then resell them. However, they typically sell the same lead to multiple billing companies, collecting around $500 per qualified lead overall by selling it to multiple buyers.
The Challenges of Buying Medical Billing Leads
There are several factors to consider before deciding if purchasing medical billing leads is right for your company:
- Lead Quality and Qualification: Many of the purchased leads may not be high quality. Some leads might be unqualified or inaccurate, which lowers the effective value of each purchased lead.
- Contact Difficulties: Even if a lead is legitimate, they may not respond to outreach attempts. This can lead to high drop-off rates, impacting your success in connecting with these potential clients.
- Competitive Lead Market: Most purchased leads are shared with several companies. This means that, by the time you reach out, another billing company may have already connected with the provider. Often, the first to make contact will secure the business, making quick response times crucial.
- Lead Size and Value: Many leads from these services are smaller, solo healthcare providers, and contracts typically range from $5,000 to $35,000 annually. Rarely will these leads convert into high-value clients, such as contracts worth $250,000 or more.
Evaluating the ROI of Buying Medical Billing Leads
To assess whether buying medical billing leads is a good investment, companies should calculate the customer acquisition cost (CAC). Most medical billing companies buying leads report a conversion rate of only 2-3%, though some achieve up to 5% with well-optimized processes. With these conversion rates, the acquisition cost can quickly climb. For example:
- If your conversion rate is around the norm of 2-3%, your CAC may be around $4,000 per new client.
- In best-case scenarios, optimized processes can lower this to around $2,000-$2,500 per client.
Given these numbers, medical billing companies with lower-value leads may find the actual cost-per-client acquisition dramatically higher than initially anticipated. Although leads may cost only $100 each, the CAC after factoring in conversion rates and competition can reach thousands of dollars. Additionally, unless have high monthly lead volume in a large budget or stay with the program for enough months to receive dozens and dozens of medical billing leads, you may never see one of the leads convert into a sale.
Key Takeaways on Buying Medical Billing Leads
For some billing companies, buying medical billing leads can be effective, but it is not a guaranteed or low-cost solution. Although the leads may appear affordable at first, acquisition costs can be higher due to the competitive, low-conversion nature of these leads. It’s essential to carefully consider these factors before diving into a lead purchase strategy.
