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. We have put together a comprehensive guide on medical billing leads that among other things discusses – hiring salespeople, attending trade shows, and using lead generation or appointment-setting firms. Those three, along with buying medical billing leads, rank among the most common 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 and 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.
Strategic Tips for Buying Medical Billing Leads (Part 2)
Strategic Tips for Purchasing Medical Billing Leads
In this podcast, we explore the strategies to succeed in buying medical billing leads and how to optimize this channel to maximize your return on investment (ROI). For businesses committed to investing in purchased leads, implementing certain tactics can greatly improve close rates, reduce customer acquisition costs (CAC), and increase overall profitability.
Filter Leads to Focus on High-Value Specialties
The first step is to choose lead-selling companies that allow you to filter by specialties or other criteria that will generate more profitable clients. For example, surgical practices, even solo practitioners, are less likely to bring in small monthly revenues like $500, compared to fields such as mental health, where mixed insurance and cash payments often result in lower monthly billing.
Selecting higher-revenue specialties such as orthopedic surgery, where even solo practices can generate collections in the millions, can provide better returns. Carefully filter leads to prioritize specialties that match your revenue goals, even if this results in fewer leads.
Respond to Leads Immediately
Speed is crucial. The moment a lead hits your system—whether it’s on your computer or phone—reach out immediately. Treat it as an urgent priority and call them right away. This quick response significantly increases your close rate since you’re engaging the lead before competitors have a chance to connect.
For those serious about optimizing speed, consider implementing an automated dialer that connects to leads instantly upon receipt. This system can initiate a call to the lead and transfer them to you live, reducing delays and enhancing your chances of closing the deal.
Prepare a Strong Sales Pitch and Lead with It
When you call the lead, jump right into a prepared and well-rehearsed sales pitch. Avoid a short introductory chat or setting up a second call. Your goal here is to maximize your time with the lead and keep them engaged while preventing competitors from reaching them.
Be ready to answer common questions, discuss pricing, and address potential objections on this initial call. Keep them on the line as long as possible, because the more time they spend speaking with you, the less likely they are to engage with others.
Answer FAQs and Provide Pricing on the First Call
With purchased leads, aim to answer frequently asked questions and discuss pricing right away. While this approach might not be suitable for complex deals, it’s effective for converting purchased leads quickly. Prepare responses for the most common inquiries, and determine pricing in advance based on the information gathered during the call.
Having a pricing template ready allows you to provide a quote during the call and, ideally, send it over immediately while still on the line. Securing a verbal commitment on the first call can increase conversion rates significantly.
Use Trial Closes to Identify Buyer Needs
During the conversation, use trial closes to gauge the lead’s readiness to commit. For example, if a potential client asks, “Can you manage patient statements this way instead of that way?” you could respond with, “If we can do that for you, would that help you make a decision to give us the business?”
This technique helps uncover any final objections the lead might have, allowing you to address them directly. Continue asking similar questions and keep trial closing until you receive a definitive “yes” or determine the next steps needed to close.
Always Be Closing
Before ending the call, aim to secure a commitment to work with your company. An “always be closing” approach ensures you’re maximizing the potential of every lead. Your persistence and attentiveness during this conversation can turn you into a sales-closing machine, reducing customer acquisition costs and significantly boosting ROI. Practice these methods, refine your process, and observe the difference in your conversion rates.
Implementing these strategies when buying medical billing leads will improve your ability to close sales, reduce acquisition costs, and increase the effectiveness of this lead generation channel.
Buying Medical Billing Leads (Part 3): ROI and Numbers Deep Dive
Breaking Down the Numbers in Buying Medical Billing Leads
In this third part of our series on buying medical billing leads, we’ll dig into the numbers to assess whether purchasing these leads is a worthwhile investment. Previously, we covered typical close rates and lead conversion metrics. For most billing companies purchasing leads, close rates tend to be around 2-3%, with a high end of 5% if processes are optimized.
When running the numbers, this close rate translates to a customer acquisition cost (CAC) of around $4,000 on average. If you’re doing well, this can be reduced to around $2,500, but it generally falls within this range. Is this CAC good or bad, and how does it stack up against other medical billing marketing strategies?
Average Client Value from Purchased Medical Billing Leads
The size of clients obtained through buying medical billing leads tends to be relatively small. These clients are often solo or part-time healthcare providers with contracts averaging around $500 to $1,000 per month. Occasionally, a higher-value client may come through with an annual value between $25,000 and $35,000, but larger deals are rare.
With smaller contracts, the customer lifetime value (CLV) typically averages between $7,000 and $10,000. These figures are drawn not only from our experience but also from feedback from current medical billing companies using purchased leads. If you’re seeing smaller CLVs, it’s essential to evaluate your ROI on these leads carefully.
Evaluating Return on Investment (ROI) for Purchased Medical Billing Leads
Let’s walk through the basic ROI for purchased leads. If you’re spending $4,000 in CAC to obtain a client with a $7,000 CLV, that’s a modest 2X return, or 200% ROI. At best, this can range between 100% and 300% ROI—meaning a breakeven point after about two years.
In reality, the ROI can be lower than it seems because there are ramp-up costs. It often takes a couple of months to onboard a new client, during which you’re incurring costs without revenue. By the six-month mark, the client should be cashflow positive, but it typically takes a full year to recoup the initial marketing investment. The result is an effective ROI closer to 100%, which is considered poor by medical billing marketing standards.
Customer Acquisition Cost Relative to Client Lifetime Value
The relative size of buying medical billing leads also affects whether the acquisition cost makes sense. With smaller clients averaging a CLV under $10,000, a CAC of $4,000 is high. For comparison, some companies with higher CACs may spend $5,000 to $10,000 to acquire clients, but they’re securing contracts worth $50,000 to $100,000+ over the client’s lifetime. For those companies, the investment pays off significantly due to the larger revenue from each client.
Additionally, clients obtained through purchased leads generally have a shorter retention rate. Smaller or part-time providers often have lower commitment levels and a higher churn rate. In contrast, clients obtained through other channels typically stay longer and have a CLV exceeding $100,000, providing a better ROI on higher CACs.
When Buying Medical Billing Leads Might Be Right for You
So, does buying medical billing leads ever make sense? For most established billing companies targeting larger, high-value clients (e.g., $50,000–$100,000 annually or more), it’s probably not the best approach. However, for newer billing companies looking to gain initial clients, establish references, or gain experience, buying leads can be a viable short-term solution.
In particular, purchasing leads can work well for startups needing quick wins and are less concerned with the client’s specialty or size. The process is fast: you start receiving leads immediately and can close deals quickly. For newcomers seeking experience, this can be a good temporary strategy to check off those first milestones.
For more established businesses, however, the ROI of buying leads may not justify the cost, and exploring alternative marketing channels might be a better path to long-term growth.
