Why Medical Billing Companies Feel Pressure to Grow
Should you hire a medical billing salesperson for your company? Many billing companies feel the need to grow. They want to increase profitability, and there’s significant pressure to expand due to the competitive forces in the marketplace. However, that’s a conversation for another day.
One of the most common reactions to this pressure is to hire a salesperson or even multiple salespeople. I’ve had the opportunity to see inside a large number of billing companies over the past few years – whether through private equity deals, consulting, or other professional relationships. A common thread among them is that they often try hiring a medical billing salesperson to generate growth. Unfortunately, they typically significantly underperform and fail – I estimate greater than 95% of the time.
Why Do Salespeople Fail in Medical Billing Companies?
Why does hiring a salesperson often lead to poor performance in the medical billing industry? And why do some companies succeed while others don’t?
To start, let’s look at what works. Many companies that generate more than $100 million in revenue have dedicated sales teams. These teams may have varying growth rates, but they tend to book significant top-line growth—$10 million, $20 million, or even $30 million. While some may argue about the level of success, these larger companies are at least not failing. On most metrics, they’re doing well enough to generate eight-figure top-line growth.
But why do larger companies succeed while smaller ones struggle? It’s important to examine how we define success for a salesperson. You can measure success by the number of deals closed, the revenue generated, or the return on investment (ROI). For smaller billing companies, however, the metrics tend to look grim—often bad, awful, or a complete failure.
The Key Reason Sales Fail for Smaller Billing Companies
So, why are smaller billing companies—those with $5 million, $10 million, or even $20 million in revenue—failing when larger companies are not? Is it because larger companies attract better salespeople? Are they paying more or providing better training? Do smaller companies lack sufficient marketing support?
While many factors can contribute to these failures, the number one reason, without exception, is that billing companies hire salespeople for the wrong reason. Most medical billing entrepreneurs are not natural salespeople. They are customer service-focused. So, it seems logical for them to hire someone to take on a task they aren’t good at—hiring a professional salesperson to do the selling.
But the problem is that they don’t actually need sales.
Do Billing Companies Really Need Salespeople?
When you look upstream from the salesperson, you quickly see the core issue. How many leads are the billing companies generating each month or each year? If you do the math, you’ll find that the number of leads being generated is far from sufficient to meet the company’s growth goals.
This brings up a crucial question: Does the company need more leads or better closing of deals? Salespeople, by definition, are closers. They aren’t typically prospectors who generate leads. If you expect them to do both, you’re forcing them into an uncomfortable role. Even if they agree to do lead generation, it’s likely a “square peg in a round hole” situation.
The Right Solution: Marketing vs. Sales
If your company needs more leads, what you actually need is more marketing, not more sales. I believe in the value of dedicated salespeople. I’ve been a salesperson, trained them, and led sales teams. I’m not against salespeople at all.
But it’s critical to solve the right problem. For most medical billing companies with less than $25 million in revenue, the real need is for better medical billing marketing, not additional salespeople.
