Determining the lifetime value of a new patient can help your medical practice run a more informed and cost-effective business.
In an increasingly competitive healthcare environment, there’s no way around the fact that in order to get a seat in the table, you have to ante up. That means investing in a variety of digital marketing tactics, such as search engine and social media advertising, content marketing, and website optimization. But how do you determine how much budget you can spend on patient acquisition while still remaining profitable?
By determining the actual lifetime value of a new patient for your medical practice, you’ll be better prepared to set realistic goals, build an impactful strategy, and justify your decisions to administrators. Most importantly, by assigning a hard value to each new patient gained, you’ll gain a practical understanding of what kind of marketing budget is appropriate in order to maximize your practice’s profitability.
The real question is, how do you actually go about calculating the lifetime value of your patients? It’s best to begin with the basics. Of course, you want the number to be as accurate as possible — but a bit of estimation is expected and perfectly acceptable. Here are a few of the considerations you should take into account:
For example, if you typically charge $120 for an in-office consultation, and the average patient visits the practice about five times per year, each patient is worth a minimum of $600 per year. However, if each of those patients, on average, makes two referrals that result in new appointments, their value effectively doubles. And that’s not even factoring in recurring revenue from follow-up visits, as well as revenue from procedures.
Then you have to consider that value over the course of a lifetime — the longer the patient stays with your practice, the longer you’ll continue earning the same amount of revenue (and sometimes even more) year after year.
Once you’ve identified the average baseline value of each new patient, you can determine all sorts of things, like how much you can afford to spend on various digital tactics while still remaining profitable.
Now that you’ve determined the potential lifetime value of each patient, it’s time to focus your efforts on improving that value. The good news is this is a relatively simple thing to do.
You should strive to make your practice as patient-focused as possible, both online and off. By improving the overall patient experience, you bolster loyalty, retention, and referrals. In an increasingly competitive healthcare environment, the value of a solid reputation is immeasurable. Also, remember that it’s much more expensive to find new patients than it is to hold onto existing ones.
At the end of the day, the deeper your understanding of who your patients are and the lifetime value they represent, the better you’re able to build the business side of your operation. By reducing revenue-related stress and uncertainty, you can focus more of your attention on quality of care, treatment, and patient satisfaction — in other words, the building blocks of a successful and sustainable medical practice.