While attracting new patients is incredibly important for practices looking to grow, stopping there is a recipe for an incomplete marketing strategy. Patient retention matters because new patients are always more expensive to acquire than returning patients – and understanding and calculating LTV will help you gauge your marketing campaigns for their efficacy and return on investment. Here’s what you need to know about how to calculate this metric for your own practice, and how you can optimize it for your own growth.
What is Patient Lifetime Value (LTV)?
Patient lifetime value is a formula that estimates the net profit a relationship with a patient will generate throughout their entire lifetime with a practice. Healthcare practices should aim to maximize LTV as much as possible per patient. This will look different depending on which industry and specialty they operate in.
How to Calculate Patient Lifetime Value
The formula used to calculate LTV requires a couple of assumptions based on the industry. The basic formula looks like this:
Average revenue per visit x annual visits x years with practice = patient LTV
For this exercise, we’ll use a dental practice as our example. Let’s say the average profit per dental patient visit is $50 (the most recent number available from the ADA), and this patient visits the practice twice per year. If this patient is 20 years old and was to stay with the practice for 30 years, here’s what the formula would look like.
$50 x 2 x 30 = $3,000
The LTV for this patient would be $3,000.
To put this in perspective, if you’re investing in a marketing strategy that costs $1,000 per month and that strategy were to generate only one new patient per month (a very low bar), you would see a 3X return on that monthly marketing investment. If that same investment delivered 5 new patients per month, the $1,000 invested would generate $15,000 of patient LTV—an excellent bang for your buck.
Optimizing Patient Lifetime Value
Increasing your LTV is a matter of increasing any of these numbers. The first is to increase the average revenue per visit of the patients you see. This can be done by investing in marketing campaigns that are focused on patients who are intentionally looking for the procedures and services that offer a high profit margin for your practice. A good example of this would be SEO and paid search campaigns as opposed to Groupon campaigns.
The second way to increase LTV is to increase the number of annual visits per patient. This can be accomplished through things like seasonal offers, social media posts, announcements about new procedures, devices, or offers your practice is running.
The third way is to simply keep your patients around for as long as possible. Asking for patient feedback, responding to reviews, and keeping your front desk staff well-trained and happy go a long way in this regard.
We Can Help
MyAdvice can help you optimize your marketing efforts for higher LTV. We have more than 20 years of experience with digital marketing campaigns for healthcare practices just like yours. Contact one of our digital marketing experts for more information.