Attracting new patients to your practice is certainly important, but the purpose of marketing is not just to bring in new people to your business. Considering the fact that new patients are almost always more expensive to bring in than those you already have, patient retention suddenly becomes important too. The longer a patient can be retained, the more potential for revenue. The metric used to calculate this value is called patient lifetime value, which is the total net profit a patient can generate for a practice, and it can help gauge the efficacy of your marketing campaigns. 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)?
In its simplest terms, 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. It does this by combining the average revenue a patient generates per visit with the number of visits they make per year. When combined with their total number of years with your practice, you have an idea of how valuable they will be to your business over the course of their time with you.
How to Calculate Patient Lifetime Value
The exact 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
Now let’s pretend we run an aesthetics practice, and we’re calculating LTV on one of our patients. Let’s say the average revenue per medical spa patient visit is $97.5, and this patient visits the practice twice per year. If this patient were to stay with the practice for 20 years, here’s what the formula would look like.
$97.5 x 2 x 20 = $3,900
The LTV for this patient would be $3,900.
To use that number to gauge your marketing success, consider this: if you’re investing in a marketing strategy that costs $1,000 per month and that strategy was to generate only one new patient per month (a very low bar), you would see nearly a 4X return on that monthly marketing investment. If that same investment delivered 5 new patients per month, the $1,000 invested would generate $19,500 of patient LTV—an excellent bang for your buck.
Optimizing Patient Lifetime Value With Marketing
Increasing your LTV is a matter of increasing any of these numbers. The first way to accomplish that? Increase the average revenue per visit of the patients you see. This can be done by investing in targeted 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. You know which procedures make your practice the most money. Orienting your marketing around them by utilizing strategies like SEO or paid search campaigns that let you target specific things will help you achieve this.
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. Patients who stick with your practice are ultimately happy patients, which is another benefit to investing in your marketing.
About Chad Erickson:
As a trusted senior executive and co-owner of MyAdvice, Chad Erickson has been consulting clients on the best marketing strategies for their businesses since 1999. With a focus on both the internal and external aspects of effective marketing, he plays an instrumental role in MyAdvice’s growth, as well as the development of our comprehensive, best-in-class digital marketing platform.
In addition to being an industry leader in digital marketing, Chad understands the complex aspects of owning and running a business. He has a proven record of raising capital, acquiring companies, and developing strategic alliances within the industry. He is also a faculty member for many of the top medical and dental conferences. Visit myadvice.com to learn more about how we can help you with local listings management, reviews and other aspects to your digital marketing campaign.
About MyAdvice:
MyAdvice empowers business professionals to increase revenue through digital marketing. The platform enables hands-on control and visibility into performance, backed by 20+ years of expertise. MyAdvice provides a step-by-step plan for implementing tactics, including websites, local directories, customer reviews, social media, SEO and paid advertising. Learn more about our platform and how it can help your business at myadvice.com.