Why Your Patient Lifetime Value Matters

With growing patient demand comes the opportunity for more customer acquisition and retention, which are important to grow any business, including your medical practice. Both patient acquisition and retention will impact your patient lifetime value (LTV), but did you know that knowing your patient LTV can also help your practice gain more traction?

Here’s why you should care about your patient lifetime value, and how to calculate the LTV of a regular patient as well as patients requiring surgery.

How to Calculate Your Patient Lifetime Value

The lifetime value of a patient is essentially the net profit that the patient can generate for the business. It stands to reason, then, that the higher your LTV, the higher your revenue.

There are a few factors to consider when determining a patient’s lifetime value.

For Regular Medical Patients

There are three variables you need to know when calculating patient LTV—average revenue per visit (A), frequency of visits per year (N), and the average number of years the patient remains with the practice (Y). In other words,

●    A = Average Value of One Appointment
●    N = Average Number of Appointments Scheduled Each Year
●    Y = Average Number of Years Patients Are Likely to Visit Your Practice

A patient’s lifetime value can therefore be calculated by using this formula: LTV = A x N x Y.

For example, the Blue Book price for a visit to a primary care office to treat a minor problem is $68 (A). According to the CDC, the average patient makes 2.8 visits to a medical practice annually (N). Finally, assume that the patient will stay with the practice for ten years (Y).

The patient LTV will be $68 x 2.8 x 10 = $1904.

By dividing your patients into different segments, you can calculate the patient LTV for each segment.

When Upfront Surgery Is Performed

While LTV = A x N x Y is a basic formula, it can be modified by adding other variables relevant to your healthcare practice. For example, if your practice brings in several patients who require upfront surgery, it can be helpful to add that cost to determine a specific patient lifetime value that is more applicable to you.

The formula can be easily modified to reflect this new variable. Consider:

S = Average Value of One Surgery

The formula then becomes LTV = S + (A x N x Y) since the incoming revenue from the surgery will be added to the existing base lifetime value.

Why Does Patient Lifetime Value Matter?

Patient lifetime value offers a lot of insight for both medical practitioners and healthcare marketers since it helps bring in more patients, retain old ones, and provides the data to make strategic marketing decisions. Consider your practice’s conversion rate, for example. Knowing the potential LTV of a patient will make it easier to decide if you will get a good return on investment (ROI) for the marketing costs you will incur.

Want to find out the potential returns your practice can get? Try out Clinician Box’s ROI Calculator!

While patient lifetime value isn’t an exact science, it can definitely help medical practices learn how to make the right decisions to grow their practice. At Clinician Box, we focus on making sure your medical practice is marketed the way it deserves. Contact us today to get started!