In an era of choice, when patients shop for medical providers the way they shop for any service, it’s vital to not only bring new patients into your practice, but to keep the patients you have coming back.
The financial value a patient has to your practice goes far beyond their first visit. To build and grow your business, you need to optimize for PLV — your patient lifetime value.
Practices can improve their PLV by focusing on the patient experience, encouraging patients to return for follow-up visits, building relationships, and optimizing back-end operations.
What Is Patient Lifetime Value?
Patient Lifetime Value is the total amount of revenue a patient brings into your practice over months or years, from their first visit through their last.
Many small practices devote considerable marketing resources to patient acquisition. But once those new patients are in the door, optimizing their lifetime value means showing the same dedication to engagement and retention.
Why Patient Lifetime Value Matters
In every industry, it costs less to keep an existing customer than it does to convert a new one. The potential bottom-line impact of increasing PLV is immense.
First, prioritizing the patient experience keeps patients coming back — happy patients are 28% less likely to switch providers than patients who feel their medical appointments are transactional.
Second, happy patients not only return to your clinic for future visits, they’ll bring their spouse and children to you. They will recommend you to their family, to their friends — even to complete strangers online.
In short, by optimizing for patient lifetime value, you compound it. Each patient becomes inherently more valuable, and also more likely to bring in new, valuable patients.
How to Calculate Patient Lifetime Value
PLV is not a crystal ball. By necessity, it’s an estimate based on projections of what is likely to happen in the future.
Essentially, you will estimate how long you expect an individual to be your patient, how many visits they will make in that time frame, and the average revenue you will collect from each of those visits.
If an orthopedist’s service offering is primarily focused on surgical patients, however, the length of the patient relationship may be shorter. Perhaps their average patient visits them 10 times in total.
Meanwhile, the average dermatology patient may come in for 10 annual exams, have six moles removed, and invest in four Botox treatments a year.
The formula our experts recommend for calculating PLV is:
Revenue per Visit x Visits per Year x Years with the Practice = Patient Lifetime Value
When using patient lifetime value to help you project your practice’s gross profits, you will subtract overhead costs from revenue to arrive at a more accurate estimate:
(Revenue per Visit - Overhead) x Visits per Year x Years with the Practice
Calculating Marketing ROI from Patient Lifetime Value
To know if your clinic’s marketing investment is generating a positive return, you need to know the PLV of the patients it brings in.
When planning your marketing strategy, identify the acquisition cost related to each channel. This is how much you expect to spend on the channel in order for it to convert one new patient.
For example, if you want to advertise on Facebook, you will pay for a certain number of impressions. Through some experimenting, you can find how many impressions it takes to get a click, and how many clicks it takes to get a customer.
Your acquisition cost is how much you spent on the ad to get the customer. Be sure to include both the amount paid to Facebook and the amount spent to create the ad (if you created it yourself, calculate the cost of your time).
To calculate the ROI of your Facebook ad campaign, you would use the following formula:
(PLV – Acquisition Cost) / Acquisition Cost x 100
By optimizing patient lifetime value, every dollar of your marketing budget generates a higher return.
Optimizing Patient Lifetime Value
The question then becomes, how do you optimize patient lifetime value? Focus on creating an exceptional patient experience, providing natural next steps, building relationships, and optimizing your operation.
Create an Exceptional Patient Experience
- Pay attention to the aesthetics of your space. Make sure patient-facing areas like waiting rooms and exam rooms are comfortable and beautiful.
- Give patients your full attention. An intelligent EHR like Nextech presents exactly the information you need to see during an exam. Instead of flipping through screens on your tablet, you can be completely focused on your patient.
- Make the mechanics of the appointment, from scheduling to payments, fast and easy for your patients. Nextech’s practice management software offers smart, intuitive scheduling and payment tools to eliminate stressed-out lines at the front desk.
- Offer a patient portal with a chatbot assistant so your patients can research their questions and contact your team on their own time, even if it’s outside office hours.
- Offer referral incentives to encourage patients to refer new people to you. These might include procedure upgrades or discounts on retail products.
Provide Natural Next Steps
- Educate patients on what they should do after leaving your office. Empower them to look after their own health with tips for home care. Tell them when they should come in again, why, and what to expect at that visit. This positions you as their healthcare partner.
- Encourage patients to stop by the desk and book the next appointment before they leave. With Nextech’s fully integrated EHR and practice management solution, you can easily use the drag-and-drop scheduling tool to get the next visit on the books before you even leave the room.
- Offer memberships that encourage repeat visits. Nextech’s integrated point-of-sale and membership management tools make it easy to upsell patients to a membership program at any point during the visit.
Build Relationships
- Provide continuity of care. Patients build relationships with providers, not with clinics. If they see a different provider at every appointment, they won’t develop a sense of loyalty to your practice.
- Send follow-up messages at set periods after an appointment. Checking in on how patients are doing with the advice or information they received makes them feel cared for. It’s also an opportunity for them to offer feedback or bring up any questions that arose after the visit. Nextech’s marketing automation tools make routine follow-up messages as easy as set-it-and-forget-it.
- Reach out to patients between appointments, too. It’s hard to form a relationship with someone you hear from once a year. Send periodic emails or text messages offering helpful information. For example, a dermatologist can send wintertime tips to prevent dry skin, while ophthalmologists can send a summer message on what to look for in sunglasses.
Optimize Your Operation
- Make sure your practice is set up to maximize PLV. Are there opportunities to expand your service offerings to encourage more frequent visits? For example, the aesthetics boom has provided many plastic surgeons, dermatologists, and med spas with recurring revenue from maintenance injections.
- Set up your billing structure to offer financing. Payment flexibility makes it easier for happy patients to stay with your practice.
- Make sure you’re getting the maximum revenue from each visit by optimizing for MIPS reimbursement. Nextech’s automated tools take most of the work out of MIPS compliance.
How AI Can Improve Patient Lifetime Value
Artificial intelligence is helping specialty practices optimize virtually every part of their operation, and PLV is no exception.
AI can aid in patient engagement through chatbots and personalized appointment reminders. These are surprisingly human touches that build a patient’s affinity for their provider.
AI-powered marketing automation tools can precisely segment marketing audiences so patients receive content and promotions highly relevant to them. The more relevant the offer, the more likely they are to take advantage of it.
AI can also optimize the back end of your operation. Automated revenue cycle management improves cash flow and keeps your practice running efficiently.
How Else Can Your Practice Improve the Bottom Line?
Optimizing the revenue each patient represents over their lifetime is a great start to improving your bottom line. Here are a few additional steps you can take:
- Increase operational efficiency with an integrated EHR and practice management system. The efficiencies they’ve realized from using Nextech have allowed our customers to see more patients in the same amount of time, driving new revenue. Our specialty-specific solutions also help practices lower their costs by eliminating bottlenecks and wasted administrative time.
- Tap into the possibilities of telehealth. Four years post-COVID, patients have shown widespread acceptance of telehealth services. In some markets, telehealth appointments can cut the wait time to see a specialist from months to weeks, creating a powerful competitive advantage.
- Offer retail products. Go a step beyond recommending the kind of skin care or eye care products patients should look for, and sell recommended products yourself. It’s an additional revenue stream for you and a point of convenience for patients. Nextech’s point-of-sale and inventory management tools make sure managing a retail business is convenient for your staff, too.
The Tools to Maximize Value – at Your Fingertips
Nextech’s electronic health record and practice management tools have everything you need to eliminate inefficiency and maximize productivity in your practice, without sacrificing patient relationships.
In fact, by taking much of the administrative burden off the provider’s plate, Nextech empowers providers in dermatology, plastic surgery, ophthalmology, med spa, and orthopedics practices to provide higher-quality patient care.
Schedule a demo to see how Nextech can elevate your practice.