A Guide for Health Practitioners (Free Calculator Included)
If you’re a health practitioner, chances are you’ve come across the term ‘patient lifetime value’. Essentially, this figure represents the value of a patient to your practice over its lifetime, not just a limited period. It recognises that a patient typically doesn’t visit a healthcare clinic once. Instead, they become a regular and loyal attendee of your business whenever they’re searching for quality care.
Tracking this data is a worthwhile exercise for every practitioner, as it allows you to accurately calculate your ROI and other key metrics.
But there is much confusion online about how to calculate these numbers and more importantly how to interpret them. These numbers aren’t new, in fact, I was first exposed to these numbers over 30 years ago when I first began receiving practice coaching as a Chiropractor!
Keep reading as I break down these numbers as simply as possible and explain what they mean and how you might be able to enhance them.
First, You Must Know Your Patient Visit Average (PVA)
Definition: The average number of times you see a patient in any given period.
Example: Let’s say you’re a physiotherapy clinic and in May, you saw a total of 500 patients, including 50 NEW patients. Your patient visit average (PVA) is 500/50 = 10
Now, this doesn’t mean that you saw all 50 patients 10 times. It simply means that over the given period of a month, on average you saw 10 visits patients for every new patient you saw. It is also very important to note that the longer the time period you use to calculate your result, the more accurate the result.
Another distinction is that this number will vary between practitioner types and styles of practice.
A high PVA will relate to one or all of the following:
- You are a great practitioner and people return for care many times over their lives
- You treat complex cases that require more visits
- You have expertise in one or many areas and generate strong social proof and referrals
- You have strong communication skills and easily build trust
- You know how to effectively manage patient conditions and schedule follow-up appointments
- You have an efficient team (receptionists) and they know how to ensure that your patients are compliant with your scheduling requests
- You understand that long-standing conditions often require more extensive periods of care and you tell patients what they need to hear, rather than what they want to hear
From this, you can see that there are many ways to enhance your PVA. But let’s take this one step further!
Understanding Patient Lifetime Value (LTV)
Based on your PVA, we can now estimate the Lifetime Patient Value – the amount of revenue you can expect from each new patient you attract. Simply multiply your PVA by the average fee you bill clients.
To do this, divide your total revenue by the number of patients seen in any given period and multiple by your PVA.
Example: Using the example from above, your PVA is 10 and your average fee is $100 per visit. Multiply 10 x $100 gives you a LTV of $1000.
So, on average, for each new patient you saw, you generated $1000 in revenue! Again, each of these patients during the month did not pay you $1000, but on average, you generated $1000 for each new patient you saw.
How is LTV Helpful?
Essentially, if you know that on average, you’ll generate $1000 per new patient, then it gives you an indication of how much you can spend to acquire a new patient.
Likewise, if your PVA is low, say 3, and you average $65 per patient on average, then your LTV is $195. This means you have to rely on very skinny margins and cannot overspend on new client acquisition.
Furthermore, understanding your LTV also offers an opportunity to improve the metric. Implementing measures to increase patient satisfaction and experience can increase LTV over time, thereby making your practice more profitable and successful.
Calculate Your PVA and LTV With Our Calculator
I’m a self-confessed numbers man…I love them, but I know they aren’t for everyone. Here’s a simple calculator that will help you equate all of your numbers!
Looking for Specialised Digital Marketing Support?
At practiceedge, we help our healthcare clients to maximise their return on investment – and we don’t stop at generating new online leads. We also want to ensure that your patients receive a high-quality service once they visit your clinic. That’s why we also offer advice and consulting to help you increase your patient LTV.
For tailored advice and support, contact our digital marketing team today.