Patient Lifetime Value: What It Is and How To Increase ItPosted: February 2, 2023 - By Health Dev
Ideally, every medical practice wants to maximize the time each patient spends with them. But in the real world, people move, life circumstances change, and patients inevitably pass away.
Likewise, your patients might find other doctors or facilities that better suit their needs. So how do you keep your patients coming back to your medical practice? How do you increase the patient lifetime value? Learn more here.
What Is Patient Lifetime Value (PLV)?
Patient lifetime value is a metric that measures the total revenue a patient will bring to your medical practice throughout their life. In other words, it’s a way to estimate how much money a patient will spend with you in their lifetime.
You want the patient lifetime value for every patient to be as high as possible. The higher the PLV, the more valuable that patient is to your medical practice.
Many factors affect the patient lifetime value. While these factors may differ across medical practices, some standard factors apply to all practices. These include:
- Quality of care: When patients receive high-quality care, they’re more likely to continue coming back. Thus, a good patient experience increases the patient lifetime value.
- Continuity of care: This refers to the degree to which patients see the same physician or provider over time. The more patient continuity of care, the higher the average patient value. For instance, if you run a dermatology practice, your patients might come for multiple rounds of visits over their lifetime to address different skin concerns. In this case, continuity of care would be high. On the other hand, if you have a one-time service, like a teeth whitening service, continuity of care would be low.
- Geographic location: If you’re located in a city with a high cost of living, your prospective patients may have a higher lifetime value than those in a rural area. The prospective patients in cities are more likely to have higher disposable incomes and be able to afford your services.
- Type of practice: The type of practice you run also determines the lifetime value of your patients. For instance, a dental patient may require multiple procedures over their lifetime. This would result in more visits and a high lifetime value.
Besides these factors, patient age might also come into play. Older patients typically have more money and better insurance plans. They are also likely to return often due to age-related decline in health and wellness.
Why Should You Care About Patient Lifetime Value?
When patients build relationships with doctors, clinics, and hospitals, these establishments must nurture those relationships to keep patients returning. Therefore, you need to care about patient lifetime value to ensure high patient retention. Here are some other reasons to focus on this metric.
Maximize Return on Investment
It’s easy to see how patient lifetime value and return on investment (ROI) are related. Your marketing and advertising efforts are meant to bring in new patients.
But you’re not going to make a profit if those patients only come in once and never return. You need to focus on patient lifetime value to ensure you’re getting the most “bang for your buck” and that your marketing campaigns are effective.
Improve Customer Service
Customer service is another important factor in patient lifetime value. If patients have a bad experience, they probably won’t come back.
If you don’t pay attention to patient lifetime value, you won’t track how many patients have left your practice. Without that knowledge, you’ll be unable to determine the shortcomings that have lowered patient retention for your practice.
Therefore, you can use patient lifetime value to make informed decisions about allocating your resources. For instance, you may want to invest in better customer service or hire additional staff if you lose patients because of long wait times.
Generate Consistent Revenue
If your patient base is constantly changing, it can be difficult to predict how much revenue you’ll generate month-to-month or year-to-year. However, you can generate more consistent revenue if you have a loyal patient base because those patients will keep coming back.
How To Calculate Patient Lifetime Value
The most common way to calculate patient lifetime value is to take the average revenue per visit and multiply it by the number of visits over a patient’s lifetime.
Here’s the formula:
PLV = (average revenue per visit) × (number of visits over lifetime)
For example, let’s say the average revenue per visit at your medical practice is $100. Patients visit your medical practice an average of once per year for 10 years. In this case, the patient lifetime value would be:
PLV = ($100) × (10 visits over lifetime) = $1,000
Do note that this is a very simplified example. In reality, you would want to factor in things like inflation and the time value of money.
You must know the limitations of using this formula. For one, this formula doesn’t consider that some patients may be more profitable than others. Nevertheless, the patient lifetime value formula is a helpful starting point for understanding how much each patient is worth to your practice.
Tips To Improve Patient Lifetime Value
Regardless of the type of medical practice, improving patient lifetime value is a goal for every physician and healthcare facility. Here are a few tips healthcare practices can use to increase the average lifetime value of their patients.
Prioritize Efficient Care and Patient Communication
Providing efficient care is the first step to fostering a positive relationship with patients. The most important drivers of satisfaction are appointment availability, quality of care, and provider communication.
If your patients are satisfied with the care they receive, they are more likely to stay with your practice. Furthermore, efficient care can help reduce the number of no-shows and late cancellations.
But the quality of care isn’t limited to the time a patient spends with the healthcare provider. It starts from the moment a patient decides to schedule an appointment. Here are some factors to consider in this regard:
- Ease of scheduling appointments: Can patients use multiple methods to book an appointment? Do you offer online scheduling? Can patients schedule an appointment through a mobile app? If they call to book an appointment, how long does the process take? If the patient has trouble getting an appointment, they’d already have reservations about your practice.
- Condition of healthcare facility: The cleanliness of your office and how up-to-date your equipment is can also affect patient satisfaction. For instance, if your office still uses an antiquated scheduling system, it might reflect poorly on the quality of care patients can expect.
- Staff behavior: Your receptionists are the first point of contact. They set the tone for the patient’s entire experience. If they’re unfriendly or unprofessional, it will reflect poorly on your practice.
- Provider communication: Patients want to feel like they’re being heard. If a provider fails to explain things in layman’s terms or doesn’t listen to the patient, it will erode trust. Furthermore, patients should feel like their provider has their best interest in mind.
As you can see, the quality of care starts long before the patient even steps foot in your office. It’s important to perfect all these steps to increase the average lifetime value of a patient.
Focus on Client Referral Value and Build an Extensive Network
Nielsen research found that 88% of people trust recommendations from friends, family, or people they know. Word-of-mouth referrals can do wonders for your medical practice.
The best way to capitalize on this is by creating a referral system that incentivizes your patients to refer you to their friends and family.
Give them a discount on their next visit for every referral they bring in. You can also enter them into a raffle to win prizes.
These are just a few ideas. Be creative and come up with a referral system that works for you. RRD research shows that 28% of consumers prefer to learn about a new service, product, or brand through word-of-mouth marketing. That’s even more than social media (23%) and online digital ads (11%).
The principle applies strongly to medical practices. After all, it’s not a new shirt or a pair of shoes someone is buying. Patients can’t afford to take chances with their health. They want to be sure they’re in good hands. If someone close to them suggests a doctor or a medical practice, they’ll likely trust them more than an online ad or a pop-up they see while scrolling down Instagram.
Take Patient Feedback Seriously
Patient feedback is your insight into what patients think of your services. Do they like the way you operate? Are they happy with the quality of care? What can you do to improve things?
There are many ways to collect patient feedback. For one, you can collect feedback right after the consultation or patient visit. For example, you can send them a text message or an email with a link to a survey. You can also include a section for feedback in your follow-up calls.
Another way to collect feedback is by setting up a suggestion box in your office. Patients can drop their suggestions anonymously if they’re not comfortable giving feedback directly.
You can also use social media to collect patient feedback. For example, you can post a survey on your Facebook or Twitter. Patients can fill this to answer questions about the appointment process, care quality, and post-consultation. You can also encourage patients to leave reviews on your social media channels.
Collecting patient feedback is just the first step. You also have to act on it. Suppose your patients express dissatisfaction with how long it takes to schedule an appointment via phone call.
You can use this feedback to improve your scheduling process. Allow patients to schedule through your website or app. Or, you can hire more staff to take phone calls, so patients don’t have to wait too long.
Start an Email Campaign for Consistent Engagement
Even with social media taking over people’s lives, email is still a superior form of communication due to its personal touch. You can use an email campaign to develop consistent engagement. For instance, you can send the following types of emails to patients.
- Feedback: Send a survey to get feedback about the quality of care.
- Appointment reminder: Send an email a few days before the appointment to remind patients.
- Offers and discounts: If you plan to offer discounts on your services or have a new offer lined up, you can communicate this to your patients through email.
- Educational content: Email is a great way to send educational content, such as tips on how to stay healthy and information on new treatments.
Be careful not to overwhelm patients with too many emails. Stick to a once-a-week or bi-weekly campaign so patients don’t get annoyed and unsubscribe from your campaign.
Foster Positive Relationships With Your Clients
Creating a positive relationship with patients is key to ensuring their loyalty and repeat business. You can develop positive relationships by ensuring the following:
- Listen to your patients: When patients voice their concerns, listen to them. Don’t just offer lip service; take their suggestions and feedback seriously.
- Hire approachable staff: The staff is the face of your business. If they’re not approachable and accommodating, patients will get a negative impression of your business.
- Educate your patients: Educate your patients on their health so they can make informed decisions. For example, if a patient is considering a new treatment, explain the pros and cons of the treatment.
- Respect your patients’ time: Don’t make your patients wait for long periods. If you’re running late, let them know in advance.
- Make it easy to contact you: Patients should be able to reach you when needed. Offer different channels, such as email, phone, and live chat.
A loyal patient will generate good revenue for your practice. So, make an extra effort to keep your patients happy.
Build Stronger Patient Relationships With the Right Technology
With the acquisition costs getting higher, it’s more important than ever to retain existing patients. The higher the patient lifetime value, the more profitable your practice will be. Automated marketing and communication software can help you develop positive relationships with your patients by taking care of all aspects of quality care and patient satisfaction. For example, Demandforce offers a suite of features that help you foster patient-centered communication and manage your online reputation all in one place.