Topics: Revenue Cycle Management, Practice Management
Do you know how much your patients are individually, or as a whole, contributing to your revenue cycle? On the other hand, are you aware of how much your medical practice is spending to retain or acquire patients? Both the financial input and output for each patient can provide insight into your medical practice’s bottom line and help you gain a better understanding of your practice’s relationship with your patients. Keep reading to learn how to calculate the lifetime value of a patient, and why it matters to your practice.
- What Is Patient Lifetime Value?
- Why Is Patient Lifetime Value Important to Your Medical Practice?
- How To Calculate the Lifetime Value of a Patient
- 3 Tips for Improving Lifetime Value of a Patient (and Keeping It High)
What Is Patient Lifetime Value?
As the name might suggest, patient lifetime value (PLV) is the total worth of a patient to a medical practice over the course of their relationship. Sometimes referred to as customer lifetime value, or CLV for short, this metric reveals how much it costs your practice to acquire new patients and how much it costs to retain existing patients. Understanding—and increasing—the patient lifetime value of current patients can be a beneficial avenue to drive growth at your medical practice.
Why Is Patient Lifetime Value Important to Your Medical Practice?
Patient lifetime value is vital to your medical practice because it helps you understand your marketing scope and secure your financial future. When you’ve established what the lifetime value of a patient is at your medical practice, you’ll have a solid idea of how much you want to spend on that relationship—hint, you don’t want to spend more than they’re contributing to your revenue cycle.
Knowing the lifetime patient value at your medical practice is also necessary for evaluating the status of your bottom line. Your patients are the whole reason your medical practice exists, so it’s essential to know and anticipate how much revenue they generate at your medical practice while you’re serving them.
Once you’ve calculated the patient’s lifetime value for your medical practice, you can use that information to further enhance the patient’s relationship with your office; for example, the CLV metric can help you:
- Refine your marketing strategy by understanding which types of patients are most valuable to you; with this information, you can emphasize patient acquisition strategies that target your best patients
- Boost loyalty in new patients and retain current ones by investing in your practice’s most valuable patients with the insight gained from calculating their CLV
- Learn which touchpoints in the patient’s journey get the most engagement and grow your medical practice upon expanding those channels or develop new propositions
Leveraging your patients’ lifetime values can help you deliver a better patient experience and result in a stronger relationship with your patients.
How To Calculate the Lifetime Value of a Patient
In order to calculate the lifetime value of a patient at your medical practice, you’ll need three pieces of information:
- Average visit value of the patient: This is the total value of all patient visits over a period of time (for example, one year), divided by the number of visits in that period
- Average visit frequency: To gather this figure, divide the number of visits to your medical practice in that same time period (one year) by the number of individual patients over the same period
- Patient value: You’ll calculate the average practice visit frequency multiplied by the average visit value
- Average patient lifespan: What is the average length of time a patient continues seeing you?
PLV = patient value X average patient lifespan
The resulting answer reveals how much you can reasonably expect the average patient to spend at your medical practice over the course of their relationship to your practice.
3 Tips for Improving Lifetime Value of a Patient (+ Keeping It High)
Ready to boost the lifetime value of your patients? Try the following tips:
1. Utilize Patient Satisfaction Surveys
Your medical practice wouldn’t exist without patients, whether new or returning. Do you know how they perceive your medical practice? Of course you’re delivering high quality care, but what if there are some inconveniences to the patient that could be easily resolved but which you don’t know about? Utilizing patient satisfaction surveys can help you measure the impact of your medical practice on the members of your community.
By gathering and considering patient feedback and then implementing new initiatives at your practice, you demonstrate how much value you put into your patients. If a patient notes that the scheduling system could be better streamlined, then adding some grease to that wheel would illustrate that your practice listens to the needs of patients and you’ll build loyalty in the relationship.
2. Boost Patient Engagement
When patients are more engaged with your medical practice—and, in turn, their own medical health journey—they’re more likely to stay with you instead of finding another practice that they feel might better serve them. One way to boost patient engagement is to develop and disseminate patient education resources.
These types of material are vital to a well-rounded practice that values its relationship with the patient because they help inform and empower the patient. When a patient is given literature from their trusted provider, the patient learns more about their diagnosis, condition, treatment plan, and furthers their own understanding. Further, they can use this information to do more research, if needed. This can lead to a healthy dialogue between patient and provider and the patient feels valued by the medical practice.
3. Partner with a Medical Billing Firm
When you let a team of qualified medical billing experts handle your medical billing and coding, you remove a significant frustration from your daily operations. This lets you and your team get back to what matters most: addressing the specific needs of the patient and delivering the best care for them.
Turn to the experts at NCG Medical for medical billing, revenue cycle management, and more to streamline your practice and optimize your operations. Outsourcing your medical billing can tremendously improve your practice in terms of internal and external efficiency. A medical billing firm can equip your practice with 24/7 reporting via analytics, for example, or can act as an in-house electronic health records (EHR) expert. In doing so, the outsourcing service can help ensure that incentive program adherence doesn’t drag your team’s time away from patients.
With NCG Medical, you’ll gain a team of experts in your corner who can help navigate the worlds of medical billing, healthcare software, and more! Contact us today to learn how we can make your practice more efficient, enable better patient access, and ensure you give the most effective care.