What is Patient Lifetime Value?
It can take quite a lot of time and money to get a new patient, but keeping that patient is far more affordable. However, you don’t want the cost of getting new patients to outweigh the income generated from those patients. This is where knowing your average Patient Lifetime Value can be very helpful. Patient Lifetime Value (PLV) is the predicted total revenue you’ll earn from a patient through all visits they have with you. Using this number can inform how much money you spend on marketing to new patients and show your overall return on investment (ROI).
Figuring out how much you can earn from the entirety of a patient’s visits to your office can seem overwhelming. Different services have different costs and some patients may only visit you once, while others come back again and again. Of course, some of your income from recurring patients can be used to offset the cost of one-time patients, so we’ll use averages to work the math. To determine your PLV, use the following formula:
$First Time Patient Visit + [($Recurring Visit X Average Visits/Year) X Average Number of Years]
You can also use our Patient Lifetime Value Calculator, below, and have it do the math for you.
How is PLV Used for the Valuation of Marketing Campaigns?
Marketing campaigns can end up costing a lot of money, especially if you don’t set a budget or understand the true cost of acquiring patients for your practice. Not every lead turns into a new patient, and some leads aren’t meant to become patients. In these cases, it’s better to cut your losses early instead of spending more trying to convince a new patient when they aren’t committed to your practice in the first place.
Using the PLV formula above shows you the average financial outcomes of a lead. Some patients will earn you more, and some will earn less. But for those that earn more, you can mitigate the costs of those that earn less. In fact, the quality of the lead will affect the financial outcome. We can usually put patients in one of these categories:
Positives – With inbound marketing, such as Google Ads and SEO, you typically have a higher quality of lead. These are patients that come to you, so you know they’re highly interested in visiting your practice.
Negatives – When you spend a lot of time or money trying to acquire a new lead, you may end up spending more than what you’ll see returned when the patient finally visits your practice. This is more common with lead generation campaigns, mailers, and in-person events.
How to Use the PLV Calculator
We offer a free calculator that can help you quickly and easily determine the Patient Lifetime Value for your practice. All you have to do is enter in the average value for each line:
- First-Time Patient Visit Revenue – How much do you earn from the first time a patient visits your practice?
- Recurring Visit Revenue – How much do you earn from every subsequent visit for that patient?
- Average Visits per Year – How many times will that patient visit you in one year?
- Average Number of Years – How many years will that patient visit your practice?
The calculator will then work the formula for you to determine your individual Patient Lifetime Value. You can run this calculator as many times as you like to find the PLV for all the different services you offer or the types of patients you encounter at your practice.
Want High ROI for Your Marketing Campaigns?
Marketing Done Right is a leading digital marketing agency located in Cleveland, Ohio. We work with medical practices of all kinds throughout the United States to bring in new patients and turn them into lifelong visitors. Please contact us today to learn more about our services. If you’d like a free local marketing audit, please do so below: