Chiropractic Patient Lifetime Value
The importance of patient lifetime value is often not realized by many chiropractors but it is an extremely important concept in terms of maintaining and improving the overall profitability of the practice. What is patient lifetime value? Patient lifetime value is the value of a patient while they continue to be a patient visiting a practice.
What’s the best way to calculate the current patient lifetime value in your practice? The most exact way to calculate this, if the information is available, is to calculate the total revenue generated by your patients from the time they became patients until the time they stop visiting your practice. To calculate the lifetime value of all your patience, you would simply divide the calculated value by the number of patients in the calculation.
If you do not have the precise data available, another way to calculate patient lifetime value is to follow these steps:
1. Review your patient records and determine and estimate as accurately as you can the average number of years a patient remains with your practice.
2. Next, estimate the annual revenue generated per year from a patient and multiply that by the average number of years a patient remains with your practice.
3. The resulting number provide you with an estimate of the lifetime value of a patient.
Knowing, or at least estimating, these numbers provides a chiropractor with a better understanding of how to increase practice profitability. One example is the impact of a small percentage increase in patient lifetime value.
If the chiropractor can increase the average number of years of patient remains with his practice by only a small amount( for example, 10%), the impact on practice profitability can be substantial. For example, if the annual revenue generated from one patient is $1500 and the average length of time a patient remains with the practice currently is five years, the lifetime value of that patient would be $7500. Assuming a practice has 500 active patients, the accumulated lifetime value of those patients would be $3,750,000. In this example, if a chiropractor increased lifetime value by 10%, $375,000 of additional lifetime patient value would be added to the practice. This is the equivalent of adding $75,000 of increased annual revenue to the practice.
There are many ways a chiropractor can increase patient lifetime value. For example, he can:
– Follow-up on patients who stopped visiting the practice to encourage them to come back.
– Provide better services to existing patients to increase their satisfaction with the practice and to encourage them to remain a patient of the practice for a longer time frame.
Patient lifetime value is an important marketing concept for chiropractors to understand because understanding this concept and how to increase lifetime value can dramatically increase practice profitability. Once a chiropractor understands these concepts, it is beneficial for him to educate practice staff to understand the positive impact providing a high level of service to patients can have on the practice. Now is the time to calculate patient lifetime value for your practice and to determine what steps can be taken right away to improve the lifetime value of patients for your practice.