What Is the True Value of a New Patient?
When you work in the lead generation business as we do, and your stock-and-trade is proving the return on investment you provide your client(s), one of the key questions that we ask all of our clients is “How much is a new patient worth to you?” It is the output to our input (which of course is the cost of a marketing program), the ying to our yang, and we cannot calculate an ROI without it. While every patient is certainly unique, and no two may follow the exact same path, it is rather important to get a sense of the value of an ‘average patient’ when assessing your marketing RO
When you work in the lead generation business as we do, and your stock-and-trade is proving the return on investment you provide your client(s), one of the key questions that we ask all of our clients is “How much is a new patient worth to you?” It is the output to our input (which of course is the cost of a marketing program), the ying to our yang, and we cannot calculate an ROI without it. While every patient is certainly unique, and no two may follow the exact same path, it is rather important to get a sense of the value of an ‘average patient’ when assessing your marketing ROI.
Over the years, the responses we’ve received to this question have made we wonder whether all our clients have a full understanding of how much value a new patient brings into their practice. One of the reasons I say this is because those clients that seem to answer this question more confidently and precisely tend to state values that are 2-3X higher than that of their comparable colleagues. When asked, these are some of the items they cite as considerations:
- Appointment revenue – If reimbursed separately, appointments alone often net $150-$300 of revenue.
- (Targeted) Procedure revenue – When devising your marketing plan, you should target those procedures that are more profitable to maximize your new patient value. If you are an orthopedic surgeon, you may want to look at the value of knee, hip, hand/wrist, shoulder, back/spine, elbow/arm, and neck patients separately to determine which to target. Generally you want to target a patient type or procedure where the expected reimbursement is $2000 or more (we typically target procedure/patient types in the $2K – $200K range).
- Ancillary revenue – Don’t forget any revenue you may get from smaller procedures (e.g., injections, biopsies, endoscopies), diagnostic tests (e.g., radiology scans, blood tests, EKG/EEGs) or products (e.g., compression stockings, braces, splints, medications). Every little bit helps.
- Recurring revenue – Look at your new patients over a longer time horizon (multiple years). Many, once they know the practice, will end up coming in later years for additional visits, procedures, etc.
- Referred patient ‘goodwill’ – If you end up having to refer the new patient to another doctor/specialist, although you won’t directly benefit, the goodwill you create by doing this may come back to you as additional downstream referrals.
- Referred patients (Word of Mouth advertising) – This is often the largest component of missed new patient value. A new patient who comes in to your practice and has a good experience, will often refer your practice on to other friends, family, and colleagues (who may come, also have a good experience and further refer to their friends, family and colleagues, and so on and so on). When considered fully, this impact often has a multiplicative effect on new patient revenue.
- Investment from other stakeholders – Sometimes other parties benefit (financially) from your new patients. The classic example here is a surgeon who always performs a given procedure at a certain hospital or surgicenter. While the surgeon collects the surgeon’s’ fee, the hospital/ASC collects the facility fee (which is often 2-3X+ that of the surgeon’s fee). MDs can often get the facility to cover part (or all!) of the marketing investment (especially when they can show that it is actually working). Obviously Stark laws need to be fully considered in this scenario (please consult your lawyer).
Mining the data within your billing systems will likely give you the answers to many (but not all!) of the above financial considerations. Even if you don’t have access to such detailed data in your systems, it is important to consider the various ways a new patient can positively impact your bottom line!