For any clinic, understanding the Patient Lifetime Value (PLV) helps clinics balance their efforts between attracting new patients and nurturing existing relationships. This fosters a patient-centric approach and sustainable clinic growth, where long-term patient engagement and satisfaction become key drivers of success.
In this article, we'll explore the concept of PLV in a way that's both informative and practical, from defining PLV to demonstrating how it's calculated. We will include real-world calculation examples and hands-on strategies to enhance PLV.
What is PLV?
Patient Lifetime Value (PLV) is a metric that shows the total financial value a patient brings to a clinic over the entirety of their relationship.
Several factors influence the lifetime value of a patient in a private healthcare setting:
- The frequency of visits: regular patients contribute more over time.
- The range of services utilized: patients who use a variety of services often have a higher PLV.
- The cost of delivered services: delivering higher-cost services increases clinic revenue.
- Patient loyalty and retention: loyal patients not only return but also refer others.
- Patient satisfaction levels: metric that drives both repeat visits and referrals, significantly affecting PLV.
Each of these elements, when managed effectively, can boost a patient's lifetime value to the clinic.
How to calculate the average lifetime value of a patient?
The average lifetime value of a patient can be calculated using the following equation:
PLV = (Average Value of a Visit) x (Number of Visits Per Year) x (Average Patient Lifespan in Years)
Let’s explain each variable:
- 'Average Value of a Visit': represents the average revenue generated from each patient visit.
- 'Number of Visits Per Year': indicates how often, on average, a patient visits the clinic annually.
- 'Average Patient Lifespan in Years': reflects the typical duration a patient remains with the clinic.
Multiplying these variables provides a tangible PLV figure, enabling a more strategic approach to managing patient relationships and retention.
Sidenote: There are more advanced ways to calculate PLV which also consider care and acquisition costs (as seen in the graphics below).
Example: calculating the lifetime value of a dental patient
Let's illustrate this with a dental clinic example.
Suppose the average revenue per visit is $200, and a typical patient visits twice a year. If the average patient remains with the clinic for 10 years, the PLV would be calculated as follows:
$200 (average visit value) x 2 (visits per year) x 10 (years) = $4,000
This means that, on average, each dental patient brings $4,000 in revenue over their relationship with the clinic. Understanding this value helps private practices make informed decisions about patient care investments, marketing strategies, and service offerings.
6 tips for maximizing patient lifetime value
Maximizing PLV is essential for any healthcare practice looking to grow. Below, we provide six practical tips to enhance patient loyalty and PLV, each focusing on different aspects of patient interaction and clinic management.
1. Personalize patient experience
Personalizing patient care is more than just a courtesy — it's a strategy that significantly enhances PLV by creating a more engaging and satisfying experience. This approach might include customizing treatment plans, considering patient preferences in scheduling, or even personalizing communication styles.
For instance, a dental clinic might offer anxiety-reducing options for nervous patients, such as music or sedation dentistry. In a general practice setting, doctors could provide tailored health advice based on a patient's lifestyle, habits, and activation levels.
Digital personalization is also impactful, like using patients' preferred communication channels for reminders or offering a patient portal for convenient access to health records and appointment scheduling. These thoughtful touches make patients feel valued and understood, reinforcing their loyalty to the clinic.
2. Improve quality of care and services
The quality of care and services provided is a cornerstone in building patient loyalty and maximizing PLV. High-quality care results in better patient outcomes, which in turn, fosters trust and satisfaction.
This trust is crucial for patient retention; when patients have confidence in the care they receive, they are more likely to return for future needs and recommend the clinic to others.
Ensuring high standards in medical care involves several approaches. Regular training for healthcare staff on the latest medical practices and patient care techniques is essential. Implementing a robust quality control system that regularly reviews and improves treatment protocols can also make a significant difference.
Clinics should also gather and act on patient feedback to continuously refine their services. These measures collectively contribute to a higher standard of care, a big factor in increasing patient loyalty and PLV.
3. Implement efficient communication channels
Effective communication is the lifeline of any successful healthcare provider-patient relationship. Clear and consistent communication sets realistic expectations, provides reliable health information, and makes patients feel heard and respected.
This transparency leads to better health outcomes and builds a foundation of trust, significantly impacting patient satisfaction and loyalty.
Digital tools like electronic health records (EHRs), patient portals, and telemedicine platforms offer convenient and efficient ways for patients to engage with their healthcare providers. These tools enable easy access to health information, appointment scheduling, and direct communication with healthcare professionals — resulting in a more responsive and personalized communication.
4. Use patient engagement strategies
Active patient engagement is a key factor in enhancing patient loyalty and PLV. When patients are involved in their own healthcare journey, they tend to be more satisfied with the care they receive.
This involvement can range from participating in decision-making processes to understanding and managing their own health. Engaged patients are more likely to adhere to treatment regimens, attend follow-up appointments, and maintain a long-term relationship with their healthcare provider.
Educational resources, such as brochures, videos, or interactive online content, can empower patients with knowledge about their health conditions and treatments. Offering workshops or support groups can also encourage patients to take an active role in their health.
Additionally, implementing patient satisfaction surveys and feedback mechanisms can provide valuable insights into patient needs and preferences, helping quality and operations managers find better ways to engage their patients.
5. Offer value-added services
Offering value-added services is an excellent strategy to increase PLV by enriching the patient experience. These services, which go beyond basic healthcare, can include wellness programs, preventive health screenings, or cosmetic procedures.
They provide additional revenue streams for the clinic, and they offer patients comprehensive care options under one roof. Broadening the service range means clinics can meet more of their patients' needs, enhancing convenience and patient satisfaction.
Examples of value-added services will differ based on the type of clinic you run: a dental clinic might offer teeth whitening or orthodontic services alongside routine dental care, while a general healthcare provider could incorporate nutritional counseling, fitness assessments, or mental health services.
In any case, diversifying the range of services you offer can attract new patients, as well as encourage existing ones to explore additional aspects of their health.
6. Utilize data and analytics for strategic decisions
Patient data can provide insights into patient behaviors, preferences, and health outcomes. This information is invaluable for making informed decisions about service and workflow improvements, marketing strategies, and investing in new tools and equipment.
Data-driven strategies can take many forms:
- Analyzing appointment trends may reveal the most demanded services, enabling clinics to allocate resources more effectively.
- Patient feedback collected through surveys can guide improvements in care delivery and patient communication.
- Predictive analytics can be used to identify patients at risk of churn, allowing clinics to proactively engage these individuals with personalized care plans or check-ins.
Utilizing data strategically helps healthcare providers make targeted improvements that significantly impact the average patient lifetime value and retention.
Grow your clinic by increasing PLV
Clinics that consistently deliver high-quality care, personalized experiences, and engage patients in their health journey are more likely to see patients return, stay longer, and refer others. This patient-centric approach doesn't just benefit the patients — it's a strategic move that will enable long-term growth and sustainability for your clinic.
Speaking purely from the financial perspective, it's significantly easier (and cheaper) to keep the patients you have happy than to go on acquiring new patients. So, while patient acquisition should stay top of mind, clinics shouldn’t forget that investing into patient retention and PLV can potentially provide even higher ROI.