New patients are crucial for any healthcare facility’s business, but even more so for specialists.
Where Does Most New Patient Acquisition Come From?
Most healthcare facilities get their new patients through two primary sources: Online Search and Referrals.
When People recognize they need a specialist they do their own online search to find one. Besides provider qualifications, one of the top factors these patients will consider is a facility or provider’s online reputation.
Typically, you want at least 10% of your business to grow from new patients finding you online. It’s challenging to have great reviews from existing and past patients to maintain (or increase) this percentage.
Referrals make up the bulk of new patient acquisitions, and they can come from various places, depending on your specialty. Primary care physicians, Insurance companies, friends, or associated institutions, like sports training facilities, or schools are the most notable referral avenues for most healthcare organizations.
What Is Patient Acquisition Cost?
If new patients come from referrals and online reputation, then new patient acquisition cost is the amount you spend on these two business initiatives. The following expenses are usually associated with your overall patient acquisition cost.
- Referral Marketing Costs
- Referral Management Costs
- Online Reputation Management
- Online Presence
How Do You Calculate Patient Acquisition Cost?
For example, imagine an orthopedic specialist spends $4,000 on Marketing Salaries, $1,000 on Marketing Materials and events, $1,500 on software, and $750 on monthly advertising expenses. That monthly patient acquisition expense would be a simple addition problem:
(Marketing Salaries) + (Marketing Materials)+ (Software) +(Advertising) = Total
$4,000 + $1,000 + $1,500 + $750 = $7,250.
This practice spends $7,250 on patient acquisition per month.
Calculate Patient Lifetime Value
Next, you’ll want to calculate your patient lifetime value (Patient LTV). This value estimates the amount of revenue the future relationship with each new patient will generate. For example, the abovementioned orthopedic specialist may determine the following:
- 20% of new patients will elect for surgery at $3,000 on average per surgery and four office visits at $250 per visit.
- 80% of new patients will make two office visits at $250 per visit.
To calculate the Patient LTV for this specialist, you would complete the following calculation: ((20 x $3,000) + (20 x 4 x $250) + (80 x 2 x $250)) / 100 = $1,200.
On average, each new patient will generate $1,200 in revenue during their relationship with this practice.
Find Your Monthly Revenue
Once you determine the Patient LTV, you can use this number to calculate the monthly revenue added by your new patients.
For example, this orthopedic practice’s net revenue is $1,200 per new patient, and it sees 35 new patients monthly. To calculate the total revenue added by new patients per month, they would complete the following equation: 35 x $1,200 = $42,000.
The total revenue added by new patients in one month is $42,000.
Calculate Your Patient Acquisition Cost
At this point, you can use these amounts to calculate your patient acquisition cost by dividing all your patient acquisition expenses by the number of new patients you see. So, for this example, this amount would be calculated using the following equation: $7,250 / 35 = $207.
It costs $207 to acquire a new patient, but when you have an average Patient LTV of $1,200, that’s a great sign! For every new patient, you’re making a profit of $993. Your patient acquisition cost should always be lower (ideally, much lower) than the Patient LTV, and for this practice, it is.
Determine Your ROI
Finally, calculate your return on investment (ROI) for patient acquisition by subtracting the total patient acquisition cost from the revenue and dividing it by the expenses. For this practice, the equation would be ($42,000 – $7,250) / $7,250 = 4.79.
When you multiply this number by 100%, this practice has an ROI of 479% on patient acquisition, which is excellent.
Keep Patient Acquisition Cost Low and ROI High
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Learn more about the solutions we offer for the Growth of your healthcare.