Understanding Patient Acquisition Costs

Understanding patient acquisition costs of a new patient comes down to the numbers. Basically, you need to figure out what the average value of a new patient is to you clinic over their lifetime. Once you figure this out, (provided you are not already fully booked everyday) you can figure out the maximum amount you should spend for each new patient acquisition. With this in mind, it is important to analyze the cost of each marketing campaign and its overall success based on the number of new patients enrolled and their cost per acquisition. After trying multiple marketing campaigns, using different channels and messaging you will learn which types of communication are most effective and have the highest ROI.

Patient Acquisition Costs Example:

For this example, I have used extremely unrealistic numbers that are multiples of 10, so that you have a good understanding of how to do the calculations on your own. Your figures will vary significantly and depend on a variety of factors.

Dr. Smith uses pay-per-click advertising on Google. The ad costs $10/click and shows up at the top of Google anytime someone searches for “Vancouver Dentist.” Once a patient lands on the clinic’s website, assume that 1/10 visitors will call the clinic to learn more about the services and a 1/10 callers will book an appointment.

Questions:

1. What is the average amount a patient spends per visit?
2. How many appointments does your average patient book a year?
3. What is the average life expectancy of each patient?
4. What percentage of new patients become lifelong patients?
5. What percentage of your revenues are expenses?

For the purposes of this example, we are going to use the following answers:

1. $100
2. 10
3. 10 years
4. 10%
5. 50%

If Dr. Smith’s clinic gets 100 visitors at $10/click he has spent $1000. 10 patients (10%) will call to learn more about the clinic and 2 (10% of leads) will book an appointment. The cost per new patient acquisition in this example is $500. After the first appointment, the clinic will lose a total of $450 ( -$500 acquisition, + $100 for treatment, -$50 expenses on treatment). But in the long run, if a new patient becomes a lifelong patient (in this example it happens 10% of the time), the value of that new patient is $10,000 (100*10*10).