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Average Lifetime Value of a Dental Patient

Average Lifetime Value of a Dental Patient

The average lifetime value of a dental patient is a significant value that not many general dentists know the answer to. This is in part because of the difficulty in quantifying lifetime value, as it varies based on how frequently patients visit and what procedures they need. 

Every patient who leaves your practice should have his or her lifetime value (LTV) calculated. It’s a simple way of assessing the effectiveness of your marketing and estimating the future value of your dental patient to help you budget and plan for expansion.

A patient’s lifetime value is the total amount a practice can expect to earn from that patient throughout his/her life. The lifetime value of a dental patient is the amount of revenue gained by providing care to a specific patient throughout their life.

Table of Contents

How Is It Calculated?

Healthcare consumers have a relationship with their providers that can last for years. To determine how much an oral health care practice can expect to earn from each new patient. The following factors must be considered:

1. Determine the average number of visits of dental patients.

2. Calculate the average revenue per visit or procedure.

3. Average number of years an individual remains a patient

4. Number of new patients each person attracts to your practice on average by referral.

When you know the figures behind these three variables, you can use the basic formula below:

Average Lifetime Value = [Average revenue per patient per year] x [Average number of years an individual remains a patient] + [Referral value] 

For example,

Let us say that Patient A visits your dental clinic an average of 4 times a year and remains with your clinic for a period of 20 years. Also, Patient A requires a few procedures ranging from routine cleaning costing $100 three times a year and once a year to a specialized procedure that will cost $450. Let’s also estimate that this patient refers three friends or family members to your dental practice over time.

Patient B also visits your clinic, let’s say once a year, for a routine cleaning costing $100 and remains with your clinic for a time period of 7 years and in this time frame refers one person to your clinic. Using the formula above, we will calculate the customer lifetime value.

PATIENT A

Average revenue earned by patient A per year = $300 ($100 per cleaning x 3 cleanings per year) + $450 ( For one specialised procedure per year) = $750

The average number of years Patient A remains a patient = 20 years

Average Lifetime Value = [Average revenue per patient per year] x [Average number of years an individual remains a patient] + [Referral value] 

Average Lifetime Value = ($750 * 20) + (3* ($750 *20)) = $60000 

PATIENT B

Average revenue earned by patient A per year = $100 ($100 per cleaning x 1 cleaning per year) = $100

The average number of years Patient A remains a patient = 7 years

Average Lifetime Value = [Average revenue per patient per year] x [Average number of years an individual remains a patient] + [Referral value] 

Average Lifetime Value = ($100 * 7) + (1* ($100 *7)) = $1400

By calculating the lifetime value of your dental patients, you can see Lifetime Value (LTV) can be used to help dentists determine the effectiveness of their marketing strategies, as well as plan for expansion. It is also an important value in calculating if a particular practice or practice type is profitable. 

Dentist showing patient their teeth
Smiling dental assistant

Why the Average Lifetime Value of a Dental Patient Is So Important to Your Dentistry Practice

The average lifetime value of your patients can show the profitability of a practice. The formula above is just an example and has been widely used across dentistry. The important thing to remember is that it is calculated by considering the average revenue you earn from a patient and how long the patient will remain with you. Once you know how much money each patient is worth, you can better budget and plan for expansion so that your practice can grow.

 

The Importance of ALV in Business Planning and Dental Marketing

This lifetime value of a patient can help you decide if a particular practice is profitable. ALV is also useful to dental business managers who must know how to determine if a practice type, such as pediatric dentistry, would be profitable and throw more weight into targetted marketing to a select audience you seem to be attracting more.

 

Maximizing the Lifetime Value of Your Dental Patients

As an experienced dentist, you already know that making a new patient is by far the most important part of your business. Having a strong referral system will help you build trust with potential patients. The great thing about referrals is that they are free and also increase your practice’s ALV.

Find ways to offer exceptional service and remain loyal to your current dental patients. Focusing on these areas will not only help you retain patients but also make your services more attractive to new customers.

How To Start A Dental Assisting School in Texas

Final thoughts

As a dentist, Knowing the value of each client will give you the knowledge to determine if your practice is profitable, as well as help you better plan for expansion. This value has a direct impact on your ability to cover overhead costs and ensure that your business can expand.

Now that you know what every patient is worth, your practice can make more informed marketing decisions that will lead to your highest return on investment (ROI).

ARE YOU READY TO TAKE THE FIRST STEP TOWARDS OPENING YOUR PROFITABLE DENTAL ASSISTING SCHOOL?

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