They say volume is the key to growing your dental practice. On the surface, that makes sense because more patients mean more revenue, right? But in reality, dentistry isn’t a one-and-done kind of service. Patients don’t just walk in for a single visit and call it a day. For your practice to thrive, they need to come back regularly, and ideally, they’ll bring their friends and family along, too. This is why you need to know how much is a dental patient worth.
That’s why patient value isn’t just about how many people walk through your door. It’s about how often patients return or how many new patients they bring in through referrals.
In this article, we’ll explore how to estimate a patient’s lifetime value. At the end of this article, you might realize why having fewer loyal patients who keep coming back can often be better than having a high volume of one-time visitors.
What Is Lifetime Value?
First things first, what is lifetime value?
A patient’s lifetime value (LTV) is the total revenue they contribute to your practice over the course of your relationship.
It’s not just about their next appointment but the long-term value they bring over several years. Building trust and rapport is key because when patients feel comfortable with your care, they’re more likely to stay.
Satisfied patients also boost their LTV by referring others, bringing in additional revenue, and turning loyal patients into valuable assets.
Keeping them happy isn’t just about retention; it’s a strategic move that drives long-term growth.
How To Calculate Total Lifetime Value
A patient’s total LTV can be computed using this formula:
Total Patient LTV = (Annual Revenues – Annual Costs) x Retention Rate + Referrals
The annual revenues and costs can be estimates or actual costs. If you keep detailed records of patient transactions and procedures, you can use those as data for computing LTV. However, if you think there’s no need for accuracy, using estimates is fine.
1) Compute Individual Patient’s Lifetime Value
An individual patient’s LTV is calculated using the first part of the formula above:
(Annual Revenues – Annual Costs) x Retention Rate
For example, if a patient spends an average of $10,000 per year on dental procedures, and the annual cost to provide those services is $7,000, their net annual value is $3,000. Assuming they stay with your practice for five years, their LTV would be:
($10,000 – $7,000) x 5 years = $15,000
This means the patient brings in $15,000 of revenues over the course of their relationship with your practice. But that’s just five years. It can increase further if they decide to stay with us longer or if they choose you to perform more expensive procedures in the future. That’s why it’s crucial to keep them engaged and loyal; they represent not just consistent revenue but also potential for growth.
2) Compute Referral Value
New patients often walk through your doors thanks to marketing, but let’s be real because word of mouth plays a huge role. When your current patients like you personally and are impressed with your dental skills, they’re likely to refer others. That’s essentially free marketing. To capitalize on this, it’s crucial to deliver excellent service while building strong relationships.
When calculating referral value, you simply add the referred patient’s LTV to the referring patient’s LTV. Let’s take Max as an example. He’s been with your practice for 10 years, spending $8,000 annually, with $6,000 in annual costs. Max’s LTV on his own is:
($8,000 – $6,000) x 10 years = $20,000.
Max has referred five patients over the years. If each referred patient contributes an annual net revenue of $1,000 and stays for five years, their combined LTV would be:
$1,000 x 5 years x 5 referrals = $25,000
Adding this to Max’s LTV, his total value to your practice becomes $45,000. Max is clearly a high-value patient, making it essential to maintain his satisfaction and loyalty.
Maximizing a Patient’s Lifetime Value
The examples above look great on paper, but they’re just numbers. It’s easy to crunch the math, but that alone won’t drive growth.
As a dental provider, the real challenge lies in building a solid foundation of trust and delivering exceptional care.
When patients feel genuinely cared for, they’ll not only stay loyal but also refer others to your practice. Here are some practical tips to help you maximize and boost a patient’s LTV:
Improve Patient Experience
Happy patients stick around, and it starts with delivering quality care. Fillings should hold, toothaches should disappear, and smiles should shine. If you’re not solving their problems, they’ll find someone who will. Consistent results build trust and keep them coming back.
Upsell Your Services
Every appointment is an opportunity. Don’t let an hour in the chair go to waste. Introduce patients to services like teeth whitening, veneers, or Invisalign. It’s not just about selling; it’s about helping them achieve their best smile.
Reward Referrals
Referrals are a win-win. Offer incentives like free checkups or discounts for every new patient they bring in. People love rewards, and a good program turns loyal patients into your best marketers.
We Can Help Your Dental Practice Grow
Understanding a dental patient’s worth helps you prioritize your efforts, not to play favorites, but to recognize the value each patient brings. LTV is simply a tool to gauge how a patient contributes to your practice’s growth over time.
If you’re looking to grow your dental practice, our team at Virjee Consulting is here to help.
As dental CPAs, we specialize in guiding practices through the complexities of accounting and business management.
Don’t just take our word for it, check out our 150+ 5-star client reviews on Google!
If you’re ready to take your practice to the next level, head over to our Getting Started page to get in touch. We’re always here to help.
Until next time!
