April 27, 2018

3 Nuggets of Wisdom to Boost Your Patient Retention

Prevailing wisdom states that the cost of acquiring a new patient is far above the cost of retaining an existing one. But hey, see for yourself below. Plus, according to research done by Frederick Reichheld of Bain & Company, “increasing retention rates by 5% boosts profits by 25% to 85%.” So, keep reading to learn how your practice can improve patient retention so more patients are happy, pay, stay and refer!

It’s Okay, Patient Attrition is Normal

Even if your practice was plated in gold and patient reminders were sent out on engraved diamonds, patient attrition would still be a normal part of business. No matter what, patients relocate, die, and so on. But typically, a good chunk of your patient base erosion will be a result of them choosing to leave. So, the question is: do you know your patient attrition rate? Better yet, do you have a plan to improve it?

Let’s cover a few bases on patient attrition before we move onto its complement, patient retention . . .

First, you might be wondering what a normal attrition rate is and how your practice compares. Well, who’s to say what’s normal??

“Normal” seems to be up for debate:

Normal Patient Attrition Rate per Year

Sources: Dental Economics, Henry Schein, DentistryIQ

(Though based on conversations, we've heard 10-30% is normal, yet 50% is the average.)

Second, let’s say compared to 10.3% your patient attrition rate is in dire need of improvement . . . or you simply want to increase profitability and productivity.

Is your first thought, “I need more new patients” or “I need to retain more patients”?

Well, you’re not alone if you thought “new patients.” Most practice owners turn to patient acquisition. But actually, patient retention is the answer! Of course, a focus on both is necessary for practice growth!

The Math on Patient Acquisition vs. Patient Retention

Let’s suppose that your active patient base is 1000 patients. By the end of the year, 100 patients leave (because you don’t have engraved diamond appointment reminders). In this case, your patient attrition rate is 10% ((100 ÷ 1000) x 100 = 10%).

Since your attrition rate and retention rate are complements, if your attrition rate is 10%, then your retention rate is 90% ((1000 - 100) ÷ 100 = 90%).

Yippee, now for the fun part . . .

Now, let’s suppose that your Lifetime New Patient Value is $880 (the average for a dental patient, meanwhile a chiropractic patient is approximately $2000). At $880 per patient, 1000 patients would equal $880,000. However, since you lost 100 patients, you lost $88,000 of that . . . bummer 😢

Acquisition Costs to Replace 100 Patients

According to the Hubspot Demand Generation Benchmarks Report, the average cost per lead in healthcare & medical is $26-$50. Since the close rate for most practices is typically 20-60% (based on Adept Marketing’s data collection), let’s do the math on your potential acquisition cost to replace the patients you lost.

If we imagine your team is on their A-game and only spend $26 per lead and convert 60% to new patients, how much would it cost to replace the 100 patients you lost? (Don’t worry, we’ve done the math below 😆)

100 ÷ 60% (0.6) = 166.7 (Leads Generated)
$26 x 166.7 = $4,334.20 (Marketing Spend)
$4,334.20 ÷ 100 = $43.34 (Cost per Acquisition (CPA))

Your Conversion Rate Matters

If your conversion rate was 20%, you’d have to generate 500 leads! And at $50 per lead, your marketing spend would be $25,000. Evidently, Conversion Rate is another important metric to consider alongside Patient Attrition Rate and Patient Retention Rate. Luckily, in our scenario, your team is at their best 😀

Still, your acquisition cost is $43.34 per new patient, which requires you to spend $4,334.20 to replace the 100 patients you lost.

Your Lifetime New Patient Value Matters, Too

Keep in mind, even at $100 per new patient, that would still be a great return on your marketing investment (which your marketing ROI would demonstrate). Remember, the lifetime value for each new patient means each new patient will potentially bring $880 to the practice.

When you know your Lifetime New Patient Value, it opens your eyes to how much it really costs you to lose a patient. Which, of course, stresses the need for investments designed to retain those new patients.

So, let’s consider a retention program to have retained those 100 patients, instead, shall we?

Costs to Retain 100 Patients

A retention program could cost as little as $5 per patient, as you’ll see with our recommendations below. If you spent $500 to retain those 100 patients, in less time and energy, you’d obtain the $88,000 and potentially a lot more!

Reichheld’s research also found that, “Across a wide range of businesses, the pattern is the same: the longer a company keeps a customer, the more money it stands to make.”

Let’s imagine if you improved your retention rate by just 1% . . .

By retaining just 10 more patients, you’d save $433.40 on patient acquisition costs and gain up to $8,800 or more in revenue.

The choice is clear. Shall we just move on to the golden nuggets of wisdom already? Here you go:

How to Improve Your Patient Retention Rate

The first rule of any business is to retain customers and build a loyal relationship with them. As we learned, doing so helps you avoid acquisition costs. Plus, returning customers tend to buy more over time. Perhaps most importantly, however, they tend to refer others to your company. In a well-run practice, the existing active patient count is the source of up to 80% of new patient referrals. Clearly, improving patient retention is important.

So, here you go! Here are our 3 simple recommendations to improve your practice's patient retention and keep your office full of happy patients who pay, stay and refer:

3 Tips to Boost Patient Retention

#1 Communicate to Connect

Keep in mind, communication begins before someone becomes a patient and continues throughout their relationship with you. Building meaningful relationships with your patients will result in far more than increased patient retention. Also, if you don't have your team calling past due patients on a monthly basis, then you're doing your patient retention percentage a giant disservice.

RESOURCES:
Effective Listening Skills
Building Meaningful Relationships

#2 Manage Your Online Reputation

Simply put, if you’re not paying attention to your online reputation and what patients want from a modern practice, then you may likely attract and retain less and less patients. Nowadays, people take action based on reviews and reputation, so put forth a concerted effort to manager yours online.

RESOURCES:
The Perfect Social Media Post
What Patients Want From a Modern Practice

#3 Improve the In-Office Experience

Keep patient satisfaction high. Your office should run smoothly and efficiently so wait times are 10 minutes or less. The goal for each appointment should be to provide a rewarding patient experience. Word-of-mouth marketing has always been powerful and is becoming even more powerful today.

RESOURCES:
A Rewarding Patient Experience
Pre-Blocking

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