You should be measuring return on investment (ROI) for every marketing strategy or channel you use. To accurately measure ROI, you’ll need one very important number…the “case average” of your new patients.
Case average is a figure that represents how much money a patient will generate over time in your practice. You will sometimes hear it referred to as “lifetime value of a patient.”
You figure it by taking your collections for the month (or quarter, year) and dividing by the number of new patients during the month. And make sure to count all the new patients who’ve come into your practice, not the number of patients who started care. (I do exclude freebies who never get an exam though.)
You can also calculate a case average using a different forumla. Take your PVA (patient visit average) and multiply it by your $ collect per visit. So if your PVA in your office is 22 and you collect an average of $50 per visit, then your case average is around $1100 (which is too low.) But I don’t like this method as much because it can be inaccurate, since you’re figuring an average from averages (that have usually been rounded up or down).
Some chiropractors don’t like to calculate case averages in their office, because they think you’re putting a dollar value on the patient’s head. But let’s face it, you’re running a business here. There are two parts to running your own practice… a clinical aspect and a business aspect. This blog is about the business aspect.
The biggest reason to determine case average in your practice is to make good marketing decisions. Combine it with your conversion rate and you can really drill down on your marketing. Let’s run through an example…
An ad costs you $1500 to run. The last two times you ran it you got 13 new patients. You’re thinking about running it again, but your not sure if its really worth it. Because you’ve read this blog for awhile now, you’ve been keeping track of your numbers (right?). You know that every new patient that walks in the door will equal an average case of $1500. And you know that if a new patient comes in, you have a history of converting about 60% of them to care.
So if the ad produces 13 new patients, you’re going to convert 8 of them (13 x .60 = 7.8 rounded up).
8 new patients times $1500 case average is $12,000.
So now back to the question. Should you spend $1,300 on an ad to get $12,000 in return? If you said “NO, $1300 for one ad is crazy!”, you need to go back and reread the above paragraph until you get a yes.
This is the problem with judging your marketing solely on the number of new patients. Some chiropractors think…”13 new patients, well gosh Dr.. Beck, that’s not very many. Dr. Joe Blow said he got 187 new patients from an ad!”
That’s great for Dr. Joe. But I wonder what his conversion percentage is? And what?s his case average? Because if he really did get 187 new patients and converted most of them, he’s got a million dollar a year practice.
In today’s world, you need a case average well over $1500 to be profitable in practice. If this number gets below $1000 your usually going to struggle unless you have a ton of new patients coming the door. If the case average falls below $500 for more than a month, you?re practice is in big trouble.
The best way to get a higher case average is to increase your retention and collect more per visit.
Also, you can raise your case average by planning out each patient’s case in detail. This means around the time you do your report of findings with the patient, plan the services you’ll be performing with care plan. For example, if you are going to see a patient for 24 visits, what are all the services and billing codes you’ll be performing. Use a travel card, folder or software to keep track of this.
Planning the case out like this also helps your staff stay on track with the patient?s care. If a re-exam is supposed to take place on visit 12, your staff sees it and is able to make sure it gets done and billed. Or if an extremity adjustment is supposed to be done each visit, you are reminded of it.
This may sound like a simple step to take, but don’t overlook the pre-planning of a patients care. You’ll be surprised at how much you and your staff miss if you’re not watching it every day on every patient. Just one small service missed regularly can amount to hundreds of dollars on each case.
I once counted up how much revenue was lost one month because my staff had “missed” a few re-exams, extremity adjustments, re-xrays, computerized test-ing, home exercises, rehab etc. It came out to be over $3,000. From that point forward, I made sure everyone (including myself) kept up with each patient’s planned care.
Each month, figure your case average for your practice. Then check to see how your marketing is going. The number of new patients you get is important, but make sure you are considering the total dollars they are bringing into your business as well.