The Value of a New Patient

Podiatrists are blessed to have a medical specialty that often creates long-term relationships with patients. Some patients present with an issue, you heal them, and they don’t return. Many require long-term care and treatment plans. Whether the patient relationship is short- or long-term, their value as a potential referral source is very high and one can maintain this connection for a lifetime.

What is a New Patient’s Financial Value to a Practice?

What is the financial value of a new patient to your practice in the first year and during their lifetime? Calculating this is easier than most doctors might think.

“How much financial value do you think a new brings to your practice in the first year as an average?” I’ve asked this question of hundreds of podiatrists in workshops over the years and, as you might expect, the answer varies. I have heard anywhere from $100 to $5,000 or more. Everyone’s practice is different. Think for just a moment about your practice, or even better, divide your total collections from new patients for the past year by the number of new patients you’ve seen. If that is too hard to extract from your electronic health record (EHR), simply take your best guess. \

Based on my work, I believe the average dollar amount a new patient brings to a practice in the first year is $1200. For the purposes of this illustration I’m going to use an extremely conservative number of $450. You should use whatever dollar amount you believe is correct for your practice when you do your own calculations.

What is the Lifetime Value of a New Patient?

The lifetime value, on average, for a new patient is, once again, a varying and movable target. Here is one way to look at it. Let’s assume that the new patient brings $450 in collections to your practice in year one. Let’s further assume that that patient will return to your practice one additional time in your career. That is, they will revisit your practice only one more time before you retire or either of you die. In today’s dollars we can then calculate that that patient is worth $900 to your practice in their lifetime. Let’s further assume that they, on average, refer only one person to your practice before your retirement and that person also returns only once to your practice. The referral patient’s value would also be $900. So, a new patient that returns to your practice and refers only one other person has a lifetime financial value to your practice of $900 + $900, or $1800. It is important to remember this is at the $450 conservative value. If we used $1200, that lifetime number is $4800.

New Patients are the Key to Practice Growth and Sustainability

It is almost impossible to overstate the importance of new patients to your practice’s success and long-term sustainability. If you see on average only 50 new patients in a month they will bring in an additional $22,500 in collections for that month. Fifty new patients at $450 for each month of the year equals $270,000 of revenue in only the first year. A look at the lifetime value of your new patients illustrates the essential importance of a steady stream of such patients. The 50 new patients for one month when viewed at the lifetime value calculation equal $90,000! And for only one year of 50 new patients per month, the lifetime value to your practice is a whopping $1,080,000!

Successful businesses understand the lifetime value of their customers, clients, or patients, and therefore invest robustly in marketing. If, for instance, the cost of acquisition of a new patient was $100, but the immediate return was $450 and the lifetime return was $1800, it makes sense to invest in marketing. At $1200 initial value it is even more compelling.

Marketing is Vital to Podiatry Practice Success

No one likes to spend money, but smart people know that good investments in business development produce returns; reliable, controllable returns. You could take that money and invest in cryptocurrency, of course, and in fact, you could come to my town of Las Vegas, play the casinos and hope for the best. Smart business people never win the lottery, because they don’t play it. It’s a fool’s game. It’s more likely you will be struck by lightning or a meteor than it is you will win at gambling. Investing in your DPM license and your business is the smartest investment you can ever make.

In my experience, a good benchmark for the number of new patients you should be seeing in your practice is 20 percent. Every week, if you average 20 percent new patients and 80 percent established patients you will ultimately grow and sustain your practice year in and year out.

Marketing includes online marketing, of course, and a robust effort to stay connected to your existing list of patients who already know you, like you, and trust you. In fact, if you aren’t connecting with your existing patient list, the lifetime calculation will precipitously drop. Without an effort on your part to nurture your existing patient list, they will over time forget your name and their value goes to zero. This matters! It also includes nurturing referral sources that surround your practice, such as other medical or non-medical practices and businesses that can send you a stream of referrals. If you appropriately nurture those relationships, using the same $450 new patient number, one new referral source that sends you one referral per week is worth $23,400 in revenue in the first year. If you develop 5 of these referral sources they will increase your collections by $117,000, and 10 will produce $234,000! And that is only in the first year. The lifetime value is staggering.

Marketing is the Best Use of Your Time

Building a healthy practice with a steady pipeline of new patients that grow and sustain your practice is one of the most valuable uses of your time and money. Understanding the value of new patients and learning how to nurture this essential business development strategy make all the difference. Educate yourself and put a plan together to make every other goal in your life possible.

Mr. Jackson is the President and CEO of Top Practices, LLC, and the leader of the Top Practices Master Mind Group. Top Practices is a company dedicated to helping podiatrists thrive in private practice through its marketing and management programs.  Rem is a Fellow of the AAPPM and the recipient of the AAPPM President's Award for 2012. He was inducted into Podiatry Management’s Podiatric Hall of Fame in 2019. He is the author of “Podiatry Prosperity: How to Market Manage and Love Your Practice.” Rem can be reached at rem@TopPractices.com. You can find out more about Top Practices at www.TopPractices.com

This content was created in partnership with the American Academy of Podiatric Practice Management.