Once you know what a new patient is worth, the next question is what each channel costs to produce one. That single number, cost per new patient, lets you compare channels that otherwise have nothing in common.
The formulas
- Cost per new patient = total cost of the channel for the period ÷ new patients from that channel who actually came in.
- Return on investment = (value of those new patients − total cost) ÷ total cost.
“Total cost” means everything: ad spend, agency or management fees, call-tracking and software fees, design and photography. Leaving out fees is the most common way a channel looks better than it is.
A worked example
These are example numbers to show the math. Say a practice spends $3,000 a month on a paid search campaign, including the management fee. In one month the campaign produces 60 calls and form fills. The front desk books 20 new-patient appointments, and 15 of those patients show up.
- Cost per lead: $3,000 ÷ 60 = $50.
- Cost per booked appointment: $3,000 ÷ 20 = $150.
- Cost per new patient: $3,000 ÷ 15 = $200.
Using the example lifetime value of $4,000 in collections from the patient value chapter, those 15 patients are worth $60,000 over their lifetime against $3,000 spent. In first-year collections, at the example $800 each, they’re worth $12,000. Both views are useful: lifetime value tells you whether the channel is worth it; first-year value tells you how long the cash takes to come back.
Leads and clicks are not new patients
Agency reports often stop at impressions, clicks or “leads.” Those numbers aren’t useless, but they aren’t results. A lead can be a wrong number, an existing patient calling to reschedule, a vendor, a spam form or a caller who never books. Clicks can come from people who never call at all. In the example above, the cost per lead looks four times cheaper than the real cost per new patient.
The gap between leads and patients is also where the front desk shows up in the numbers. If a channel produces plenty of calls but few bookings, the problem may be how calls are answered rather than the channel; see the front desk and phone conversion guide.
Compare channels on the same basis
- Use the same period, the same definition of a new patient, and full costs for every channel.
- Count free channels, too. Your Google Business Profile and reviews cost staff time and any management fees; put a value on that.
- Look at several months, not one. Small numbers swing a lot month to month.