You can’t decide whether a channel is too expensive until you know what a new patient is worth. Most practices underestimate it, because they look at the wrong number.
Why first-visit revenue is the wrong yardstick
A new patient’s first visit is often an exam, X-rays and a cleaning, sometimes discounted as a new-patient offer. If you judge a channel by what that first visit collects, almost every channel looks unprofitable. But a patient who stays comes back for hygiene visits, accepts treatment over time, and may bring family members and friends. The value is in the relationship, not the first appointment. That’s also why patient retention matters as much as acquisition; see the patient retention guide.
A simple lifetime value calculation
You don’t need a complicated model. Three numbers from your own records are enough:
- Average yearly collections per active patient. Total collections for the year divided by the number of active patients.
- Average years a patient stays. Estimate from how long patients in your records stay active before they stop coming in.
- Your margin, if you want profit rather than revenue: what’s left after the direct costs of providing care.
Here’s the math with example numbers only. Say your average active patient brings in $800 in collections a year, and a typical patient stays five years. The lifetime value in collections is $800 × 5 = $4,000. If you prefer to look at profit and, in this example, keep $1,000 of that after direct costs, the lifetime profit is $1,000. Your own numbers will be different, and that’s why you calculate them rather than borrowing someone else’s.
Use your own practice management data
- Use collections, not production. Production includes write-offs and adjustments you never receive.
- Define “active” clearly, for example a patient seen within a set period, and use the same definition every time.
- Split by type if it matters. An implant or orthodontic patient may be worth far more than a hygiene-only patient. If you market those services separately, calculate their value separately.
- Check insurance mix. Patients on different plans can have very different values to your practice.
- Write down the assumptions so next year’s calculation is comparable.
Be conservative
It’s tempting to include referrals and every possible treatment, which makes any spending look justified. Use a conservative figure for decisions. If a channel only works under the most optimistic assumptions, it probably doesn’t work.