What is the Value of a New Dental Patient?Jan 6th, 2010 | By Lisa Buber | Category: Featured Articles
Like any other service-based business, a dental practice depends on an influx of new patients to grow in both size and revenue. While an established dental patient base is vital, over time patients may move, pass away, or choose a different dentist based on their own needs, location or wants. As a result, even though you may be content with your current patient base, to continue to operate a thriving, lucrative practice, actively attracting new dental patients is essential.
Most dental practices devote at least a portion of their marketing budget to locating and acquiring new patients. Just how much of a dental practice’s marketing budget should be used to attract new patients can vary dramatically from one practice to another. Obviously, marketing dollars spent to attract a new dental patient shouldn’t exceed the lifetime value that patient will bring to the practice; therefore, determining the value of a new patient becomes a vital component in deciding the best way to allocate marketing dollars.
But what is the best way to determine the value of a new dental patient?
Overall, dental marketing experts agree that a new patient can represent a substantial amount of income over time, especially if that patient remains with a dental practice for a long time, or brings in additional family members. However, marketing experts, and dentists themselves, have a widely ranging idea of the long-term value of a new patient. Some estimates place the value of a new dental patient at a few hundred dollars, while others estimate it to be well over $10,000.
A survey conducted by The Wealthy Dentist found that of the 68 survey respondents, only one-fourth had calculated the value of a new patient to his or her dental practice. Overall, respondents estimated the value of new patients to be between $200 and $3,000, with an average of $900 to $1,200 per dental patient.
According to dental marketing expert Joel Harris, CEO of ADA Intelligent Dental Marketing, the key to determining new dental patient value is to consider the average value of a group of patients over time. In his example practice, a dentist with 1,000 patients who remain for an average of three years has an average annual income of $900,000 over those three years. Divided by 1,000 brings the average patient value to $900. Harris notes that figure represents pure profit, after all costs are deducted.
The actual value of any new dental patient varies mostly as a result of the income level of a given practice’s patient base, as well as the dentist’s specialization. Dental professionals who specialize in more costly procedures, as well as those who have a large base of low-income, “sliding scale” patients, will have different values for new dental patients.
In a recent survey and statistical analysis, Roger Levin, DDS, founder of the Levin Group, determined about 50 percent of an average dentist’s production is derived from hygiene patients requiring additional follow-up treatment, with an additional 10 percent coming from emergency treatments. The remaining 40 percent of revenue is derived from new patients, meaning that for most dental practices, attracting new patients is critical to remaining profitable.
Why do new dental patients represent such a large percentage of production? Levin cites several reasons:
- Because many new dental patients see a hygienist during their initial visit, these patients represent hygiene production, as well as dentist production. Most require one or more prophylactic treatments, as well as radiographs and other diagnostic series, fluoride, sealants, cancer biopsy and other treatments that can add significantly to the practice’s hygiene component.
- Most new dental patients require “baseline” exams and measurements to be made, requiring a more comprehensive workup than existing patients.
- New patients may also be more open to other cosmetic recommendations.
- And finally, Levin notes that new dental patients seeking a second opinion or more advanced dentistry tend to be more open-minded and are more likely to take action recommended by a new dentist.
New dental patients are also potential sources of additional future referrals. In the survey conducted by The Wealthy Dentist website, one respondent estimated an average patient will bring in one or two additional referrals during their period of service with the dentist.
Although the actual value of a new dental patient can vary among practices, marketing strategists agree it’s vital for a dental professional to have a system in place to track new patients and the dollars they spend, as well as other factors, that can help determine how many marketing dollars should be spent on attracting new patients to a practice.
In addition to tracking the number of new patients a practice is acquiring each year, Levin recommends keeping track of the following information in order to more clearly define and target future marketing efforts:
- Types of procedures and services recommended to new dental patients
- Types of procedures and services provided to new dental patients
- Time between initial phone call and the actual dental appointment
- Number of appointments following initial dental appointment
- Level of insurance limitations
Dental professionals and their staff should also have a clear way to identify the source of any new patients – phone book, newspaper ad, patient referral, and so forth – to determine which efforts are more effective in attracting new dental patients.
The underlying lesson is this: Marketing specialists agree that while the actual lifetime value of a new patient can vary from one practice to another, having a general idea of that value can help any practice determine how much of its marketing dollars can be profitably spent in attracting new patients. By keeping track of new patients and the services they accept during their first year, your practice can achieve a much more targeted and successful marketing campaign, designed specifically to attract the new patients that are so vital to the growth and viability of every dental practice.