Why Patient Lifetime Value Matters? (How to Calculate It for Your Business)
Although the demand in the healthcare sector is increasing, concerns are growing regarding patient loyalty. Due to the rising cost of care, patients are compelled to behave like consumers who compare growing set of healthcare options. Therefore, examining patient’s lifetime value becomes very important.
Model for Creating Patient lifetime value
Patient Lifetime Value (PLTV) can be calculated in many ways, but typically you need the following:
- Number of visits per year (V)
- Average amount spent on each visit (AS/V)
- Patient’s current age and gender (Calculate life expectancy (LE))
- Disease category and frequency of visits suggested on an average (ADFV)
Once you have a hold of the above numbers, the formula for calculating PLTV should look like the below:
Lifetime Value = [AS/V] X LE X [ADFV]
Lets take an example. A patient (F/ 40yrs) makes 4 appointments a year in diabetic department, and has spent Rs. 3200 in an year. The average lifetime value of your patient would be 800 x 4 x 30 = Rs. 96000
Each patient’s lifetime value can be created accordingly.
Plot the Patients on a normal curve to segment your patients on the basis of PLTV
Advantage of segmenting your Patients based on value.
Patient lifetime value models allow healthcare providers to narrow down their focus on specific customers. This can help them to ensure the customer retention and focus on acquiring new patients with similar backgrounds using look-alike patient modelling techniques. Additionally, it can help in slowly up-selling less valuable patients to increase their PLTV and can improve personalized experience; something that many patients now expect.
