What is one patient worth?

 

Author: Marc Grossman 

In a traditional primary care practice patients come and go relatively fluidly with little care as to where they came from or why they left. While I would argue that there is a lot to be learned from tracking this ebb and flow, the reason it is usually goes unchecked is the net worth of a patient – if a practice has 2,500 active patients and the physician is netting $150,000 a year, the average patient nets the physician only $60 a year and depending on the nature of the practice, may change physicians regularly.

This perception is one of the issues that physicians we at GSC have worked with have had the toughest time overcoming when transitioning to a concierge practice. In a concierge practice, the worth of a patient almost cannot be overestimated. Let’s take for example a practice whose annual revenue is $1700 per patient. ($1500 retainer and $200 average in insurance billing and co-payments). Assuming we are talking about on on-going practice that has already has enough patients to cover its major fixed costs (rent, staff, etc.), we can say conservatively that 90% ($1,530) of this amount can be considered profit.

Evidence shows that a well run concierge practice retains 80-90% of its patients from year to year (including deaths, moving, and voluntary exits). If at most only 20% of the patients leave every year, then the average patient stays in the practice for 5 years.

Therefore, a new patient is worth $7,650 (1,530 x 5) in average profit to the practice – Not an inconsiderable sum and one worth some investment of time and money to secure. This figure is especially important to keep in mind when you are first embarking on a transition and you are trying to justify marketing, staffing, office space, and consulting costs that would have been out of the question in a traditional practice.