13 Jun Everything Dental Blog June 2019
PATIENT ACQUISITION COSTS
In the dental community it is common to hear someone talk about a patient in insurance terms i.e.: fee for service patient – PPO patient – DMO patient – Medicaid patient etc. Among industry insiders, the predominant patient type that a practice serves conveys the type of practice a dentist may be operating. Some would even deduce the décor and the technology or lack thereof, in that practice based on these terms and other demographics. Of course, that would be practice prejudice because any practice, regardless of patient population and insurance participation can deliver great care and may be extremely profitable. Some of these types of practices are equipped with the latest and greatest technology because they budget for it or receive grants! There are many formulas for success but they all require great systems – great people – great customer service and dental professionals that execute. You must diagnose, treatment plan, provide accommodating financial solutions and do the dentistry efficiently if you want to profitable.
In the clinical community and the marketing community there are different schools of thought regarding patient acquisition. The clinical elite believes that great dentistry and a boutique like environment will attract educated and affluent patients. These FFS offices invest in community-based programs and targeted print and digital marketing campaigns. They invest in technology, their facility, management consultants and highly trained employees to accomplish their objectives. These costs are part of their patient acquisition strategy and the practices overhead.
Marketing professionals know that every dental practice invests or spends a percentage of their revenue towards patient acquisition whether they know it or not. A PPO practice accepts discounted fees in the hopes that insurance participation delivers a nice flow of new patients. DMO and Medicaid practices tend to service a ginormous patient population with limited competition and low fee reimbursement. Their patient base may have a low dental IQ but they are rich in need-based dentistry. Unbeknown to most, some subsidized state and federal assisted dental programs allow the practice to offer and perform out of pocket dental electives. Hence, they have modified FFS patient opportunities.
Today, most dental offices participate in insurance and they adjust their fees accordingly. In a highly congested or competitive market, fee for Service (FFS) practices maintain fees between 20-40% higher than neighboring PPO offices. Whereas, FFS practices in rural or ivory tower markets (Mid-town Manhattan) price fees based on what the market will tolerate. In addition to fee balancing, progressive dental practices invest in mobile ready, interactive web sites to support their brand and marketing strategy. The monthly web hosting fee is part of their patient acquisition cost. In addition to their website many of these offices put resources into social media, SEO, SEM and traditional print and direct mail. It is quite common that these same offices engage in philanthropy (mission programs and community programs) and over 80% of them have a patient communication program like Demand Force™ or Lighthouse 360™ to appoint, reactivate and communicate with their patients. A good percentage of these practices also offer senior citizen discounts and a handful utilize e-commerce discount tools like Groupon. All these activities are part of the dentist’s acquisition strategy.
How much money are you willing to pay for a new patient?
What is a good patient?
Based on twenty-eight years of working with some of the most successful practices in America, it’s all about the return on investment (ROI). A great patient accepts treatment, refers friends and family, pays their bill promptly, keeps their hygiene appointments, comes on time and respects the dental team. Patient attraction is big but patient retention is bigger! A strong patient advocate can be worth thousands in referrals and restorative dentistry.
When we talk about patient acquisition we tend to forget the heavy lifting that is required once we get a lead from our marketing and patient acquisition efforts. Do you reward or thank your referrers? What is your new patient onboarding process? How do you make new patients raving fans? What’s your capture and closure rate? What percentage of your prospective patient leads stay with the practice? How long does that patient remain with your practice? What is the average lifetime value ‘$’ of that patient? Every dentist or practice administrator should know the answers to these questions. Patient acquisition, marketing and patient retention values must be measured like other key practice performance indicators.
There are many patient marketing strategies and a slew of analytics to run for capture rates, retention rates and customer satisfaction ranking. Unfortunately, many offices do not invest the time or resources towards this end. For those offices who do a great job at acquiring new patients, you must now focus on onboarding and retention. Many offices that have great new patient numbers have a back-door issue. They get the new patients in the front door and they leave the practice shortly thereafter through the back door.
When discussing the return on investment for patient acquisition and practice marketing remember your R.O.I. > Your return on investment goes up when the patient stays with your practice!