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You might be one heck of a salesperson, or you might be a master marketer. But how do you know that? A gut feeling, perhaps? Sales or marketing skills only matter to a business if that business understands the value those skills provide. More succinctly, sales or marketing only matter if they work, and the only way you’ll know if they’re working is if you measure them. With that, here are a few key metrics that’ll help you determine the worth of your practice’s marketing and sales efforts, allowing you to make better decisions about future initiatives.
Lifetime Value (LTV)
This metric is the product of two variables: price and retention.
Average revenue/visit x Average number of visits x Average number of lifetime episodes of care = LTV
Typically, people associate LTV with subscription-based services where business models focus on increasing the subscription prices or moving customers to higher-ticket subscription brackets and then maintaining those customers for the longest period of time possible. Strive Labs suggests, however, that because patients pay—and payers reimburse—per visit, physical therapists are actually in the subscription business: “PT is unlike many areas of the healthcare system; instead of dealing with one-time interactions such as a surgical procedures or a yearly checkup, providers only make money if their patients come back.”
From that perspective, measuring LTV makes perfect sense, especially when it comes to gauging the success of your practice over time. However, there are some stipulations:
- Insurers and Medicare both reimburse based on their fee schedules, so unless you’re supplementing with cash-based services, you’re limited in terms of adjusting your price variable.
- You’re also limited regarding how long you can sell your services to a customer. Insurance approvals, prescribed amounts, and the patient’s own ability to improve all influence how long a patient will receive your services.
Even with these stipulations, determining your practice’s LTV is crucial because you can still control retention. As you’re well aware, there are patients who cancel, fail to show, or self-discharge—and your practice can positively impact those factors. (Strive Labs calls this metric “patient retention rate” and recommends monitoring it by calculating the “difference between the amount of visits a patient attends and the amount insurance approves.”) Furthermore, you can use LTV to determine whether you should add cash-based services or if you should adjust your schedule or treatment plans to better maximize reimbursements.
Customer Acquisition Cost (CAC)
In plain terms, this metric is the amount of money it costs you to acquire a new patient, and the lower the CAC the better. To determine this, you’ll need a marketing budget and a marketing plan—or at the very least, you’ll need to know the total amount your practice is spending on marketing and sales, including labor.
Marketing and sales spend ÷ Number of new patients = CAC
You’ll frame this equation by time, most likely in relation to marketing campaigns or altered sales efforts, to determine the effectiveness of those initiatives. CAC can also tell you whether you need to make cuts or intensify efforts.
Vacancy Percentage or Rate
Hotels like to keep their rooms booked, and you—and your clinic’s bottom line—like to keep your therapists’ schedules full. Vacancy rate is the percentage of unbooked time on your clinic’s calendar.
Number of hours not booked ÷ Number of total bookable hours x 100 = Vacancy Percentage
Several things influence vacancy rate:
- Cancellations and no-shows
- Excess padding between appointments
- Erring too much on the side of patient convenience rather than maximizing calendars (i.e., asking patients what date is good for them rather than suggesting a couple of next-available appointment slots)
- Failing to pre-book
Some of these factors are easier to adjust than others. The important thing is that your vacancy rate can tell you whether those adjustments are helping.
Phone Call Conversion
Conversion rate, or the percentage of prospects who convert to customers, is in itself quite the metric to track—but narrowing your focus and tracking the conversion of a particular task or campaign allows you to better understand the efficacy of your efforts. In a post on Rockit Conversion, social media aficionado, physical therapist, and owner of San Francisco Spine and Sport Jerry Durham recommends focusing on phone call conversion: “When you track (measure) the calls coming into your office, then you have all the information you need to convert these phone calls into new patients.”
Number of new patients booked over the phone ÷ Number of phone calls from prospects x 100 = Phone call conversion rate (as a percentage)
Beyond calculating your phone call conversion percentage, Durham advises that you track several pieces of information on a call log. Separate from your patient intake form, “the New Patient Call Log is a place to gather data and start measuring multiples points that will help you add more new patients without spending a dime! This Call Log can be as simple as an Excel spreadsheet or better yet, a Google Doc,” which you and your team can share and view at multiple locations, if needed. Here is what Durham recommends you include on your New Patient Call Log:
- Standard patient intake information like name, phone number, and date of birth
- The answers to these questions:
- “Who is the provider you saw?”
- “Who can we thank for recommending us?”
By asking these questions, you’ll be able to determine which marketing or sales effort is generating the most “leads”—marketing speak for interested prospects. Are new patients finding you online, through word of mouth, or through physician referrals? Learn how people are hearing about you and what is making them pick of the phone to call you, and you’ll be able to better identify where you should devote your marketing dollars in the future.
Follow-Up and Cancellation-to-Rebook
In addition to Durham’s aforementioned advice, I would also recommend tracking follow-up and cancellation-to-rebook phone calls. Converting prospects to patients is an absolute must, but if your practice is plagued by cancellations, no shows, and self-discharging patients, then your business will never reach its full potential. Here is my advice:
- Pre-book all appointments. If patients say “no,” just assume that “no” means “know”—as in they don’t know enough yet to say “yes.” Then explain why it benefits the patient to pre-book.
- If patients call to cancel, reschedule them. And this doesn’t mean asking, “Would you like to reschedule?” It means saying, “We can get you in tomorrow at this time or the following day at that time. Which would you prefer?” Also, people always say they’re too busy, so it’s on your front office staff to remind them that it’s crucial to their recovery plan to reschedule all missed appointments. Be sure to track this, too, as cancellation-to-rebook phone call conversion.
- Use automated appointment reminders.
- Use WebPT’s lost patient log to keep a pulse on cancellations and no-shows, so you can better manage these stats. Then:
- Develop a schedule for following up with no-show patients. Track how many no-shows you convert back to appointments booked.
- Determine what constitutes a lost patient. How many times does a patient have to fail to show up for an appointment? How many times does the patient not answer or return email or phone communication? Develop a plan for following up with lost patients; make sure that plan includes frequency of follow-up and an end-date for said follow-up.
- Answer all phone calls within two rings. You’d be surprised by how many private practices fail to answer their phones at all, let alone in a timely manner. Again, everyone is busy, but you’ll be hard-pressed to acquire new patients or maintain current patients (translation: run a business) if your staff isn’t answering the phone. The faster and more frequently they do so, the better.
You may have noticed an underlying theme with these crucial sales and marketing metrics: Cancellations, no-shows, and lost patients are the linchpin of your practice’s success. No matter how strong your marketing and sales efforts are, if you’re beleaguered by absent patients, then:
- You’ll never realize the true potential of your initiatives.
- You’ll never maximize your spend.
- You’ll never enjoy the full fruits of your labor.
The moral of the story, then, is two-fold: marketing and sales must focus on patient acquisition and retention, and you can’t properly target, modify, or improve upon either if you’re not tracking the data.