Let’s take an example. If your typical Botulinum Toxin patient stays with your practice for five years and spends £300 every six months for injectables at a profit of £150 per treatment, the lifetime value of a patient seeking Botox Cosmetic injections is £3,000 and the lifetime profit to your practice is £1,500.
However, not all patients require the same amount of support. A patient who visits your practice only sporadically and does not require a lot of service may be a good patient—in terms of profitability—while another patient may spend more per visit, but require so much support and outreach that she ends up costing the practice money.
The best way to evaluate the profitability of a specific patient or patient group is to keep track of all interactions with that patient or patient group over a two- to four-month time frame. Many practices determine procedure costs based on the cost of the service provider and the product used plus a percentage of their overhead costs. Missing from this measurement is additional support, including the receptionist’s welcome, coffee services, follow up calls and visits that ultimately make up the total cost required to meet the patient’s needs.
The first step in turning unprofitable patients into valuable assets is to determine whether the relationship can be improved. A practice owner or manager who believes in holding onto every patient—no matter what the cost—may never see the medical aesthetics business reach its maximum earning potential.
The one question many practice owners or managers often ignore is whether their best business decision may actually involve letting some of their least profitable patients go elsewhere. While this may seem like an illogical suggestion (particularly in a bad economy), having the wrong patients can hold a practice back from real success—despite the temptation of short-term profits. If the problem is not addressed, the facility may find itself in a difficult position, with minimal profit margins and an inability to accept new and more profitable patients.
Accounting for acquisition and service costs helps practices develop more targeted marketing campaigns and more realistic pricing strategies. When detailed enough, that same cost accounting can also reveal who you’re most profitable patients and patient groups really are.