Strategic Growth Planning

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Strategic Growth Planning is the process by which a physician in a private practice creates a vision for what their practice looks like in the future and creates a strategic plan to achieve that vision. Included in the strategic planning are measurable goals which are realistic and attainable, but also challenging.

The emphasis is on long-term goals and strategies rather than short-term objectives. Strategic planning assumes that certain aspects of the future can be created or influenced by the practice. Strategic planning helps assure that a practice remains relevant and responsive to the needs of its patients and contributes to practice stability and growth.

What’s Working? What’s Not?

When it comes to measuring the effectiveness of marketing campaigns, the most important metrics to focus on are:

ROI – Return on Investment
PAC – Patient Acquisition Cost
RPP – Revenue Per Patient

Understanding your Patient Acquisition Cost (PAC) is crucial for the growth of your practice. This single number can guide you through your marketing efforts and help you cut down non-effective marketing costs. Just about every medical practice we meet with has no idea what their PAC metric is. Most practices fail to consider the PAC metric. Instead, they scramble to acquire more and more patients, oblivious to the amount of money being paid out to reel them in. When you repeatedly spend money on marketing, regardless of whether it is on print ads, digital marketing, direct mail or community education seminars, and you have no idea what your PAC is, it’s bad for your business.

It is not surprising then that a practice that doesn’t take the time to figure their PAC and Revenue Per Patient (RPP), is unwilling to spend money on marketing initiatives because they look at this as an expense, not something that generates revenue. In many business models, both within and outside of healthcare, many experts believe that failure to determine customer acquisition cost and revenue per customer and its impact on business is a major reason why businesses fail. But that’s not all there is to it. PAC and RPP is also an important metric for determining where and how to distribute your marketing dollars, helping you get more bang for your buck.

Calculating Your PAC

Determining your Patient Acquisition Cost is quite simple if your staff is trained to identify exactly where every patient found out about you and is committed to accurate documentation.

It all boils down to following these steps:

  1. Track your expenses for every marketing initiative used to create patient inquiries and consultations.
  2. For each marketing initiative, categorize and track the number of patient appointments / consultations you acquire in the same period for which you tracked the expense.
  3. Divide your expenses per marketing initiative by the number of completed (not scheduled) patient appointments / consultations and you have the PAC for this specific marketing channel.
  4. Now track the revenue generated (cash or insurance payment) by each marketing initiative and you can identify the RPP.

Example – Determining PAC
Let’s say you spend $15,000 in 4 months on a digital marketing campaign (SEO, Social Media, Paid Search) and you gain 32 new patient consultations. Your PAC for your digital marketing campaign is $468.75. ($15,000 / 32 = $468.75.) Repeat this process for all marketing campaigns.

Example – Determining RPP
Now it’s time to calculate your revenue per patient for each marketing initiative. Unlike a restaurant or retail store, this calculation must wait 4-6 months until the patient has completed treatment. In the PAC example above, the practice spent $468.75 to acquire a new patient consultation. Now we track all (32) patients through treatment and payment. If the (32) patients generated $110,000 in revenue, your RPP would be $3,437.50. ($110,000 / 32 = $3,437.50)

The relationship between the two metrics is easy to see. You spent $15,000 to gain $110,000 in revenue and your profit exceeds your cost for acquiring the new patient. In marketing, you always want your PAC to be less than your RPP. We generally look for a minimum of a 5:1 ROI for every dollar spent. The above example would generate a 14:1 ROI.

Decision Time

There’s magic in the numbers. By examining the average PAC and RPP for each marketing initiative, you can decide the best places to put your marketing dollars to work. When you identify a marketing initiative in which you have an ROI greater than 5:1, it’s time to invest more money in that initiative, but only if your practice has the capacity to support a growing patient base. If you find that some marketing initiatives have a PAC that is higher than your RPP, you might want to do some due diligence. It might possibly be that patient appointments were not properly assigned to the correct marketing initiative or revenues were not tracked to the conclusion of treatment.

Effective Tracking of Advertising Generated Patient Inquiries. In order to make this an effective process, we will work with your staff to assure compliance in tracking data. We will help you develop tracking and follow up forms that collect the data you need in an easy to interpret format. The information we will collect will include the following:

How did the patient hear about you?
Television? Which station and program?
Radio? Which station?
Newspaper? Which one? What Day?
Referral? From Whom? From another physician?
Digital Marketing (SEO, Social Media, Paid Search)?

Tracking response to a patient outreach event:
How many patients attended?
How many scheduled follow up appointments?
How many procedures are scheduled to be performed?


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