Cleaner fish and lifetime value of patients

A wrasse fish, which is known as a type of "cleaner" fish, is often seen wandering into the mouths of large predatory fish like sharks or the smaller oriental sweetlips (above) on its own accord. And just as it swims in, it swims out – unscathed.

How does this fish survive such encounters? Cleaner fish live in a symbiotic relationship with larger creatures, helping to maintain their health and hygiene by removing parasites from their gills, mouths, and other hard-to-reach areas. Parasites are harmful to the larger fish but are a tasty meal for the cleaner fish. Because of this mutualism, the larger fish doesn't consume the smaller as it appreciates the benefit of keeping the cleaner fish on the payroll.

Mutualism in healthcare

Physicians have a symbiotic relationship with our patients. We provide a service and see that the patient has a positive experience. In return, satisfied patients tell others about their experience with the practice. The patient returns as a satisfied customer and aids in new patient growth.

Placing this arrangement in an economic perspective, we must understand the lifetime value (LTV) of a patient, which is the net profit your client might generate over their lifetime and is a valuable metric to maximize revenue. It helps in making sound decisions on investing in patient acquisition and retention and demonstrates the financial importance of patient satisfaction.

The LTV equation

To find a patient's LTV, you use the following formula: revenue per visit X annual visits X years with your practice.

Revenue per visit: As a starting point, you could divide last year's total revenue by the number of patient visits. There may be significant differences in these numbers even within the same specialty, depending on your payer mix.

Annual visits: The CDC estimates an average of 2.8 visits annually, but this could differ based on your specialty.

Years with your practice: This will vary based on the patient's age when first establishing care with you, the duration of care required, and the services provided. For example, pediatricians would estimate the time from establishing care until the patient turns 18 years old.

Happy patients are worth their weight in referrals

Much like a cleaner fish and its clients, if you aid in improving your patients' health, they won't eat you up on Yelp. Their satisfaction with your care is directly related to your practice's financial position. Not only will they contribute to this by returning for services, but their endorsements can lead to new patient growth.

Bottom line: Assigning value to the acquisition and retention of patients may be just what you need to reinvigorate your team to prioritize patient satisfaction and a positive doctor-patient relationship.

Neil Baum, M.D., is a physician in New Orleans and the author of Business Basics for Creating and Managing a Healthcare Practice (Springer 2022)