Image Alt

Ascent PGS | Blog

Ascent Practice Growth Strategies Discusses Patient Acquisition for Dental Practices

President of Ascent Practice Growth Strategies discusses Patient Acquisition for dental practices.

What is considered a good cost to acquire new dental patients?

As with most business questions, the answer to this one begins with “That depends…” What does it depend on? It depends on your average annual per-patient value, your average patient’s lifetime value, and your overhead rate.

For the sake of this article, let’s assume an annual per-patient value of $1,000; we’ll set the lifetime value at five years with 80% retention, and for overhead, let’s take a rate of 70%. (Those are considered common numbers in dentistry).

Ideally, you’d like your per-patient acquisition costs to be less than the 30% gross margin remaining from your overhead for the average annual value of a single patient. So in our example here, that would equal $300. At that rate, you know you’re going to at least break even on average in year one and then, for the lifetime of the patient relationship, make a good profit for the remaining years.

In competitive areas, acquisition costs tend to be higher as online advertising fees go up due to the level of competition vying to buy the ad space. This means that there are times when it’s just not probable that you can attract patients at a cost less than the annual gross margin. If you live in one of these areas, it is important to factor in the lifetime value of a patient to determine whether the acquisition cost is worth the investment. For example, still assuming the numbers above, if your patient acquisition cost is $500, that can still be a good investment if you can retain new patients at a high rate. In this scenario, you’d start seeing profit on those patients in year two and beyond.

Understanding your new patient acquisition costs is critical in determining what type of marketing works best for you. This is why at Ascent we’re very proud of our average per patient acquisition costs of less than $200.

Add Comment