PLV

A financial and marketing metric that estimates the total revenue a healthcare provider can expect to generate from a single patient throughout the duration of their relationship with the practice. This concept mirrors Customer Lifetime Value (CLV) in other industries, but is tailored for the healthcare context where long-term relationships, repeat visits, and treatment plans are common.

PLV is particularly important for private practices, specialty clinics, dental offices, and subscription-based health services, as it helps quantify the long-term impact of acquiring and retaining patients. By understanding the expected value of a patient, providers can make informed decisions about how much they can afford to spend on Patient Acquisition Cost (PAC) while maintaining profitability.

Formula for PLV

The calculation of PLV can vary depending on the practice model, but the general formula is:

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Where:

• Average Revenue per Patient Visit is the typical billing amount collected per appointment.
• Average Number of Visits per Year accounts for the frequency of care.
• Average Patient Retention (in Years) reflects how long a patient stays active with the practice.

Why PLV Matters

PLV is a strategic metric that shifts focus from short-term revenue to long-term growth. When paired with PAC, it helps answer the critical question: Are we spending the right amount to acquire patients relative to the value they bring over time? For example, if PAC is $300 and PLV is $3,000, the acquisition strategy is sustainable. However, if PAC approaches or exceeds PLV, it indicates that marketing and sales efforts are not yielding a cost-effective return.

PLV also guides investments in patient retention strategies, including loyalty programs, follow-up systems, preventive care initiatives, and enhancements to the patient experience. Increasing retention has a compounding effect on PLV, as each additional year of patient engagement drives more revenue without incurring additional acquisition costs.

Applications in Healthcare

Healthcare organizations use PLV to:

• Forecast long-term financial health and practice growth.
• Segment patients to prioritize high-value relationships.
• Allocate marketing budgets more effectively across channels.
• Justify investments in retention and patient experience initiatives.

PLV serves as a cornerstone metric for balancing acquisition and retention strategies, ensuring practices grow profitably while maintaining strong patient relationships.