BLOG: The cash flow benefits of continuity of care, part 2

Read more from John B. Pinto.

When we do the math on the kind of neglect described in my last blog, the impact of superior continuity becomes obvious. Imagine two competing senior-oriented practices. In year 1, they each get a new 65-year-old patient with the average incidence of eye care needs. Let’s say these patients each have the potential to stay in the practice 10 years, and that in the aggregate of medical and surgical care, they average $150 per visit in eye care outlays. And assume these patients, after a pleasant experience, have the potential to refer two friends to the practice, prompted by each time they visit. Now imagine that one practice, Dr. Smith’s, has a perfect recall system, and patients come back every year on average. Dr. Jones’ practice has a poor recall system and only sees its patient every 2 years, and then loses the patient altogether within 6 years, after just three visits. Here’s a simple breakdown on the net compounded value of such a new patient in each practice over the first 10 years:

 

 

Dr. Smith’s practice with a perfect recall system

Dr. Jones’ practice with a flawed recall system

A new patient at $150 per visit times the number of visits made over 10 years

$150 × 10 = $1,500

$150 × 3 = $450

The number of visits the patient makes to the practice, times two patients referred after each visit

10 visits × 2 referrals/visit = 20 referrals

3 visits × 2 referrals/visit = 6 referrals

The value of the original new patient, plus the patients they subsequently refer

$1,500 + 20($1,500) = $31,500

$450 + 6(450) = $3,150

Smith’s practice clearly has the edge. But note that this is only half the story. Each of Smith’s and Jones’ referred patients will in turn refer others. Over just a 10-year period of time, this will generate a cascade of derivative referrals, but hundreds more new patients for the Smith practice as compared with Jones, each yielding $150 per visit. Taken over a 30-year career, you can understand how practices with great continuity of care but nonexistent external advertising can, over time, outflank a promotionally oriented practice with poor recall. Obviously, the grand prize goes to those practices with both great promotion and great patient retention.

Read more from John B. Pinto.

When we do the math on the kind of neglect described in my last blog, the impact of superior continuity becomes obvious. Imagine two competing senior-oriented practices. In year 1, they each get a new 65-year-old patient with the average incidence of eye care needs. Let’s say these patients each have the potential to stay in the practice 10 years, and that in the aggregate of medical and surgical care, they average $150 per visit in eye care outlays. And assume these patients, after a pleasant experience, have the potential to refer two friends to the practice, prompted by each time they visit. Now imagine that one practice, Dr. Smith’s, has a perfect recall system, and patients come back every year on average. Dr. Jones’ practice has a poor recall system and only sees its patient every 2 years, and then loses the patient altogether within 6 years, after just three visits. Here’s a simple breakdown on the net compounded value of such a new patient in each practice over the first 10 years:

 

 

Dr. Smith’s practice with a perfect recall system

Dr. Jones’ practice with a flawed recall system

A new patient at $150 per visit times the number of visits made over 10 years

$150 × 10 = $1,500

$150 × 3 = $450

The number of visits the patient makes to the practice, times two patients referred after each visit

10 visits × 2 referrals/visit = 20 referrals

3 visits × 2 referrals/visit = 6 referrals

The value of the original new patient, plus the patients they subsequently refer

$1,500 + 20($1,500) = $31,500

$450 + 6(450) = $3,150

Smith’s practice clearly has the edge. But note that this is only half the story. Each of Smith’s and Jones’ referred patients will in turn refer others. Over just a 10-year period of time, this will generate a cascade of derivative referrals, but hundreds more new patients for the Smith practice as compared with Jones, each yielding $150 per visit. Taken over a 30-year career, you can understand how practices with great continuity of care but nonexistent external advertising can, over time, outflank a promotionally oriented practice with poor recall. Obviously, the grand prize goes to those practices with both great promotion and great patient retention.