Can Lifetime Value of a Patient Be Calculated? Is It Worth the Effort?

// Ask The Expert with Daniel E. Ansel //

It’s a commonly accepted maxim that it costs five times more to re­cruit a new cus­tomer than to retain a satisfied one, yet when I ask hospitals and health systems if they’re concerned or think about tracking the “lifetime value” of a patient, they usually don’t have a clear answer. After all, the concept is relatively straightforward – lifetime value equals how much a patient is worth to the hospital/health system over the course of that person’s life.

Maybe the problem is that it’s healthcare. “We’re selling the biggest service that nobody wants,” says David Marlowe, principal of Strategic Marketing Concepts in Ellicott City, MD. “Nobody wants to be a patient, and yet a healthcare system’s financial success is based largely on finding and keeping patients.”

In a 2004 research study where 3.75 million Blue Cross Blue Shield of Michigan members were analyzed, the per capita lifetime medical ex­penditure was $316,000 for men and $361,200 for women. Nearly one-third of the lifetime expenditure was incurred during middle age, and nearly half during senior years. In 2009, according to the U.S. Census Bureau, the average annual health­care expenditure was $7,578 per capita. Multiply that amount by the average lifespan of 78 years and you get an average lifetime expenditure of $591,084.

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