How to Calculate the ROI of Your Patient Communication Tool
- Applying Your Key Metrics
- Patient Communication Tools
- Valuations
- The Key Formulas
- Using the Formulas
Applying Your Key Metrics
Almost any financial decision in your office can be made with the assistance of your Key Metrics (Spreadsheet Project). If you have these figures, then it is as simple as knowing which numbers are relevant and applicable to these decisions.
In future following articles, I will be showing you how to Calculate Your ROI in various aspects of your office, such as: Patient Communication Tools, Diagnostic Equipment, Ophthalmic Lenses Lab Stock, etc… using your Key Metrics!
Patient Communication Tools
There are many patient communication solutions available. These tools will communicate efficiently
and effectively with your patients using different communication mediums: voicemail, texting, emails, and more. For more information on the various patient communication tools, listen to Dr. Gary Gerber’s episode here: 4patientcare, DemandForce, SolutionReach and Websystems - ALL on the same episode! via the Power Hour
and effectively with your patients using different communication mediums: voicemail, texting, emails, and more. For more information on the various patient communication tools, listen to Dr. Gary Gerber’s episode here: 4patientcare, DemandForce, SolutionReach and Websystems - ALL on the same episode! via the Power Hour
You may have had your subscription to these tools for years or you may be part of a trial period. Regardless of your situation, how do you determine your Return on Investment (ROI)? Let me show you how.
Valuations
Most patient communication tools will show you estimated values for the exams they bring in. Here are the dashboards for SolutionReach and Demandforce
Solution Reach
Demandforce
Don’t count on their estimated revenue, use your Key Metrics!
It is not realistic to assume that you are capturing 100% of these recalled patients
It is not realistic to assume you are “grossing” the national average of $316 gross per patient or the default of $150 per exam.
($316/exam is the national average for Gross Revenue per Complete Exam)
This IS realistic:
1) You will make little to no profit off strictly off of your exams
- Look at the national average chair cost of $134 and the national average managed care patients at 52%.
- If you are only capturing at the national average of 61% for a pair of lens, then 39% of your patients will be “exam only.”
- If more than half of those patients are coming in with managed care plans, then that means more than half of your “exam only” managed care patients will not cover your chair cost.
2) You will make little to no profit off of your contact lens sales
- Competition from big box and online retailers are inevitably diminishing the profit margin from contact lenses to an almost standardized percentage.
- That percentage will usually be enough to cover processing time needed by staff and, hopefully, a little over.
3) Therefore, your profits will rely more on your Ophthalmic Lens/Complete Pair Capture Rate.
So let’s take a look at what we know from our example Key Metrics Spreadsheet (if you don’t have access, you may request it here for FREE) and build a more conservative and realistic estimate using:
- Row 2: Gross revenue per exam
- Row 15: Eyewear Rxes per 100 exams (Capture Rate)
- Row 46: Net Income %
The Key Formulas
- Number of appointments made X Capture rate = Estimated Captured patients
- Estimated Captured patients X Gross revenue per exam = Estimated Gross Revenue
- Estimated Gross Revenue X Net Income % = Estimated Net Revenue
- ROI = (Estimated Net Revenue - Total Cost of Service) / Total Cost of Service
Using the Formulas
Let us revisit the example estimates above using mean national statistics.
SolutionReach example for 12 months @ default estimate of $150 gross per exam:
- 713 appointments * 61% capture = 435 patients realistically captured
- The estimated gross of $106,950 is actually higher at $137,460 (with a $316 gross per exam)
- If your net income is 30%, your profit= $41,238
- ROI = ($41,238 - $4,788) / $4,788 = 761%
($399/mo Monthly Fee *12 months= $4,788 a year)
Demandforce example for 12 months @ $316 gross per exam:
- 743 visits * 61% capture = 453 patients realistically captured
- The estimated gross of $234,675 is actually significantly lower at $143,148
- If your net income is 30%, your profit= $42,944.40
- ROI = ($42,944.40 - $3,588) / $3,588 = 1,096%
($299/mo Monthly Fee *12 months = $3,588 a year)
Other Factors
Now here are some other factors that can affect these estimates:
No Show Rate
- Because these estimates only reflect the appointments made and not the appointments that actually showed, you may want to get an even more conservative estimate
- You may incorporate your no show rate in the first calculation of Captured Patients:
- (713 appointments - 10% No Show Rate) * 61% capture = 391 patients realistically captured after No Show Rate is applied
- However, if you have to calculate such a high No Show Rate into your ROI, then you may want to reconsider addressing your No Show Rate as your main priority.
Other Patient Communication Tool features
- Patient communication tools are not just for patient reactivation/appointments. Please listen to 4patientcare, DemandForce, SolutionReach and Websystems - ALL on the same episode! via the Power Hour, to see what else they can do.
- There are other features such as: patient notifications for glasses/contacts, appointment reminders, reputation management, etc… that will offload duties from staff and allow your office to operate more streamlined and efficiently.
- If you want, consider these factors:
- How many phone calls your staff makes to notify patients of glasses or contacts?
- How many phone calls your staff makes to confirm appointments?
- How long, on average, do these phone calls take?
- How many of the phone calls we unable to reach your patient?
- How many additional phone calls will you have to make?
- How long does it take for you to be aware of a bad review? Would it be helpful to “centralize” your reviews into a single dashboard?
- With all that being said, your ROI will be considerably higher in the long run.
- I have evaluated the major patient communication tools and I have more information to come. Stay tuned!
Conclusion
So remember the main conversions: 1) Estimated Captured patients; 2) Estimated Gross Revenue; 3) Estimated Net Revenue; and 4) ROI. These numbers will put a little more truth into the valuations that your patient communication tools are giving you. Don’t forget to use your actual Key Metrics to calculate your own realistic ROI.
Please let me know if you have any questions or comments! If you found this information useful, please like my page on Facebook or follow me on Twitter.