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Reason for Recall
Bringing in new patients is good, but getting them to come back is better.
Gary Gerber, O.D.
If you've been reading my column for any length of time, then you know that I'm a huge proponent of using effective recall systems. I've spent years tracking client data that continually supports the premise that the single most effective practice-building tool a practice can use is a well-thought-out recall philosophy and program.
Something to think about
If you've taken time to carefully configure and execute your own recall system, I'm sure you already agree with me. You also know that measuring the results of your recall strategy is relatively straightforward. Send out 100 postcards and complete 41 exams in the next 30 days -- a 41% return. Seems simple enough until we throw in one other variable.
In this case, what happened to the other 59 patients? Did they move, die or change insurance plans? Was their experience at their last visit so horrible that they swore to never return to your office? Or was their recall card simply lost in the mail or inadvertently discarded as junk mail?
Attrition and recall
Patient attrition rates are hard to measure yet they're critical to our understanding how well our practice is growing (or not growing). While we all know patient attrition exists, there is a dearth of data regarding the actual rate. Research we've conducted at The Power Practice has a range as low as 10% and as high as 30%. We believe several factors account for this disparity. Among them, the amount of third-party insurances a practice accepts, the location of the practice and the age of the practice.
Suffice it to say, attrition affects recall in a profound way. My consulting company offers a spreadsheet (e-mail me if you're interested) that shows some startling examples of how powerful this effect is. Here are two examples:
Practice One highly believes in constantly attempting to generate more new patients. The first year in practice it saw 1,000 patients and has an approximate annual rate of new patient growth of 15% -- a rate that's significant by any measure.
With a below average recall rate of 20%, after 20 years in business, this practice should be prepared to examine about 21,000 patients. However, at the end of year 20, the practice has only seen about 16,000 patients. What happened?
Because of the practice's fixation on new patients, its attrition rate was 30%. Certainly a case of a "leaky bucket" if there ever was one!
Practice Two believes strongly in the value of a well-structured recall program. The first year it too saw 1,000 patients. Concentrating heavily on customer service to ensure that its attrition rate remains low, it too saw about 15,000 patients in year number 20.
These two practices have different philosophies that yield about the same number of patients over time. Yet Practice Two is infinitely more profitable. Its attrition rate is only 10% and its recall is 65%. New patient growth rate is "only" 11%. So, if both practices have nearly the same amount of patients, then why is Practice Two more profitable?
Most experts agree that the cost of acquiring a new patient is much more then the cost of retaining a current patient. Practice One, with its obsession on continually garnering new patients, has a much higher patient acquisition cost then Practice Two. Practice Two's philosophy of "make a new patient so happy that he'll never consider leaving us" pays off by allowing it to have a much higher net revenue per patient.
Don't let your bucket leak
The number of patients you see each year is certainly an important metric to track. However, it's also important to track the source of these patients. If you're constantly in search of new patients with the hopes of generating new revenue, then take a look at your own practice's attrition rate and take the necessary steps to decrease a potential leaky bucket.
Dr. Gerber is the president of the Power
Practice, a company specializing in making optometrists more profitable.
Learn more at www.powerpractice.com
or call Dr. Gerber at (800) 867-9303.
Optometric Management, Issue: September 2004