Client Retention Rate in Private Practice: What is It and How Do You Measure It?
As a private practice owner, you probably often hear about the client retention rate. So you probably already know how important it is to the success of your business.
But do you know what it is?
And do you know how to measure it?
If your answer to either or both of these questions is no, it’s okay. Your secret is safe with us.
In fact, we’ve come across a lot of healthcare business clients who didn’t know how to measure client retention rates or why it’s so important to keep track of them.
This post is going to explain in simple terms what client retention rates are, why they’re important and how you can measure them in your own private practice. By the end of the post, you’ll be able to set up your own retention report and start tracking your client retention rates.
Client Retention Rate 101
What is client retention rate?
Simply put, the pure meaning of client retention rates is the rate at which you’re able to retain your clients in your private practice.
Client retention rates (or patient retention rates) are different to the customer retention rates that you may have heard of in the business context.
CUSTOMER Retention Rate
Customer retention rates in a general business sense refer to the percentage of customers a company has retained over a specific period. It follows the formula:
In the context of healthcare, this formula is difficult to use as it’s not the intention of a practitioner to retain clients forever. Following the general multi-session treatment plans, you’re very unlikely to have the same clients you had in a year’s time.
CLIENT Retention Rate
This brings us to the mystery of the client retention rate. What is it, and how can you calculate it, taking into account the fact that you’ll naturally go through a flow of clients?
Client retention is best calculated as the average difference between the number of sessions your clients attend and the number of sessions initially recommended by you. Client retention rates are then simpler to think of in terms of the rate of premature termination (or self-discharging), rather than the rate at which you retain a client.
(Click here to skip the simpler concepts and jump straight to the ultimate client retention formula.)
Why is it important to keep track of client retention rates?
There are several reasons why any practitioner should be watching their client retention rates. It gives insight into your skills as a practitioner, your client’s commitment, potential and lost revenue, as well as the level of client care you’re able to provide.
Below is a simple list of the reasons why client retention (i.e., clients attending the number of recommended sessions) is important:
- New clients are more expensive to acquire than continuing to see existing clients.
- With a low retention rate, you’re forced to spend more in marketing more frequently to get new clients through your door.
- You don’t reach your maximum potential revenue if your clients don’t attend the expected number of sessions.
- It is easier to plan your time and forecast revenue if you know your average client retention rates.
- High client retention rate generally means that you’re able to build rapport and trust with your clients quickly.
- Low client retention rate can mean your clients don’t feel committed to their treatment plan, for reasons such as not fully understanding your service.
- Client retention can be low if you’re not available enough. An understanding of the reasons why clients prematurely terminate their treatment plan can help you to operate your practice differently, including hiring another practitioner.
- Consistently low retention rates can also mean there are areas you can improve in your treatment style or the way you approach clients.
There are so many more reasons why it’s important to keep an eye on your client retention rates. Usually, consistently low client retention rates mean that something isn’t working right and it’s time to reevaluate.
Understanding Client Retention
Before we move onto calculating the real client retention rate (i.e., the difference between the number of sessions your clients attend and the number of sessions recommended by you), let’s first go through some simpler concepts of tracking client retention.
The following concepts are not exactly client retention “rates”, but can assist in understanding a general trend in your private practice.
The number of sessions a client attends with you
Let’s scrap everything we went through and start with a simple and straightforward concept. Client retention refers to the number of sessions a client attends with you.
So, if Tom has attended 6 sessions with you, you have a client retention figure of 6 with Tom.
Now, it makes no sense to look at the retention figure for each client, as that number is not as valuable or informative as the retention for a larger number of clients. For example, if Tom has attended 6 sessions and Jane attended 2, there aren’t many valuable insights you can gain from this information.
The average number of sessions your clients attend
A more useful definition of client retention is the average number of sessions that your clients attend with you. By looking at the average, you’re looking for a pattern instead of the number of sessions each individual attends.
This calculation is suitable for practitioners who meet the following criteria:
- You use a similar model for all or most of your clients.
- Your recommended number of sessions for each client is more or less the same.
For example, if you mostly work with clients with a specific set of issues that generally requires 10 sessions, you have a good reference point to compare your average figure against. An average of 9 sessions would be a great figure, whereas an average of 5 would not.
You can calculate this like you’d calculate any averages, following the below formula:
|Clients||Number of Sessions|
In this example, you have a total of 10 clients, who attended a combined total of 50 sessions. Using a simple calculation as above, you arrive at an average of 5 sessions per client.
This average calculation is as simple as it gets and, depending on your needs, you could implement this into your practice without any other fancy formula. This can be enough for sole practitioners who don’t have to account for other practitioners, and young practices that don’t have a long list of clients.
But what if you’re not a sole practitioner and/or your practice has been operating for some time?
In that case, the simple average calculation doesn’t provide you with meaningful data.
The average number of sessions your clients attend within parameters
If you have multiple practitioners in your private practice, and a high volume of clients who have gone through your practice, the use of average number of sessions as a figure of client retention can be a bit misleading.
Using the simple average calculation above, there are a few issues:
- It doesn’t specify if the client case is open or closed.
- It calculates the total number of clients and sessions, which can be large, making it difficult to detect any changes on a smaller scale. For example, if you started with a high average number of sessions for a few years, then it started to drop, it would take a long time for the average figure to drop significantly.
- The average figure doesn’t specify whose clients they are (or only calculates for your own clients).
Because of these reasons, it becomes necessary to put in some parameters in your calculation for the average number of sessions per client.
First parameter you can specify is the practitioner. Calculate the average figures for each practitioner in your practice AND a separate calculation for the whole practice.
|Clients||Number of Sessions|
|Clients||Number of Sessions|
|Clients||Number of Sessions|
Client retention rates are generally to do with the relationship between the client and the practitioner. There are other reasons of course, such as availability, location, forgetfulness, the cleanliness of the practice… The list really can go on, and you’ll never find out the exact reason some clients don’t return. It is, however, usually the responsibility of the practitioner to help clients commit to their treatment plan.
Calculating an average number of sessions for each practitioner would highlight the areas you could each improve, and can be a useful tool for performance analysis.
Parameter: Case Status
The next parameter to consider in your calculation of the average number of sessions per client is the status of their case. It would certainly make more sense to just look at the closed cases, for which you assume the clients are unlikely to come back to you in the foreseeable future.
Using the numbers from above, let’s take out the hypothetical clients whose cases are still open.
|Clients with Closed Cases||Number of Sessions|
|Clients with Closed Cases||Number of Sessions|
|Clients with Closed Cases||Number of Sessions|
The first practitioner’s average figure went down after taking out the ongoing case with 12 sessions so far. The second practitioner’s average figure went up after removing the new client sessions with 1 session each.
The result is that the average figure for the whole practice increased from 5 to 5.5.
Including currently open cases can skew the average figure as the data would have a lot of 1s and 2s for new clients. Only looking at closed cases can give you a more accurate average figure, thus giving you a better understanding of patterns in the number of sessions.
Parameter: Date of Last Session
But what if you haven’t closed the case and the client just hasn’t come back yet?
In that case, you can filter the data by the date of the client’s last session in your average calculation.
For example, only include clients whose last session was more than 6 weeks ago (or another date period of your choice). This means that your data won’t include anyone that has come back within the last 6 weeks.
The date limit you set would depend on the type of practice, treatment plan and your anecdotal experience. If in your experience, most clients who haven’t come back in 6 weeks have never contacted again, you can quite safely set the limit at 6 weeks. You could of course track and measure this with real data for a more accurate representation.
|Clients whose last session was over 6 weeks ago||Number of Sessions|
In this hypothetical practice, Client 5’s case wasn’t closed by the practitioner but they hadn’t returned in the last 6 weeks. Based on experience and other available data, we assume that this client won’t return.
Since we’re talking about retention in relation to premature termination, case status may not always be an accurate representation of your current or past caseload. After all, if you’ve been able to definitely close cases then that would mean most of your clients are attending all sessions recommended by you.
Parameter: Date of First Session
A problem you could have with all the above calculations for the average number of sessions your client attend could be that there is simply too much data. As briefly mentioned above, this can make it difficult to detect the changes in the average figure.
In this case, filtering by a specific starting period can give you a more accurate average figure.
For example, let’s say you want to new clients acquired in the year 2017 only. Then, filter your data to only include clients that had their first session between January and December 2017.
Here, you could also set a Date of Last Session parameter to exclude current clients.
|Clients whose first session was in 2017 and whose last session was over 6 weeks ago||Number of Sessions|
Clients 1, 7 and 9 were acquired in 2018, and clients 2, 6 and 10 haven’t returned in the last 6 weeks.
As you can see, for this hypothetical practice, new clients acquired in 2017 have attended an average of 8.8 sessions. Do this for each practitioner as well to see their average figure within set date parameters.
The average number of sessions in practices with a high volume of clients can seem to plateau at a certain number. While that can mean that the average number of sessions more or less stays the same, it becomes harder to detect changes as it requires a consistently significant drop or increase to drastically move the average figure.
Parameter: Presenting Issues
Another parameter you can set when calculating the average number of sessions your clients attend is their presenting issue. Depending on the problem your clients have, the number of sessions may differ. Additionally, an analysis of this data can help you determine what types of presenting issues are “risky”, in that clients with these issues often attend very few sessions.
Parameters: Demographic Information
Lastly, use the information you have about your clients to drill down further. Filter your data by client demographics such as age and gender and marvel at the different results. An analysis of this can give you great insight into your client behaviour and how you can approach different types of clients in order to help maximise their benefit.
The Ultimate Client Retention Rate
So far, we’ve looked at the average number of sessions as a representation of client retention in private practice. This can be a useful calculation for practices that generally employ the same treatment models that the recommended sessions stay similar for most clients.
However, unless you do one type of treatment and don’t have a lot of varieties in clients’ presenting issues (or even personalities), this isn’t always the best way to calculate the client retention rate.
In most private practices, the types of clients you get vary drastically, which affects the number of sessions you deem necessary for each client. For a physiotherapist, an athlete with a pulled muscle and a patient with scoliosis will require different types of treatment and a different number of sessions. Moreover, the “recovery” rate of each client is not something you can definitively know.
In this case, merely calculating the average number of sessions can be like comparing apples and oranges. An average of 5 sessions for certain types of treatment plans can be a concern, while it can be ideal for other treatment plans.
So, what do we do?
Compare against the number of recommended sessions
Instead of looking at the average number of sessions, compare the number of attended sessions against the number of recommended sessions to get a true client retention rate.
This is a more complicated and involved process, as it requires a client-by-client calculation, instead of simply looking at the sums of appointments and clients.
This calculation gives you the client retention rate as a percentage of attended sessions before self-discharging or completing the treatment plan.
For example, say you only had one client who attended 6 sessions before premature termination. You had deemed it necessary for this client to attend 10 sessions. Then,
You have a client retention rate of 60%.
This is an extremely informative calculation compared to merely looking at the number of sessions, as it also gives you an idea of your maximum revenue (i.e., 100%) and the “lost” revenue (e.g., 100% – 60% = 40%). In this example, you’re running 40% below your maximum revenue.
|Clients||Number of Sessions Attended||Number of Sessions Expected||Client Retention Rate|
Average client retention rate for each client = 63.9% (an average of each client percentage)
Average percentage of attended sessions out of recommended sessions = 67.6% (an average calculation using total figures – I.e., 50/74*100)
This client retention rate calculation shows you the percentage of sessions attended by your clients out of the sessions that were recommended by you. Simply put, it shows how well you’ve been able to retain your clients, measured against the number of sessions you deemed necessary. But how about the opposite?
You might want to look at the percentage of clients who stopped being your clients before their treatment was completed. Or more accurately put, the percentage of recommended sessions unattended by your clients.
Churn rate is simply the opposite of retention rate, and can be calculated like below:
Using the earlier example where you only had one client who attended 6 sessions out of the recommended 10 sessions:
You have a churn rate of 40%.
This shows that your practice wasn’t able to collect 40% of the expected revenue.
|Clients||Number of Sessions Attended||Number of Sessions Expected||Churn Rate|
Average churn rate for each client = 36.1% (an average of each client percentage)
Average percentage of attended sessions out of recommended sessions = 32.4% (an average calculation using total figures – I.e., (74-50)/74*100)
Client Retention Rate vs Churn Rate
Client retention rates and churn rates look at different sides of the same coin. In order to calculate them, you need the same amount and type of data. It is up to you to choose what you would like to use (or you could always use both).
While this goes without saying, you should
- Aim to increase client retention rate.
- Aim to minimise churn rate.
Good Churn vs Bad Churn
As ethical practitioners, you know that it’s not always about the number of sessions your clients attend. If your client recovered or reached the goal in fewer sessions than you recommended/expected, it’s something to celebrate. In that case, it’s a “good churn”.
So, how do we reflect this in your churn rate (or client retention rate)?
Simply put the churn rate as 0% for this specific client. For client retention, put it down as 100%. For reference, add a column to show that the goal has been achieved.
|Clients||Number of Sessions Attended||Number of Sessions Expected||Client Retention Rate||Churn Rate||Goal Achieved|
Clients 3 and 8 did not attend all recommended number of sessions, but had achieved the treatment goal. By simply marking the retention rate as 100% and churn rate as 0%, the overall figures are changed as below:
Average client retention rate for each client = 67.7%
Average churn rate for each client = 32.3%
Good churn is something to celebrate and strive for. While you would still miss out on the expected revenue, exceeding client expectations is an excellent way to make “promoters” for your practice. A client who has had a great experience at your practice is more likely to return next time and spread the word.
Manually marking the client retention rate and churn rate as above gives you a more accurate average, as it excludes good churn.
Using Parameters for Client Retention Rates
By now you would have a pretty good understanding of client retention rates in private practice.
Now, you can use the client retention rate (or churn rate) calculation using the parameters we went through above.
Practitioner: Have each of your practitioners calculate their own client retention rate, or ask them to provide you with the required data such as the number of recommended sessions and presenting issues.
Dates: Calculate retention rates based on different time periods. How does your all-time client retention rate compare to the previous year’s?
Demographics: Use the demographic information to analyse client retention rates. Are there any differences in retention for different age groups, genders or occupation?
Things to Keep in Mind
The number of recommended sessions is very subjective. There is no “correct” figure. And especially for practitioners who are not as experienced, it can be difficult to set them as a benchmark. While experience and peer support can balance this, it’s important to keep in mind that the number of recommended sessions is different in each practice and for each practitioner.
This also means that it’s easy to skew the data in any way that you like. For example, in order to increase your client retention rate, you could lower the number of recommended sessions. Take into account the industry averages and the opinions of other practitioners to set the recommended sessions as “accurate” as you can.
Client retention rates (and churn rates) are an essential metric to track for a successful private practice. However, properly calculating retention can be difficult and complex. For the most suitable retention calculation for your private practice and assistance setting up the reports, reach out to the K&W allied health consultants.
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