Retention: Vital Metric for Private Practices to Track
Summary: Tracking the retention rate of your practice and each therapist will help you understand the health of your private practice and make smart business decisions for growth.
Just like the body and the mind, your therapy private practice is a system that is either healthy, dysfunctional or somewhere in between.
Assessing the health of your private practice takes a little bit of effort, but once you get into the routine, you’ll find that the information you learn will give you peace of mind, and help you make smart business decisions.
One aspect of your practice’s health is how well your therapists are performing. You are probably very familiar and very confident with assessing their clinical performance, but do you feel so confident assessing how well they are retaining clients until therapy goals have been met?
Knowing the retention rate of your practice and of each therapist will answer these questions:
What percentage of my clients am I keeping each month?
What percentage of my clients am I losing each month?
Is this particular therapist on my team keeping or losing more clients than others?
Why is my practice losing clients?
Are clients staying until they have met their therapy goals or leaving for other reasons?
Are those reasons something myself or my therapists can influence or are they outside of our control?
Tracking Retention Rates
The retention rate of your practice is the percentage of clients who were active at the beginning of a time period and are still active at the end of a time period.
The formula to calculate the monthly retention rate is (Clients at the start of the month- clients lost during the month)/ Clients at the start of the month.
For example, if your practice had 100 clients at the start of the month and lost 13 during the month, then your retention rate calculation would look like this:
(100-13)/100= .87 and expressed as a percentage would be 87%
That means 87% of the clients that you had at the beginning of the month, you still have at the end of the month, so you have retained 87% of your clients.
Once you’ve calculated this metric, you have answered: What percentage of my clients am I keeping each month?
To calculate What percentage of my clients am I losing each month? Subtract your retention rate from 100%. So if your retention rate is 87%, then you are losing 13% of your clients each month.
You may also hear this called the attrition rate, but attrition can also be calculated to include the number of clients gained. We’ll go over this in another blog post. For now, the most simple thing to know is how to calculate the percentage of clients you kept and the percentage you lost.
To answer Is this particular therapist on my team keeping or losing more clients than others? Simply repeat the same calculation for the active clients and lost clients for each therapist individually.
Of course, you’ll never have a 100% retention rate, because the goal of therapy is to not need therapy anymore! So a good goal is a 90% retention rate. That means that in any given time period, each therapist and the practice as a whole should only lose 10% or less of existing clients.
If your practice or a particular therapist have a retention rate lower than 90%, then you’ll want to answer: Why is my practice losing clients? Are clients staying until they have met their therapy goals or leaving for other reasons?
We’ve found two simple ways to find out this information.
One way is for therapists to log the reasons that clients are terminating. As they do this over time, you’ll begin to see patterns. One therapist might have a lot of clients that terminate for financial reasons. Another might have a lot of couple’s clients whose relationships end. Another might have a lot of unknown reasons, because their clients simply stopped showing up to sessions.
Conduct an exit survey that asks your clients directly why they terminated. Put a process in place to send an email with an exit survey link to each client after they terminate. You can also ask your clients to give an anonymous review of their therapist.
The information you collect from your therapists’ reporting and your clients’ surveys will lead you to the question:
Are the reasons clients are leaving something myself or my therapists can influence or are they outside of our control?
Therapist Aid reviewed the research and concluded that “1 in 5 patients leave treatment before they have reached an acceptable level of recovery, against the recommendation of their therapist.”
Some factors, like finances, are outside of the therapist’s control, but how the client feels about therapy and the therapist are highly influenced by the therapist’s approach, and by the client’s experience with the practice overall.
Most clients want to stay in therapy until they are feeling better, but they may stop therapy prematurely if they don’t have clearly defined goals, if they feel like they aren’t connecting with their therapist, if they are having technical issues with telehealth, or if they don’t know what a healthy end to a relationship looks like. These are all factors within the influence of the therapist and the practice.
Of course, some factors, like client finances are completely outside of the therapist’s control. However, we’ve found that clients who are motivated to continue therapy because they are finding it highly valuable, will often find a way to pay for it. The therapist can help make therapy sessions one of the most valuable things in a client’s life, which will help motivate them to stay, and the stability and skills they learn in therapy can go on to influence their ability to improve their finances. Win/win all around!
We hope you’re found this explanation of retention rates to be helpful!
For a step by step guide to tracking retention rates, download our free guide. If you need more help, schedule a free consultation call!