LTV (Customer Lifetime Value)
LTV is the total revenue a single customer generates over the full length of their relationship with your business. For healthcare practices, it includes initial admission/treatment plus any returning episodes of care, referrals, and ancillary services.
What it is
Customer Lifetime Value (LTV, sometimes CLV or CLTV) is a forecasted or measured number representing total revenue per customer. For healthcare, the unit is often per patient or per admit; for ecommerce, per shopper.
How to calculate
Simple formula: LTV = Average Order Value × Purchase Frequency × Customer Lifespan.
For a behavioral health practice: LTV = Average revenue per admit × Average number of episodes per patient × Average years a patient remains in your network.
Example: $25,000 per admit × 1.4 episodes × 1 year horizon = $35,000 LTV.
Why it matters
LTV sets the ceiling on what you can spend to acquire a customer (CAC). A healthy LTV:CAC ratio is at least 3:1 — meaning if your LTV is $35,000, you can afford to spend up to $11,667 in marketing per admit and still have a sustainable business. Most agencies and ad platforms talk about cost-per-lead; LTV is the metric that lets you know what cost-per-lead is actually affordable.
Frequently asked questions
Should LTV be calculated on revenue or profit?
Both — gross-revenue LTV is the headline metric, but contribution-margin LTV is what actually determines how much you can spend to acquire. Always know both.
What's a good LTV for behavioral health?
Highly variable by service line. Outpatient therapy may have a $3K–$8K LTV; residential SUD treatment may run $25K–$50K per episode; luxury programs can exceed $100K.
How often should I recalculate LTV?
Quarterly. Service line mix, pricing, and patient mix all shift. Use rolling 12-month windows to smooth out seasonality.
