Survey reveals healthcare marketing budget benchmarks for independent practices

A recent private practices survey conducted by Tebra revealed that $15,000 or more per year is the most common marketing activities budget.

The survey comprised 106 respondents exclusively from private practice settings. Among them, 94% represented physicians, and 5% identified as clinicians or specialists. Nearly all of the respondents were practitioners with ownership stakes. 

This article shines a light on the importance of marketing through the eyes of independent healthcare practices.  

Just 18% of our survey respondents consider marketing “essential” for their practice. 

Nearly half (42%) of independent healthcare practices thought marketing was “important”, while the remainder (24%) reported it as “significant”.

Unsurprisingly, the practices who voted marketing as “essential” experienced year-over-year revenue growth and were, therefore, twice as likely to have this opinion than the businesses with declining revenue. 

These views highlight an important perception gap because the correlation between this perception and revenue growth is substantial. 

Providers experiencing positive revenue growth were more inclined to recognize the importance of marketing, which raises the question that if the remainder of respondents acknowledge its significance, they could potentially amplify their revenue growth trajectory.

The majority (15%) of respondents set aside $15,000 or more for annual marketing activities, followed by 14% that reported between $10,000-$14,999 as their marketing budget. 

Notably, practices with positive year-over-year revenue growth invested 3 times more on digital marketing and social media ads than those with stagnant revenue.

The vast majority of survey respondents (62%) answered 1%-5% when asked: “What percentage of your practice′s gross revenue does your marketing budget represent?” The next bracket (14%) stated spending 6%-10% was their practice’s marketing spend, followed by similar figures for 11%-20% (6%), 21%-30% (5%), and 31%-40% (3%). 

With most participants allocating a conservative 1%-5% of their practice's gross revenue to marketing, this highlights both an industry norm and an opportunity. The correlation we’ve already seen between higher marketing spend and potential revenue growth indicates that a more substantial allocation may boost practices’ revenue.

These form the top 3 answers in terms of marketing expenses for private practices: 

Among the surveyed respondents, the less popular networking expenses included social media ads (29%), print ads, and direct mail campaigns (28%), followed by email marketing (24%), and website hosting with digital marketing (18%).

This leads us to the question, “What type of marketing has been most successful in your practice?”

In order of importance, our respondents ranked the 3 most common marketing and networking activities highest: 

This data indicates that the most frequently engaged marketing and networking activities among private practices were also reported as the most successful. Given the prevalence of these activities in their strategies, it aligns with their perceived effectiveness. 

Conversely, organic social media/influencer marketing, PPC, content marketing, and billboard/outdoor advertising were implemented less frequently. They also ranked lower in reported success. This suggests a potential discrepancy between engagement and effectiveness in these areas.

Our survey reveals that it’s most common (44%) to have 1 private practice staff member dedicated to marketing. The results show that 21% of respondents have 2 members of staff working on marketing activities, and the remaining 18% declared their practice has no in-house marketing support.

Regarding time investment, the distribution is diverse. While 11% allocate no time to marketing, a substantial 43% dedicate 1-5 monthly hours, and 15% devote 6-10 hours. Only a small fraction (3%) invest 41 or more hours per month into marketing-related tasks.

Furthermore, the correlation between increased year-over-year revenue and the allocation of more staff time to marketing efforts highlights a significant connection. Practices experiencing year-over-year revenue growth appear to invest more staffing resources into marketing, potentially contributing to their revenue uptick.

As well as analyzing the time spent and type of marketing activities, it’s important to recognize how independent practices calculate their marketing ROI.

New patient acquisition (48%) was the top response, followed by online reviews and ratings (34%). The amount of net new revenue generated (32%) was the third most common answer. 

The 5 least popular methods of measuring marketing ROI are as follows:

Notably, one practice stated that, "We will not be doing any active marketing as our practice is currently too full to accept new patients." On the contrary, another reported new patient acquisition will be their priority in 2024. 

In fact, 18% of survey respondents will prioritize attracting new patients to their practices in the coming year. 

The rest of the practices surveyed plan to improve their awareness in their communities of their business (6%), and 10% want to improve their word-of-mouth referrals. 

Looking ahead to 2024, the projected shifts in marketing budgets among our surveyed practices indicate a trend of stability, with 65% anticipating no change in their budgets. Additionally, 31% plan to increase their marketing budgets, while a smaller subset (4%) anticipates a decrease. 

This suggests a cautious yet optimistic outlook among these practices, with a substantial portion considering potential expansions in their marketing investments for the coming year.

The most important issues practices will focus on in 2024 will be managing workflow (27%), finding new patients (25%), and hiring talented people (19%). 

The practices that experienced increased year-over-year revenue growth were twice as likely to say managing workflow is the first issue they will focus on compared to practices whose revenue stayed the same year-over-year. 

These profitable practices were less focused on retaining existing patients (13%) and hiring talented people (15%), while practices with no revenue growth ranked patient retention at 22% and hiring at 31%. 

The most popular digital channels our respondents plan to invest in for 2024 are online reviews and reputation management (49%), online business listings (33%), and social media ads (29%). 

Interestingly, the more successful practices state a higher likelihood of investing in PPC, digital ads on the web, and online business listings in 2024. 

The biggest planned areas of marketing investments are: 

The top areas our surveyed practices seek marketing education and inspiration from are looking at competitor practices (39%), experimentation (34%), and following industry leaders and influencers (29%).

Respondent sound bites, when asked about their best marketing success story, included: 

The majority of practices we surveyed reported that their revenues have increased year-over-year (53%), while 35% stated they stayed the same. Only 12% experienced a decrease in their revenue on a yearly basis.

The typical growth among responses was between 6%-10% (45% of respondents). In addition, 24% experienced growth of 11%-20% in 2023 and 15% saw 1%-5% growth. Another 12% stated their practice’s business has grown by 21%-30%.

Our report highlights a cautious approach to marketing among independent healthcare practices, as indicated by the stability in marketing budgets and the conservative allocation of funds. 

However, the optimism comes through in the anticipation of potential expansions in marketing investments for the coming year, coupled with the majority of practices experiencing year-over-year revenue growth. 

The combination of cautious decision-making and positive outcomes suggests a balanced and hopeful perspective for the industry as a whole.