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Member Lifetime Value in Health Plans - Factors & Calculation

Member Lifetime Value in Health Plans - Factors & Calculation

Retaining members is critical for bringing down the overall costs because attracting a new member costs up to 5–10 times more than the cost of retaining an existing member. Furthermore, it is important to retain a member for a longer duration to recover the high one-time acquisition cost. Consequently, Member Lifetime Value (MLTV) becomes an important tool in determining the profitability of members or segments and evaluating the various decisions to service the health plan members. MLTV is defined as the net value of all the payments-from the start of the marketing effort targeted at a potential customer to the time when the customer definitely ceases being a customer of the company

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