Kristi Fender is a freelance writer and editor in Shawnee, Kansas, with a long history of covering animal health and veterinary medicine. She is the former news channel director of dvm360.com and editor-in-chief of dvm360 magazine.Read Articles Written by Kristi Fender
What Nissan Mosapor, RVT, hates more than just about anything is facing a pet owner at the front desk who has to choose between paying rent and providing for a beloved pet’s serious health care needs.
“When you have someone in that situation, it’s heartbreaking for the whole staff,” said Mosapor, the founder and co-owner of Metropolitan Animal Specialty Hospital (MASH) in Los Angeles. “Our average client transaction is close to $1,000. That makes it hard for any single person or family to support that high level of care for their pets.”
However, when the COVID pandemic hit in the spring of 2020, his staff found itself in that situation less often than might be expected during a time of unprecedented economic uncertainty. Why? The MASH financial team crunched the numbers and discovered that the utilization of pet insurance had skyrocketed.
From March to July 2020, pet health insurance and third-party payment plans like CareCredit paid at least a portion of 80% to 90% of the invoices at MASH. What’s more, the top three pet insurance companies paid over $429,000 for treatments and surgeries at MASH, up 48% from the same period the previous year.
“Thank God for these insurance companies; they’ve been able to step up and help when everyone’s really needed them,” Mosapor said. “Between the insurance companies and credit agencies, we’ve been able to support ourselves and our staff and the pets that we work with.”
What MASH Does
Being a referral practice, MASH doesn’t necessarily promote pet insurance to clients who don’t have it. (The fact that a pet arrived means it has a pre-existing condition.) Still, MASH has three key strategies to drive the use of pet insurance.
1. Hire and train staff.
MASH has two front office managers who are highly knowledgeable about the various pet insurance companies and what their policies cover. The rest of the front desk team is trained in the details as well.
2. Work with clients on their policies.
Beyond just advising clients about insurance, MASH acts as a liaison between the pet owner and insurer to facilitate the claims process. For example, a team member will contact the insurer while developing a treatment estimate to find out exactly what is covered and the client’s out-of-pocket cost.
“We send in the necessary paperwork to make sure they’re preapproved,” Mosapor said. “We’ve done it enough now that companies are familiar with us. That provides for a much faster approval rate.”
3. Encourage referring practices to promote insurance.
Like most specialty hospitals, MASH has relationships with general practices that refer heavily, and it encourages those clinics to drive awareness of pet insurance among their clients. After all, Mosapor said, there is only upside for the general practice.
“I know of a referring DVM who surveyed all of her clients and found that 10% of them were on pet insurance,” he said. “For the next year, she pushed all of them hard to get pet insurance, and the next year she was at 20%. What’s really interesting is she found that that 20% made up 80% of her revenue. So it’s really interesting to see the dynamics of the flexibility that insurance gives our clients.”
While there’s much a hospital such as MASH can do to encourage the use of pet insurance at the individual practice level, something bigger appears to be going on. Namely, some pet insurance companies are seeing major surges in activity since COVID hit. While it’s true that the number of insured pets has grown steadily over the past several years, increases during the pandemic seem to outpace the previous gains.
Consider that Nationwide, the largest insurer of U.S. pets, had nearly 915,000 policies in force at the end of 2020, an increase of 15% over the previous year and nearly double the 8% growth from 2018 to 2019.
“We have definitely seen growth in all channels of the business since April 2020, with many of the last several months setting all-time enrollment records,” said Nationwide spokeswoman Karen Davis.
Likewise, the Crum & Forster Pet Insurance Group, which includes the ASPCA, Hartville, PetPremium and 24PetWatch brands, has seen robust activity during the pandemic. The company reported that approximately 25% more claims were submitted in 2020 than the year before, and the total number of insured pets grew by more than 30%.
These findings from pet insurers seem to parallel what’s happening at veterinary clinics. For one, new-client visits are up for the first time in four years. According to an ongoing study of 536 practices by the Veterinary Hospital Managers Association, the hospitals saw an increase in visits from new clients starting in May 2020 that persisted through the end of the year, reversing a long decline.
“The decline in new-client numbers has been a discouraging trend for the last four years. It will be interesting to see if this turnaround continues to hold as we move into 2021,” the VHMA stated in the December 2020 issue of “Insider’s Insights.”
VetSuccess, a company that helps veterinary practices leverage financial data, has tracked practice metrics during the pandemic. It reported an average 7% bump in revenue in 2020 among the 2,700 hospitals it follows.
Based on all the numbers, more pet owners purchased and used insurance policies during the pandemic than during average times and more of them were taking their pets to veterinarians than during a normal year. But why?
The Big Picture
John Volk, a senior analyst with Brakke Consulting who has studied both the pet insurance industry and the veterinary profession, has some theories. First, the pandemic has been good for pet health care in general.
“If you’re working from home and you have a pet, you’re spending more time with your pet than you have for a long, long time,” Volk said. “You don’t have to spend time commuting to your job, you have more available time in total, and you aren’t spending money on movies or restaurants. So, a lot of people have extra cash on hand.”
That means people in the presence of pets all day every day might notice potential health problems that they might not have seen otherwise, Volk said. A more flexible schedule makes for easier trips to the veterinarian, and money not spent on other activities is freed up for things like veterinary care.
“I suspect that more pets were medicalized [during the pandemic], meaning that a higher percentage of the pets out there got a trip to the veterinarian,” Volk said. “We know historically that less than 50% of cats go to the vet and only about 80% of dogs, so it doesn’t take a big increase in the percentage of pets medicalized for the impact to be seen at the clinic.”
At the same time, pet insurance has been on an upswing for the past several years. The North American Pet Health Insurance Association indicated in its 2020 State of the Industry Report that the total number of insured U.S. pets grew an average of 16% every year from 2016 to 2019. When the pandemic hit, folks who might have been considering pet insurance suddenly found themselves with some extra time and disposable income.
“We’re seeing evidence throughout the economy that people with jobs and staying home are finding other ways to spend their money,” Volk said. “So I can imagine it has had a positive impact on pet insurance sales. People have time to spend on the internet researching, and certainly, we’re seeing a big uptick in veterinary expenditures.”
New Fans of Insurance
Veterinarians are more supportive of pet insurance than they were in the past, Volk said. While some practice owners are suspicious that widespread adoption of insurance will lead to managed-care scenarios similar to those in human health care, the tide might be turning.
“There’s no question that there is greater support for pet insurance among veterinarians than ever before,” Volk said. “It certainly wasn’t hurt by the work that we did with NAPHIA to point out the benefits to veterinarians and give them ideas about how to promote pet insurance within their practice.”
He was referring to a study Brakke conducted in 2016 on behalf of NAPHIA showing that, contrary to popular belief, more than half of veterinarians wished more clients had pet insurance. The study also delved into what practices with higher rates of insured patients were doing differently to drive utilization of pet insurance by their clientele.
This normalization of acceptance of pet insurance, coupled with levers that practices could instantly pull to start seeing more insured pets, might have been at least partially behind the slow but steady increase in insured pets seen in the past several years, Volk said.
A General Practice’s Experience
Like MASH in Los Angeles, Onion River Animal Hospital in Barre, Vermont, has been slammed over the past six to nine months. Practice manager Erin Preston, CVPM, explained that in the spring of 2020, Onion River first scaled back its hours and personnel because of federal guidelines and clients’ reluctance to pursue routine care. But then Vermont’s governor declared that veterinary professionals were essential workers. Onion River needed to expand to keep up with client demand.
“We went bananas!” Prescott said. “We hired two doctors during COVID. Fortunately, they wanted to move to Vermont for quality of life.
“So, now we have four doctors at the clinic every day.”
Most of the increased caseload comes from problem, sick and emergent appointments, Prescott said, presumably because more people are home with their pets or obtaining pets. And her hospital isn’t the only one in central Vermont experiencing the crush.
“Our emergency service 45 minutes to the north is overwhelmed,” she said. “We’re actually considering expanding to offer emergent care until midnight because when we close at 8 and have to recommend the emergency hospital, our clients can sit for four to six hours in triage and sometimes even get turned away.”
Although she’s still implementing a way to track pet insurance usage at the hospital and its contribution to the practice’s financial success, Prescott has perceived an increase in activity since the pandemic hit. That is especially true for telehealth visits.
“We are doing a lot with telemedicine for daytime follow-up appointments and after-hours emergencies,” she said. “A big question with clients is getting a copy of that telehealth medical record and the dollar value they paid for it so they can submit it to pet health insurance.”
Prescott said she would love to have an employee as the go-to person for clients who have questions about insurance or to help clients with filing claims. That is a ways off, she said, but she is optimistic that pet insurance is essential to the future success of veterinary medicine.
“The more the industry, in general, gets on board with it, the more it will benefit patient care and our businesses financially,” she said. “We recognize that the more clients are insured and have some sort of coverage towards a larger bill or procedure, the more they’re inclined to return to the veterinary hospital.”
HOW TO GET MORE INSURED PATIENTS
The North American Pet Health Insurance Association released a guide for veterinary professionals who want to drive the use of pet insurance. The tips below are based on a study of what practices with higher rates of insured clients do differently.
- Choose one or two pet insurers to research in-depth and promote to clients. This avoids information overload for both the hospital team and clients.
- Appoint one or more insurance specialists who can be go-to team members for answering questions and developing relationships with insurers.
- Review pet insurance information with the client. Don’t just send home a brochure.
- Link from your website to your favorite insurance company.
- Determine which clients have pet health insurance. Pet owners sometimes forget that they have a policy, so asking always helps.
- Note the client’s pet insurance company and put the policy number in the patient record.
- Submit claims on behalf of the client. Yes, it’s an extra step and more paperwork, but it can save you time in the end because the insurer might ask fewer questions about the claim.
- Provide pet insurance as an employee benefit. Once team members get familiar with the process and see the benefits of the coverage, they’ll become advocates with clients.
- Encourage 30-day no-cost trial insurance policies. Many companies offer them in states where the promotion is allowed, and they’re a great way for clients to sample the benefits.
- Engage the entire practice. As with any hospital-wide initiative, all team members need to be on the same page to drive change.
TRIPLING THE PERCENTAGE WOULD BE TERRIFIC
Just 2% to 3% of U.S. pets are covered by insurance, according to the North American Pet Health Insurance Association. About 20 insurers are working to drive the percentage higher, said John Volk of Brakke Consulting.
What’s the true potential of the market? Not long ago, Volk was listening to a presentation by a pet insurance company leader who said the industry could achieve 25% market penetration, though the exec admitted it would take decades. Volk is skeptical.
“I think that’s optimistic,” he said. “One of my benchmarks is renter’s insurance. For the most part, that’s a discretionary purchase, whereas homeowners and auto insurance are pretty much required. Even with life insurance, there are compelling reasons to have it if you have a family.”
Just 7% to 8% of renters have renter’s insurance, Volk said, and for him, that’s a more realistic comparison for the pet industry to look at.
“It’s a type of insurance people buy only when they feel a need,” Volk said. “Still, if 7% or 8% of pet owners had insurance, that would be triple what it is now. It would be a huge accomplishment and make the pet insurance industry quite large, actually.”