Pet Health Insurance: Practice Friend or Foe?

ArticleLast Updated October 20155 min readPeer ReviewedWeb-Exclusive
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Veterinary practices continue to search for ways to counter the decreasing client visits that the veterinary profession has experienced for more than a decade. Pet insurance is an effective tool that is sometimes overlooked. Although not a panacea, pet health insurance can improve practice growth, profitability, and health.

In a recent Bayer-Brakke survey, 53% of pet owners reported that the costs of a veterinary visit were usually much higher than expected.1 It is common knowledge that veterinary healthcare costs have been rising, especially diagnostics and treatments that have expanded through increased technology and specialization.

The Bayer-Brakke study indicates that rising costs are a major concern for clients even though they want the best treatment options available.1 The challenge is finding ways to make pet healthcare affordable with financial tools that help spread out costs to fit clients’ budgets.

Impact on Veterinary Medical Services

Pet health insurance has its greatest effect on a veterinary practice’s medical services. A typical practice generates approximately two-thirds of its revenue from wellness services (eg, annual examinations, vaccinations, routine laboratory tests) and one-third from medical services (eg, surgery, disease diagnosis and treatment, patient hospitalization).

Medical visits generally generate more dollars per visit, or incident, than wellness visits. If a practice can increase its medical services, its return on investment in the facility and technology needed for these services will increase.

Most of the available data about pet insurance’s impact on veterinary care come from insurance companies themselves. Despite the possible bias, their data do suggest how much pet health insurance could help increase medical service demand.

Gina M. Fortunato, national sales director of ASPCA Pet Health Insurance, says an internal ASPCA study indicated that pet owners with its insurance spend twice as much annually on veterinary care compared with noninsured pet owners.2 Similarly, a study by Trupanion conducted on more than 80,000 insured and noninsured pets showed the mean annual revenue per pet for veterinary practices increased from $437 per uninsured pet to $837 per Trupanion-insured pet, while the mean annual visits increased from 2.4 for uninsured pets to 4.4 for Trupanion-insured pets.3 An unpublished study conducted by VPI in 2013 found that VPI-insured clients visited a veterinarian 50% more often and spent 60% more on health care compared with uninsured pets.4

These company statistics may be somewhat biased, but if the actual effect of pet health insurance is only a fraction of that claimed, the impact on practice service level and income could be significant. It makes sense that pet owners who have pet insurance seek veterinary care more often and spend more on needed services than they would without coverage.

Possible Concerns

Some veterinarians are concerned that pet insurance will eventually turn the profession into a managed care situation similar to the human health arena. However, about 2% of U.S. dog and cat owners hold policies,3 so it is unlikely that coverage will grow beyond a minority of pets anytime soon, and insurance companies will not significantly impact what veterinarians charge or what medical services can be provided. Pet insurance is fee-for-service, or indemnity, insurance that reimburses pet owners for veterinary care, much like auto or homeowner’s insurance. Policy holders are free to visit any veterinarian or practice they choose; they generally pay at the time of service and a portion of the bill is reimbursed once the claim is filed with the insurance company.

Some also suggest that clients who purchase pet insurance would end up paying more for healthcare, whether or not insurance coverage was in place. Those seeking insurance likely care greatly for their pets, but clients purchase insurance for a spectrum of reasons. For example, many want coverage because they know they would not be able to afford a large bill if their pet had a catastrophic injury or complicated illness requiring extensive veterinary care and treatment. Clients with insurance coverage would likely spend even more if they knew part of the bill would be covered by insurance.

Some veterinarians raise the issue of not wanting to be a salesperson for insurance companies. However, veterinarians and their team members sell every day, encouraging clients to follow recommendations for improving patient health. Why not utilize a tool that would help clients better afford the immediate cost of obtaining needed healthcare? Educating clients on how pet insurance can benefit them helps develop client trust and emphasizes that the practice is truly concerned about maintaining pet health, now and in the future.

Some veterinarians complain that insurance companies work to increase profitability by finding ways to deny client claims. Insurance companies are in business to return a profit, but they also depend on continued policy renewals by existing customers to remain in business. If companies made a concerted effort to deny claims, the company would soon be unprofitable or go out of business due to decreasing policy sales.  Pet Insurance Review is a good place to read policy holders’ comments about pet insurance companies.

Keys for Success

To increase client adoption of pet insurance, every practice team member needs to understand that insurance helps patients, clients, and the practice. One of the best ways to teach team members the benefits of pet insurance is to include a policy in each member’s benefits package. When team members use pet insurance themselves, they understand the benefits and share their first-hand experiences with clients. Helpful resources are available at The Pet Insurance Guide.

Assigning specific team members to be in charge of the pet insurance program and be the go-to people when insurance questions and needs arise also helps the practice. Researching and choosing one or 2 pet insurance companies that the practice recommends is a beneficial client education service.

Bottom Line for Pet Insurance

Pet health insurance can be a useful tool for practices looking for ways to encourage clients to bring their pets in more often when health issues arise and better follow the diagnostic and treatment recommendations. This may become a distinct advantage in the veterinary marketplace because not all practices will choose to openly help clients use the insurance and navigate the policies.