Offering clients payment options (Proceedings)

One of the many unhappy lessons veterinarians and their teams have had to learn from the recession is that clients don't have bottomless wallets filled with cash to spend on veterinary care. Data from the May, 2009 NCVEI QuickPoll showed that 74% of clients were using payment options they hadn't used in the past; these included pet insurance, third party payment plans and in-clinic billing options.

In addition to the recession, clients are dealing with the increasing costs of veterinary care resulting from the availability of more sophisticated medical options, the extended life span of pets which results in more routine care spending as well as an increased likelihood of the pet developing a serious and/or chronic disease and fee increases well above the rate of inflation. Even clients who are fully committed to providing quality care are looking at payment alternatives.

It's not reasonable to think that we can just give veterinary care away; running a veterinary hospital isn't cheap and veterinarians and their staff have the same need to earn a good living as anyone else. But there are things we can do. First of all, create a written financial policy for your practice. Everyone in the practice must be knowledgeable about the practice's expectations about payment before talking to clients about their financial options. Most practices don't have a formal financial policy; however, clients want to know what to expect. This increases treatment acceptance by eliminating "fear of cost."

The National Commission on Veterinary Economic Issues has created a Financial Policy Builder to help practices create their own personalized policy. It is available at: http://www.ncvei.org/financialplanning.aspx. The tool will guide the practice through a series of questions about payment options and related policies and then create a fully customizable, downloadable word document for the practice. This document can be edited as you wish and then will serve as a template for staff training and to give to clients.

Payment options for clients generally fall into three categories: in-house delayed billing of various types, third-party payment plans and pet insurance.

For years, many practices used in-house delayed billing plans to help clients who couldn't come up with the cash necessary for their pet's care at the time of service. These generally took the form of held checks or statements sent post treatment with the idea that clients would pay when they received the statement, either in full or in installments. Practices had varying degrees of success in actually collecting these amounts and the trend has been away from in-house options and towards third party payment plans and pet insurance.

While practice owners don't want either themselves or their staff to function as insurance sales people or credit card vendors, those who work in practices already regularly recommend to clients products and services not carried in the practice. Examples include obedience training, pet day care centers, groomers, pet sitters and a wide variety of dietary and other products. Doctors and staff take the time to understand those products enough to be comfortable with the recommendations and help clients understand the options because they think they are of value to the client in taking better care of their pets. Why is it any different with financial products that allow clients to provide more comprehensive care? Not only do pets benefit from the improved care; veterinary practices benefit because clients who have the financial ability to pay for better care help us practice the kind of veterinary medicine we want to practice and improve the profitability of the practice. A sophisticated study conducted by Veterinary Pet Insurance, one of the largest pet health insurance companies, showed that the company's clients with pet health insurance on average had 41% higher stop-treatment levels, scheduled 40% more veterinary visits, and spent twice as much on veterinary care over the life of their pet. A cardholder survey by CareCredit, one of the leading third-party medical financing companies, revealed that 71% of cardholders said that having this financing option affected their decision as to the level of treatment they can provide their pet.

In order to effectively recommend these payment options, veterinarians and their staff must first of all understand the products themselves. Recommendations to clients are most helpful when they include not only a general recommendation for a kind of product but a recommendation for a specific brand along with the reasons why the practice thinks this product is the best one and a company the practice has had a good experience with. This is no different from medical products; clients don't just want to know that their pets should be on heartworm preventative; they want to know which brand your practice recommends and why.

Third party medical payment plans aren't all the same but in general, their financing arrangements function like a credit card that can be used for multiple kinds of medical services such as veterinary care, dentistry, or optometry. Clients can apply for the cards while at the veterinary practice and receive immediate approval. The practice receives its money soon after they provide the care and is not responsible for collecting from the client.

As with regular credit cards, the practice pays a fee to the financing company. Sometimes these fees are higher than those charged with regular credit cards; however, some advantages exist with these dedicated medical credit cards that counterbalance the fee. First of all, the ability to be approved for credit while at the practice means that pet owners can easily make an immediate decision to accept the practice's recommendations for their pets which they might not have been able to do had a source of payment not been available. The higher fee also allows the financing company to offer interest free plans which are attractive to clients and, again, encourage them to provide more comprehensive care for their pets. As with regular credit cards, not all clients will be approved. Not all clients deserve to be approved! Even if some of your clients do not get approved, going through the application process with clients you are considering granting in-house credit to is a good exercise; if the client is denied by a third party financing company you now know that there is a good chance they may not be able to pay off any amounts you let them charge in-house. Several companies offer third party payment plans in the veterinary world. In order to be comfortable recommending both the concept and a particular company to your clients, compare plans and check out the company. Are they helpful? Is it easy to get your questions answered? Is information about their plans readily available?

Another financial option for clients is pet health insurance. As with all insurance, this is a form of risk management. The transaction involves the pet owner (the insured) assuming a guaranteed and known relatively small loss in the form of a premium payment to the insurer in exchange for the insurer's promise to compensate the insured in case of a large, possibly devastating loss. Pet insurance is classified as indemnity insurance and is similar to other forms of indemnity insurance such automobile insurance. See the NCVEI's "A Veterinarian's Guide to Pet Health Insurance" at http://ncvei.org/articlelinks/VetInsBroJan9.pdf for more information about how pet insurance works and the significant differences between it and human health insurance.

As with third party payment plans, understanding the plan options and the companies providing them will help you make intelligent and useful recommendations to clients. When veterinarians, their staff or their clients become unhappy with pet insurance, it generally arises from a lack of understanding of what is reasonable to expect from pet insurance in general or of the specific terms of a particular policy. A couple of points that will help both practice employees and clients understand their options better include:

1. Pet insurance isn't right for all pet owners. Several factors for clients to consider in making the decision to insure their pet include their bond with the pet, their philosophical position about how much they would be willing to pay for a pet's care, their level of risk tolerance and the nature of their financial situation. Pet owners need to think about their ability to cover not only basic wellness care (annual exams, vaccines, heartworm tests and preventative, etc) but also non-routine accidents and illnesses. Some clients can cover the costs of this kind of care with some planning, a savings account, a credit card and access to medical financing as discussed above. But what happens if their pet needs care that is really complicated and expensive or even catastrophic? These are the kinds of events that even the most financially responsible pet owner may have trouble finding the cash for. Pet insurance offers not just claims reimbursement but it also offers piece of mind that when something of an expensive and catastrophic nature happens, care can be provided.

2. All companies limit coverage in some way; if they didn't they would pay out more in claims than they took in from premiums and would be bankrupt in months. These limitations come in several forms including deductibles, co-pay %s, annual or lifetime limits, the use of benefit schedules, and coverage exclusions. Practice team members and clients need to understand the coverage of the policy as a whole; you can't just say "well, this policy has a 20% co-pay so it's not as good" or "this policy uses a benefit schedule instead of a % pay so it's not as good"—look at the coverage as a whole compared to the premium. Pet owners also need to be aware of any breed specific conditions that apply to their pets or any particular types of procedures they might want covered (for example, dentistry or acupuncture) and see if their policy includes those items.

3. For pet owners or veterinarians to expect that all owners will receive claims payments that equal or exceed what they pay in premiums isn't even a realistic expectation. That doesn't happen with any kind of insurance—how many people have gotten reimbursed for homeowner or automobile insurance claims that have exceeded the cost of the premium? Do you even expect to? Some percentage of pet owners will pay more in premiums than they receive back in benefits; you could say they were unlucky with their pet insurance or you could say they were lucky with their animal's health. Another group will pay much less in premiums than they get in benefits—these individuals owned pets who were unlucky health wise but they were fortunate enough to have insured their pets. And most pet owners (or owners of any insurance) are going to be somewhere in the middle.

4. Companies offer information about their policies and other useful tools/resources on their websites or via phone. Read the information and understand it before recommending or signing up for a policy; if it's not readily available or it's confusing, find another company.

Once a pet owner has decided that pet insurance is for them, they need to pick a company and a plan. There are many options out there; it can be a bit daunting to sort through them all. You can help your clients by spending some time understanding the policies and recommending a couple of companies you are comfortable with. A list of questions you or your clients should ask includes:

     • Is the company licensed in your state? Which of their policies are available in your state?

     • Does the company have a good reputation? What do the BBB or independent organizations have to say about it?

     • How long has the company been around?

     • Are the policies and information provided easy to understand?

     • Are the people you talk to knowledgeable and helpful?

     • Are they available for questions during reasonable hours?

     • Can you see any veterinarian you want?

     • Have premiums increased over the past few years? By how much?

     • What happens to coverage and premiums as your pet gets older?

     • Is there any reason you would not be able to renew?

     • What type of coverage and co-insurance does the policy require?

     • Is there a "usual and customary charges" clause? How are those limits determined?

     • What kinds of care are excluded or limited? Congenital or hereditary diseases? Cancer?

     • Is dental care covered? Is there a limit?

     • Are conditions diagnosed in one year excluded as pre-existing conditions the next?

     • Are benefits available for wellness/preventive care?

     • Is there a choice of deductibles? Can you change the deductible from year to year?

     • Is the deductible annual or is it applied to each medical incident?

     • Are the waiting periods before coverage begins reasonable?

     • Is there a maximum age for enrollment?

     • Are there limits per incident, per year, per lifetime, or per body system? How much are they?

     • Is a physical examination routinely required for enrollment or renewal?

     • How quickly are claims processed and paid?

     • Are there any billing fees or discounts?

The research necessary to understand these options will take a few hours time by someone in the practice but it is time well spent if your recommendation will now allow the practice team to help pet owners take better care of their pets.