On the AVMA playing footsie with pet health insurance companies...it just smells bad
I’m going out on a limb here because I’m not sure how much you guys really care about inside-the-veterinary-profession issues, but I thought it’d be interesting to run this past you all, anyway.
Imagine the nation’s number-one association for doctors, the American Medical Association (AMA), is choosing one particular health insurance carrier for its membership’s benefits package. Its selection criteria, it explains, is based primarily on aligning with a “like-minded” company.
In other words, the AMA says its physician membership will best like this company best because its reimbursement philosophy is favorable to docs (i.e., it promises to pay doctors more for their services) or because it says it doesn’t like to involve itself in the docs’ medical decisions.
No problem, you say, this is an industry association and it invariably does what it thinks is best for its membership.
Fair enough. But how would you feel if the AMA elected to endorse one particular drug company, one particular medical device manufacturer, one particular medical supply company, or one particular home healthcare company––without strict selection criteria for why it should do so?
You might start to wonder what kind of money was changing hands, right? you might even wonder if your doc might be making medical decisions for you and your family based on dollars rather than what's best for you.
Call me cynical, but I have a problem when any large industry association starts picking favorites in any arena that’s immediately within its purview.
Sure, it’s fine for the AMA to select a malpractice insurance carrier for their membership (so they can all receive a better deal on lawyers) or a dental health insurance company (so they can all receive a better deal on dentists), but when it comes time to selecting a company within their sphere of daily activity (like a health insurance company), they have to be careful not to foster the appearance of impropriety.
In fact, that’s how the AMA and ADA (American Dental Association) handle it. They realize that it’s not cool to show favoritism to anyone inside their own industry. It looks bad, if nothing else. It starts to smell like money, bribes and all kinds of nasty things. And it doesn't allow for the kind of free market trade we Americans are so fond of. That’s why they stick to strict selection criteria (value-based) and rotate the companies every few years––so as not to foster the appearance of impropriety and financial malfeasance.
Apparently, that’s not the case when it comes to the AVMA (American Veterinary Medical Association) and pet health insurance.
I’m a member of the AVMA. I pay more to this organization every year than I do to my AVMA-affiliated malpractice insurance carrier. I rely on the AVMA to make sure my health, malpractice, life and disability insurance offer me the lowest group rates possible for the best value. And now I have access to a group rate for pet health insurance, too.
Unfortunately, this pet health insurance carrier was not selected based on strict criteria for pet health insurance value. It was selected because the AVMA’s insurance arm says it has a philosophy that meshes well with the larger AVMA membership. So much for strict criteria. Moreover, the relationship is set for an undetermined period of time. Even more questionable.
Because the pet health insurance industry is young (at least in terms of consumer adoption), this decision by the AVMA’s group insurance arm (GHLIT) is tantamount to an endorsement of this one pet health insurance company at a time when such a nod has the ability to make the biggest difference in the future of the top industry players. In the eyes of the professionals who use the AVMA’s GHLIT and the AVMA membership as a whole, this pet insurance company has now effectively been labeled “the horse to bet on.”
We’d never allow the AVMA to pick one microchip company over another, select one flea and tick manufacturer over another or endorse one veterinary supply distributor over another––even if it meant we might get better deals from such an arrangement. Such an action simply flies in the face of fair market practices and just plain smells bad. So why is it OK when it comes to picking a pet health insurance carrier?
And now comes the part that’s hardest for me to take: the personal relationships between the players involved in the decision making. Here’s the deal.
Exhibit A: In comes the past Executive Vice President of the AVMA from 1996 through 2007. A bona fide veterinary industry muckety-muck by all accounts. We’ll call him Dr. X.
Exhibit B: Dr. X’s daughter runs the GHLIT (the AVMA’s group insurance arm). She secured this position during Dr. X's term in office. It was within her purview to make the deal with the pet health insurance company.
Exhibit C: Dr. X happens to be on the board of this pet health insurance carrier and (according to one close-to-the-action, non-pet insurance source) owns shares of this company and earns a lucrative consulting income in this capacity.
So how does the aroma grab you now?
Veterinarians who have paused to examine the facts are extremely unhappy about this relationship. It’s unfair. It tarnishes the profession, they say (and I agree wholeheartedly). But the vast majority of veterinarians aren’t aware of the deal. It’s the kind of un-sexy, non-medical kind of news most veterinarians aren’t exactly in tune with.
Amidst all this generalized unhappiness comes the claim that the AVMA and its group insurance arm (GHLIT) are separate entities (despite the fact that the board of the AVMA has the power to approve or reject this deal). And that Dr. X is no longer with the AVMA. Therefore there’s no impropriety.
As problematic as this situation is from start to finish, you’d think someone would expose this deal and we’d be done with the whole mess once and for all. Problem is, those most upset and alarmed about this relationship are the pet health insurance companies. And they know they have no clout in this fight. Crying foul may be the right thing to do, but it falls on deaf ears when it comes from those economically aggrieved by the competitive out-maneuvering. Sour grapes and all that.
To make matters even more complicated, those on the inside of the deal are powerful people no one wants to out. Sure, the relationship has the power to make the profession look bad. But let’s let sleeping dogs lie, now, shall we? No need to air our dirty laundry and so forth.
While I was in business school I had a prof who was keen on ethics. Whenever shady things went down in the business world, he had a favorite bone he would toss out for all of us to chew on (and I paraphrase): Whenever you’re faced with a complex ethical question, no matter what it is, imagine that your actions will be reported on the front page of the Wall Street Journal under your glorious photo. Now what will you do?
That’s the question the AVMA should have asked itself before it voted to follow the GHLIT into this ethical morass. It still has the opportunity to do the right thing. But will it?