The Future of Veterinary and Pet Healthcare: Learning from Human Healthcare Innovations

By Arif Damji and Veda Patel

If you or someone you know adopted a pet during the COVID-19 pandemic, you are not alone. The last decade has seen a boom in pet ownership. Over 196 million pets are now cherished as family members in one-third of US households (IBIS World). This is 2x as many as in 1995. This trend has been spurred on by work-from-home mandates and a transition to more flexible working arrangements, but that is not the only reason pet ownership has skyrocketed.?

More couples are choosing to postpone or forego having children completely and adopting a furry friend instead. The rise of this group of people among millennials and Gen Z, in particular, has led to the evolution of the terms DINK (Dual Income No Kids) and DINKWAD (Dual Income No Kids With a Dog). The excess disposable income has led to an increase in pet health spending. Most owners spend $50 to $250 per month on their furry companions, and some even spend upwards of $5,000! As a result, the global pet market is already estimated to have grown to over $320B today, with the potential to reach $500B by 2030.

Despite this explosion in ownership and spending, pet healthcare advances still lag far behind human healthcare innovations, when it comes to therapeutics, medical devices, AI, electronic health records (EHR), and insurance. The good news is, however, the increasing demand for advanced veterinary care presents an opportunity for the industry to catch up, and even surpass, human healthcare in some of these areas. By applying the lessons learned from human healthcare, the veterinary industry is poised for a revolution that will ultimately benefit both pets and their owners. Here are some of the opportunities:

1) Faster Innovation in New Drugs, Therapeutics, and Medical Devices?

The drug approval process for human use is a lengthy and expensive journey. The average spend in clinical trials is $375 million, but only 10% of drugs get approval.? Most of our pets may have four legs, but you’ll be surprised that the physiological similarities between humans and animals mean that drugs sidelined for human use could be repositioned for pet health, where tolerability of side effects may differ, and regulatory barriers are less prohibitive. This presents an opportunity to recoup investments and further monetize these pharmaceuticals.

An interesting case is Pimobendan, a heart medication initially placed in clinical trials for human use in 1988 that failed to improve mortality rates in patients with congestive heart failure. The drug subsequently proved effective in managing heart conditions in dogs and is now approved for veterinary use under the brand name Vetmedin.

With pet drug trials costing substantially less than human trials and a shorter approval process, pharmaceutical companies test drugs that failed to receive FDA approval for human use, to see if they are safe and effective for animals. Merck Animal Health, Zoetis, and Elanco Animal Health have proven the value of therapeutic research for animals.?

Similarly, medical devices developed for human use can often be adapted for pets. Wearable activity trackers like Fi smart collars, FitBark, and Tractive, continuous glucose monitoring systems like the FreeStyle Libre system by Abbott and Dexcom's G6, and remote patient monitoring devices are just a few examples of technologies made for humans that are now successfully applied to pet health.

There are even innovative applications in animal health that better human health. For example, through rapidly designing and testing preventative treatments in animals, Resilient Biotics is developing biotherapeutics to stop pathogens in animals from taking hold in their respiratory tract, which can eventually be applied to treat humans. Christopher Belnap, founder of Resilient, tells us: “Building a new therapy in large mammalian species, like pigs, which are known to be more similar to humans in terms of anatomy and immunity is beneficial for understanding how we can translate the same approach to human health.”?

2) Applying AI to Address Vet Care Shortages

In HealthTech, we see AI increase the accuracy and speed of analysis and diagnosis across almost every specialist, from dermatology to cardiology. AI also aids in reducing the burden of specialist shortages across the country. For example, there are only 31,960 radiology specialists but the demand for these services is increasing as a result of advancements in medical imaging and an aging population. A 2021 study reported that the number of radiologist trainees increased by only 2.5% while the population over 65 grew by 35% (RSNA 2022) showing a major discrepancy. Startups like Aidoc are bringing AI-based solutions, which require far less radiologist time, to improve accuracy and aid in diagnosis. As a result, turnaround time can be reduced by up to 41%.?

Similarly, increasing demand for veterinarians driven by surging pet ownership is creating a significant shortage, with the gap expected to reach over 40,000 vets by 2030 and 133,000 vet techs. This leads to extended wait times and emergency clinics turning away non-critical cases. There are a number of reasons for this shortage that include:

• Veterinarians are grappling with burnout, pressure from quotas, accreditation demands, and outdated technology.
• Veterinarians are feeling the financial strain: The average veterinary school debt stands at a staggering $188,853, with a median of $99,000, adding stress to an already challenging work environment.?
• We can't train veterinarians fast enough: There are only 33 accredited veterinary schools in the U.S. It would take over 30 years for veterinary technician graduates to meet the industry's 10-year demand.
• The pet-to-vet ratio is worsening: The rise in pet ownership by nearly 30% during the pandemic is contrasted with only a 10% increase in practicing veterinarians.?

AI advancements have helped automate and streamline many processes in human healthcare and reduce labor demand, and they’re starting to enable vets to focus on more complex cases. AI-powered tools can assist in various aspects of veterinary care, such as:

1. Triage: AI algorithms can analyze pet owners' initial descriptions of their pets' symptoms and prioritize cases based on urgency, directing critical cases to veterinarians and providing guidance for less severe issues.
2. Diagnostic support: AI can process vast amounts of data from medical records, imaging, and test results to suggest potential diagnoses and treatment options, helping veterinarians make more accurate and timely decisions.
3. Remote monitoring: AI-powered wearables and remote monitoring devices can collect and analyze pet health data, alerting veterinarians to potential issues and enabling proactive care as well as post-op recovery.

AI technologies can help veterinary practices optimize their workflows, reduce wait times, and provide more affordable and accessible care to a larger number of pets. This not only benefits pet owners but also helps alleviate the burden on veterinarians, so they can focus on the most critical cases and improve overall patient outcomes.

Companies like Moichor are already using AI to increase the effectiveness and efficiency of animal lab work, with a 57% increase in disease detection and 10x less variability. As Shevy Karbasi, the founder of Moichor, has said in an interview: “AI is not meant to replace veterinarians but to empower them. By automating routine tasks and providing data-driven insights, AI can help veterinarians work more efficiently and effectively, ultimately improving the quality of care for pets.”?

As more data is collected, we see a future where AI applications in vet tech could expand to imaging, predictive analytics for disease prevention, and even behavior analysis and training.

3) Digitizing Pet Insurance?

Human health insurance is already rather complex, and we have seen innovations such as prior authorization, AI-forward claims processing and chatbots, predictive analysis, and more change the landscape and product offerings. Health insurance differs from all other forms, such as property and casualty (P&C), fire, and life, and has unique billing methods, claims, and data interoperability. This results from a simple fact: coverage of evolving health conditions in a human being is vastly different from covering stagnant values. In fact, insurance providers are often unique with their own actuarial base and models, ensuring a theoretically smoother process for patients.?

Did you know that when it comes to insurance, our pets have traditionally been viewed as property for insurance purposes, falling under P&C coverage rather than health coverage??

But P&C coverage is notoriously difficult to claim, expensive, and has very limited coverage with some only offering emergency coverage. It also doesn’t account for evolving health conditions, similar to human health insurance. It can take months to be reimbursed and many question whether it even makes sense. Only 3% of US pet owners have pet insurance (Odie).?

A slew of startups are trying to address this gap. Companies like Lemonade, Pumpkin, Pawp, and Bivvy have digitized the pet insurance process, enabling better policy management through mobile apps, direct billing, and personalization. As Todd Haedrich with experience in vet tech at Covetrus and human health innovations at Optimize Health and Oxehealth, told us: “The digitalization of the veterinary industry has been a gradual process that has recently gathered momentum in the last decade. Without an equivalent HITECH Act, innovation and adoption of animal health EMRs have taken much longer. Similarly, pet insurance has only recently accelerated, with the first plans introduced in the 80s and electronic claim submission just starting over the past 20 years.”

These innovations are not only making insurance for our furry friends more accessible and user-friendly but in some cases even more efficient than human health insurance:

• Simplified underwriting: Pet insurance providers are using advanced data analytics and machine learning to streamline the underwriting process. By analyzing factors such as breed, age, and medical history, they can quickly assess risk and offer personalized coverage options, reducing the time and complexity in obtaining insurance.
• Direct billing and reimbursement: Companies like Nibbles are introducing credit card products bundled with pet insurance, allowing pet owners to charge all medical expenses to a single card. Claims are automatically filed and paid before the bill is due, reducing out-of-pocket expenses and simplifying the reimbursement process. This direct billing approach is more efficient than the complex billing and reimbursement systems common with human health insurance.
• Preventive care incentives: Pet insurance providers are increasingly offering coverage for preventive care, such as annual check-ups, vaccinations, and dental cleanings. By encouraging pet owners to invest in preventive care, insurers can help reduce the likelihood of more serious and expensive health issues down the line. This proactive approach to healthcare is often lacking in human health insurance plans, which tend to focus more on reactive care. Odie Pet Insurance, an embedded pet insurance provider is an example as they reimburse for more day-to-day services, such as pet daycares, dog walking, and others that promote pet health
• Flexible coverage options: Pet insurance providers are offering a wider range of coverage options, allowing pet owners to customize their plans based on their specific needs and budget. This flexibility contrasts the rigid, one-size-fits-all approach often seen in human health insurance plans. Miles Thorson, CEO of Odie, agrees, as said in an interview with The Digital PawPrint: “We’re going to see more in-network versus out-of-network structures and pre-negotiated levels of care.”?

A bright future for pets and their health?

The rise of pet ownership, increased spending on pet health, and the unique opportunities present in the pet health space have created a favorable environment for tech-related advancements. There’s potential to not only catch up to human health tech, but lead the way in certain areas, potentially influencing the broader healthcare community and leading to improved patient outcomes, increased efficiency, and better quality of care for all.

Pet health tech companies have the potential to develop novel solutions that could benefit both pets and humans alike. As Timmy Yu from Proper Pet tells us: “We always talk about pet tech catching up with health tech, but that is stage one. The next stage is a world where pets may lead, driven by lower regulatory barriers, agile innovation processes, and eager pet parents wanting to try everything for their pets.” While there is still much to be explored and developed, the potential for pet health tech to play a significant role in shaping the future of healthcare is noteworthy.

Post-amble: This is the first blog in a series on innovation across industries from the Conductive Ventures team. As generalist investors, we see innovation and development in many different industries. We believe that the lessons learned in one industry can help founders and investors identify trends and opportunities in another. In this blog series, we’ll walk through examples we have encountered from our experience. The first part discusses the similarities in innovations between human healthcare and pet healthcare. In the next part, we will dive into the similar evolution between SaaS and GenAI companies.