Fertility: The Next Frontier for Practice Management Opportunities

Fertility as a specialty practice is booming. More specifically, infertility is booming as approximately 15% of couples now have some difficulty conceiving a child due to various factors, including more women having a child later in life and more men experiencing difficulty. As a result, more individuals are turning to fertility treatments, featuring ever-advancing techniques and therapies providing new and improved options for conceiving.

As an industry poised for growth, there are several factors that point to accelerated interest in fertility as corporations and investors look to the space as one of the next frontiers in physician practice management opportunities.

• Significant Growth Tailwinds. Interrelated medical and social factors are driving the growth of fertility treatments. These drivers include consumer spending that has risen with disposable income and has remained very resilient even during economic downturns, greater awareness of infertility and social acceptance of fertility treatments, and family-building for gay and lesbian couples. As health insurance coverage of fertility treatment increases, this too will bolster market growth moving forward. Today, insurance generally covers very little for fertility treatments, and typically nothing for in vitro fertilization (IVF), though some coverage is starting to emerge. Fifteen states currently require some level of fertility coverage, while a few states specifically exclude coverage for IVF. Even when it is covered, IVF benefits are typically small relative to treatment costs, which can be well in excess of $10,000 for an average IVF cycle (including both the treatment and medication costs). Furthermore, employers are being more innovative in adding and supplementing fertility and maternity-related benefits to attract and retain talented women to the workforce. For instance, in 2014 Apple and Facebook added egg freezing as a benefit to women who do not currently wish to conceive but wish to guard against future fertility risks.

• The Ability to Draw from an Expansive Patient Population Beyond the Local Market. The specialized, high-cost, and meticulously scheduled treatment affords leading fertility clinics the ability to attract patient populations from beyond just their local geography. For instance, the Colorado Center for Reproductive Medicine (CCRM) has gained national recognition for its advanced research and innovations in technique and technology. Despite having built out clinics in seven markets, CCRM still routinely attracts out-of-state patients to its flagship Colorado clinic given the history of its success rates. Considering the extreme cost and inconvenience of choosing to travel for IVF treatment (a cycle includes multiple clinic visits for monitoring, though some of this can be performed at a local clinic with results sent to a patient’s IVF clinic), this is a testament to the draw of CCRM’s leading reputation in the market. Leading clinics can also draw international patients. Select clinics on the West Coast, including Southern California Reproductive Center (SCRC), have seen a rise in referrals from China and other countries across Asia. Agents acting on behalf of families sometimes drive these referrals in what is called “medical tourism”, which can account for nearly 25% of business for some clinics.

• Clinics Can Achieve Differentiated Results, and Prove It. One of the interesting aspects of fertility treatment is how much more transparent clinical outcomes data are for assisted reproductive technology (ART) and IVF in comparison with so many other medical procedures. These statistics play a large role in informing patients’ selection of a provider. By federal law — the Fertility Clinic Success Rate and Certification Act — all certified ART clinics are required to submit success rate data to the CDC to ensure clinics are not overstating success in order to attract patients. While some clinics do not report data, the CDC estimates that it collects data for over 95% of the ART procedures in the U.S. Many centers also voluntarily submit their data to the Society for Assisted Reproductive Technology (SART), an organization that represents the vast majority of ART clinics in the U.S. These data provide patients — who are opportunity to be true healthcare consumers and shop for the best quality/outcome provider. SART and other entities such as FertilitySuccessRates.com compile the information, allowing consumers to easily compare various metrics across a range of clinics and geographies. Standard data that are evaluated include percent of embryo transfers that result in live births, the average number of embryos transferred, and the total number of cycles performed. The data are “normalized” to the extent possible, but the comparisons across clinics are obviously never perfect. For instance, different clinics attract patients with different risk profiles (due to differences in patient acceptance criteria, local demographics, or both), and different techniques can lead to good success rates but may require higher cost or treatment intensity (e.g., some clinics heavily utilize “banked” cycles, wherein the embryo was frozen without first attempting a fresh transfer).

TripleTree expects significant growth, as fertility practices have made significant technological strides demand for their services continue to rise unabatedly. We also expect to see the emergence of consolidation in the sector, as the pace of private equity investment has accelerated in the space. One notable new entrant is Prelude Fertility, which was launched through the combination of Reproductive Biology Associates and My Egg Bank. Prelude plans to expand nationally by partnering with leading clinics across the country, similar to the practice management roll-ups that have commenced in other specialties.

Read more about how the fertility industry continues to flourish in our recent Industry Perspective, Practice Management 2.0. In the meantime, we welcome your perspectives and thoughts.