“Getting Down to Business: Chain Ownership and Fertility Clinic Performance”, 2024-09-25 (; backlinks; similar):
[supplement, data] Acquisitions by [private equity] corporate entities have fueled the growth of chain organizations in healthcare. A chain is a multiunit firm under the same ownership and management providing similar services in different locations. Chain ownership has been credited with boosting firm performance in the retail and service sectors but has been criticized for prioritizing profits over the well-being of patients in the healthcare sector.
This paper finds that chain ownership improves healthcare outcomes in the market for in vitro fertilization (IVF). Using novel data on U.S. fertility clinics and difference-in-differences methods, we find that:
IVF cycles increase by 27.2%, and IVF success rates increase by 13.6% after acquisition by a fertility chain.
We provide evidence that fertility chains facilitate resource and knowledge transfers needed to enhance quality and expand the IVF market. For example, acquired clinics change IVF processes and procedures to achieve the IVF gold standard of simultaneously reducing higher-risk multiple births and increasing singleton births.
We discuss how the fertility sector’s relatively minimal market frictions and information asymmetries may incentivize chain owners to invest in quality.
…To study the impact of chain ownership, we combine hand-collected data on fertility clinic transactions from business intelligence databases with clinic-level data from the Centers for Disease Control and Prevention (CDC) Fertility Clinic Success Rates Reports. 2004–142018, the share of clinics in a fertility chain grew 5% → 20%, with chain clinics now performing over 40% of IVF cycles in the United States. Critics caution that chains will treat “fertility medicine as a cash cow”, whereas chains argue they can help clinics “deliver high-quality, convenient care to patients while implementing cost savings, improving processes, and driving growth” (2017, 2019). We estimate changes in clinic growth and quality using difference-in-differences (DiD) methods, which compare clinics before and after chain ownership to a control group of non-chain clinics. We focus on two key outcomes: (1) clinic volume, measured as the number of IVF cycles, and (2) the success of IVF, measured as the live birth rate per transfer.
Our results show that after a fertility chain acquires a clinic, IVF cycles increase by 27.2% and live birth rate increases by 13.6%. Qualitative data obtained from press releases, marketing materials, and interviews suggest chains help clinics achieve growth by providing financial resources, such as capital, and managerial resources, such as revenue cycle management and marketing services. These materials also suggest that chains help improve quality by implementing best practices, protocols, and trainings, and facilitating knowledge sharing between clinics through research consortia and complex case review meetings. We provide empirical evidence that these resource and knowledge transfers drive performance improvements rather than alternative mechanisms such as patient selection.
…In addition to knowledge sharing, chains emphasize providing clinics with resources needed for growth. Consistent with this claim, we find evidence of market expansion rather than business stealing: for every IVF cycle performed by a chain clinic in a market, there is one additional IVF cycle in that market and no reductions for non-chain clinics.3 In cross-sectional analyses using hand-collected data from clinic websites, we find that acquired clinics are nearly twice as likely to market IVF discounts, which could help attract new patients. As another strategy to illustrate resources being used for expansion, we study how private equity (PE) investment into fertility chains impacts volume. Consistent with PE firms easing financial constraints, we find that the largest increases in clinic volume occur when a fertility chain receives PE funding.4
Overall, these results are consistent with fertility chains providing access to resources and knowledge needed to increase clinic volume and IVF success rates. However, rather than improving outcomes, clinics could instead select younger or healthier patients. We do not find evidence of patient selection: results are quantitatively similar whether we include controls for patient characteristics and infertility diagnosis, and there are no systematic changes in patient characteristics post-transaction that would influence IVF success. Because maternal age is the single most important predictor of IVF success, we also show that the distribution of patients in younger and older age groups is similar before and after a clinic transaction.
Fertility chains could also be better at selecting clinics that would generate performance improvements. Although clinic selection is an inherent feature of this setting, we conduct analyses that mitigate concerns that clinic selection explains our results. In event study analyses adjusted for staggered treatment timing, we find no observable pre-trends before a clinic transaction.
Results are also quantitatively similar in specifications using state × year or market × year fixed effects (FEs), which would help account for state or market-level changes that could impact the demand for fertility services. We also find similar increases in clinic volume and live birth rates for acquired clinics using a matched sample based on pre-transaction clinic characteristics.