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“Chain organizations are very common in hotels and restaurants,” says Ambar La Forgia, an assistant professor at the Haas School of Business, UC Berkeley. “But when it comes to healthcare, because it hasn’t traditionally been delivered in this way, it seems to be making a lot of people uneasy.” Policymakers are particularly concerned that chains will chase profit at the expense of patient outcomes.
A new study by La Forgia, published in Management Science and coauthored by Julia Bodner of Copenhagen Business School, provides a more optimistic view in the case of fertility clinics, suggesting chain ownership has improved results. The researchers found that clinics acquired by a chain serve more patients, increasing IVF treatment cycles by 27%, and they increase live birth rates by nearly 14%.
Significant improvement with chain clinics
IVF treatment cycles comprise five main stages that require over 100 distinct steps performed over four to six weeks. Along the way, many subjective decisions must be made.
The goal, of course, is to produce healthy babies, and the last step—when a physician transfers an embryo, or embryos, into a patient’s uterus—is particularly important. Transferring more than one embryo increases the success rate, which is measured by the number of live births divided by number of transfers, but it also increases the chance of multiple births, like twins, which is riskier for both the mother and the newborns.
To compare the performance of chain and independent clinics, La Forgia and Bodner collated a novel set of clinic and patient data that drew from the Centers for Disease Control, and the National Center for Health Statistics. They also manually checked the ownership of every fertility clinic in the U.S. From this effort, they were able to look at two main outcomes between the years 2004 and 2018: How many IVF cycles does each clinic perform? And what is the success rate, measured by live births per transfer?
The researchers found that after a fertility chain acquires a clinic, IVF cycles increase dramatically and live birth rates increase by 13.6%. “This means that these chain clinics are doing more cycles of IVF and converting more of those cycles into live births,” La Forgia says. “They are actually improving the quality of care in a meaningful way.”
Chain clinics are not doing this by simply transferring a lot more embryos, either. La Forgia and Bodner find that they are actually producing more “singleton” births—that is, the birth of one baby—than their independent clinic peers, which implicitly suggests a better embryo selection process.
A product of more resources and knowledge
But what if these results are driven by a more stringent patient screening process, or by chains being more selective about the markets in which they operate?
La Forgia and Bodner investigated these possibilities and found no supporting evidence. There is no appreciable change in the patient population after a chain takes over an independent clinic. In fact, the largest improvement in live births is among patients who are 38 years old and older—the population that typically has the lowest success rates. Nor are their significant differences in the broader demographics of neighborhoods in which chain clinics operate, the researchers found.
Instead, it appears that chains improve outcomes through two mechanisms: the availability of more resources and a heavier focus on sharing best practices. The researchers make this case through several analyses. For instance, chains tend to introduce new processes and procedures known to improve birth rates. In fact, the lowest-performing clinics see the largest improvements when taken over by a chain, and clinics acquired by the highest-performing chains experience the greatest improvements.
Most notably, the researchers found that affiliated IVF clinics, which pay chains for select management support and financing options but retain managerial independence, witness an increase in patient volume and number of IVF cycles, but unlike fully acquired clinics, they don’t demonstrate an improvement in birth rates.
“Basically, in affiliated clinics the number of live births is going up as an absolute value, but they’re not getting better at achieving live births,” La Forgia says. “Our hypothesis is that a chain is willing to share its resources widely, but it may not want to share specific knowledge with an organization it doesn’t own, so we’ll only see this knowledge transfer in acquired clinics.”
The authors demonstrated a final benefit of chains, which is that they increase access to IVF by expanding the market—performing more IVF cycles—rather than stealing business from competitors.
Supporting a better healthcare market
Some of the findings may be explained by the fact that compared with many other parts of the healthcare system, fertility clinics share some characteristics with retail stores and chain restaurants. It’s a relatively more competitive market and patients typically pay up front and out-of-pocket for care. Clinics are also legally required to send their data to the government. Other sectors like dialysis and nursing care are more opaque and dependent on insurance, so chains may have fewer incentives to improve quality of care. But the researchers point out that plenty of health care is shifting toward a retail model, including dermatology providers, urgent care clinics, and physical therapists.
The authors offer three recommendations to help these markets support the kind of competition that ultimately improves patient outcomes.
- Policymakers should increase transparency about quality of care. In the fertility sector, clinics are legally required to send their data to the government, which publishes them as an online report card, so patients can shop around.
- Price transparency is necessary to increase competition among providers. In most healthcare settings, patients do not know how much they will pay, often until months after treatment. Since patients typically pay up front for fertility treatments, clinic chains may compete more on prices to attract new patients.
- Finally, regulators should make sure patients have sufficient choice. In the dialysis market, for instance, two companies own 60% of clinics. Such concentration of power may negatively affect both prices and quality. As chains expand, regulators should make sure this growth doesn’t hinder patient choice.
“Very little research speaks to the ways in which chains are good or bad for patients,” La Forgia says. “We ought to start paying attention to what kinds of markets might lend themselves well to this business model.”
Read the full paper:
Getting Down to Business: Chain Ownership and Fertility Clinic Performance
By Ambar La Forgia and Julia Bodner
Management Science
September 2024
Related content:
Fertility Clinics Show How the Chain Model Can Improve Healthcare
By Ambar La Forgia
Harvard Business Review, October 15, 2024
