Over the past few years, investors from Morgan Stanley to Lee Equity have turned their attention to fertility clinics. They say their goal is to enable quality care under business growth.
The majority of in vitro fertilization clinics are now privately owned, with the market currently worth about $8 billion, according to one estimate. More employers are looking to offer fertility benefits in a booming market for the services. Analysts estimate the industry to reach $41 billion by 2026. Last year alone, fertility support startups raised $345 million in venture capital, more than double since 2019. Interest in women’s health more broadly is also piquing, with startups in the area landing a whopping $1.4 billion in funding last year.
Yet growing criticism of private equity investment in healthcare argues it leads to market consolidation, higher costs, diminished physician ownership and even worse outcomes.
Kolin Ozonian, founder and CEO of Global Premier Fertility, which builds, acquires and manages clinics, believes the traditional investor approach has been “very damaging to patient care.”
Ozonian managed operations for a division of one of the largest networks of fertility care providers in the U.S., IntegraMed, before it went bankrupt in 2020. The company was owned by a private equity fund and allegedly owed fertility patients millions of dollars, which it had misappropriated, lawyers reportedly said.
At his division, IntegraMed Fertility, Ozonian experienced a trickle-down pressure that prioritized return on investment, he told Fierce Healthcare. Regular assessments of whether a clinic was profitable led to pushes on physicians to recommend high-cost procedures, even when they were not needed, Ozonian recalled. In other instances, physicians were asked to spend less face time with patients to squeeze more appointments in daily.
“That’s absurd to me,” Ozonian said. Though the company promised employees higher bonuses or wages if they could hit certain targets, he said, providers are “not incentivized by that.”
Determined to build a better approach, Ozonian founded Global Premier Fertility, which operates on a partnership model. The company, of which Ozonian is CEO, claims to protect physicians as equity partners and says it allows them to maintain influence over key decision-making. It also aims to loop in younger physicians who are eager to revolutionize the fertility space. “It’s all about culture,” Ozonian said.
By providing fundamental management services while creating growth opportunities for younger physicians, Global Premier Fertility has developed an innovative and collaborative partnership model that disrupts the old-school arrangement between investors and their network of providers, according to Ozonian. The result, he says, is that physicians with an impressive assortment of reproductive expertise are joining Global Premier Fertility and bringing fresh, new ideas to today's fertility challenges.
Luis Murrain, D.O., a reproductive genetics specialist and partner physician at a Global Premier facility in Palm Springs, California, agrees. In his past work in a small practice setting, Murrain recalled physicians beginning as junior associates and spending years working up to partnership status, granted only after meeting certain quotas. Operational tasks were split between physicians at the practice, diverting their resources away from patient care.
An approach like Global Premier’s enables Murrain to participate in a “fairly unique physician partnership model and that allows us to focus on patient-first experience,” Murrain told Fierce Healthcare. The company also claims not to pass significant costs onto practices.
In June, Global Premier Fertility raised $11 million in a series C funding round, with a commitment of an additional future $50 million. Several of the company’s clinics based in southern California are focused on serving the LGBTQ+ population, training their clinicians on how to provide non-stigmatizing care. The goal, the head of referral development previously told Fierce Healthcare, is to establish trust with a patient. Trust is possible through things like gender-affirming pronouns and an understanding of the unique challenges the population faces, like discrimination.
To find a buyer with interests aligned with those of a practice, it’s important to invest in a representative—like an investment banker—who understands your mission, the industry and can ask buyers tough questions, explained Isabelle Bibet-Kalinyak, a healthcare attorney at New Jersey-based law firm Brach Eichler. Bibet-Kalinyak has represented providers on the seller side.
The advantage of selling to private equity, she said, is the access to capital. Fertility practices can be hard to scale for a number of reasons; an investor can bring cash and operational know-how that physicians might not necessarily have.
“They’re doctors. They’re not trained to be business people,” Bibet-Kalinyak said. “The inefficiencies in healthcare are tremendous.” Investors try to eliminate those to generate a more healthy balance sheet, she added.
There are numerous downsides to a private equity buyer, however. A deal means employees must stay at the company for a number of years if they want to get rollover equity. A buyer could also not be amenable to adjusting a contract—that’s a red flag, according to Bibet-Kalinyak. A buyer should never go against clinical judgment. And one must not be blinded by the promise of equity, she added. Practices should look for strategic partners that focus on the provider's specialty and on delivering better care. The more the buyer works like a strategic partner, "the more it’s going to be personal," she said.
“You have to negotiate hard and put things in writing,” Bibet-Kalinyak said. “If you don’t like the terms, walk away.”