IVF Business Models
Carrot Fertility does not publicly disclose its business model or specify its revenue streams, but based on available information about their service we can infer that they are likely to derive profit from premiums charged to companies for managing the administration of their fertility benefit plan in the manner of outsourced benefits administration. It is also possible a secondary revenue stream comes from advertising using data collected via the company’s website and app.
After a comprehensive review of trusted media articles, industry databases and the corporate website of Carrot Fertility, I concluded that the company does not disclose their business model online. This is not unusual as an innovative start-up in an emerging sector; it is unlikely they would want to reveal too much sensitive information for fear of competitors imitating their concept. However, it is possible to infer from the description of services provided by Carrot Fertility what their probably business model is, as detailed below.
OUTSOURCED BENEFITS ADMINISTRATION
Carrot Fertility only describes at a high-level how its services work, both on their corporate website and in quotes in the press. According to their site, they provide “a simple, affordable platform” for employers. Carrot helps corporate HR teams “to customize and self-fund fertility care for their employees through a direct reimbursement model”. Employees receiving the benefit not only receive fertility treatment subsidized by their employers, but through Carrot also access “a personalized dashboard to plan their care”, with personalized recommendations and assistance in purchase of necessary medication. Carrot also provides employees access to the expertise in fertility of their in-house doctors via “unlimited video and text messaging”, and customer support for the company’s HR team.
A Forbes article includes an interview with the VP of Human Resources at Foursquare who are a client of Carrot Fertility. She is quoted as saying that “Carrot not only handles the administration of the benefits, but they provide education and support to anyone going through the process of trying to start a family, be it IVF, IUI, or fertility preservation, such as egg freezing”. Based on this quote, Carrot Fertility appears to be providing outsourced benefits administration, but focused solely on fertility benefits, which have been neglected by employers up until recently. The Forbes article goes on to note that “[s]ome companies may find that going through a service like Carrot is easier than arranging benefits themselves” as a plan from Carrot Fertility “easy and turn-key”. This suggests that Carrot is providing a service which companies are willing to pay a premium for in order to simplify the process at their end, and hence it is likely that it is in these fees that Carrot's profit is derived.
The co-founder of FertilityIQ, a site dedicated to supporting those dealing with fertility issues and seeking medical help, is quoted as discussing the risks of managing a fertility benefits plan, noting that if carried out incorrectly it would be easy for employers to “screw [it] up…if [the employer] encourage[s] a lot of employees to go do IVF and those employees end up having high-risk multiple births — three or four — that may cost a company a million dollars”. According to him, providers like Carrot can help minimize both medical risks and costs. This type of expertise again suggests Carrot’s nature as outsourced benefit administration, able to provide expertise in the field that the employer would otherwise spend money hiring additional staff with the requisite skill set to mitigate these risks.
According to the Society for Human Resource Management, the number one reason that employers outsource their benefits administration is access to more specialized expertise, as well a “superior benefits administration technology” which Carrot’s dashboard interface suggests they also have at their disposal. Lower costs thorough “reduced [HR] staffing” would also warrant outsourcing to Carrot.
USER DATA AND ADVERTISING
Accenture recently reported on how health plans are evolving, based on a 2016 survey of health plan payer CEOs. Four business models are identified, one of which is “payer as business platform”, which it appears Carrot Fertility may also fall under. Here, “new products, services and engagement models” are connected with consumers, “while collecting and sharing end user data with current and potential business partners to increase value.” Based on the digital platform used and Carrot user data terms and conditions, it is possible that Carrot may also generate revenue via this model. In a list of how the company may use personal information of users, it includes (1) sending “information about health care and health related services” (2) “[s]ending marketing information [Carrot] think[s] may be of interest to” the user and (3) “[c]onducting [Carrot’s] business, such as data analysis, audits, developing new products, enhancing, improving or modifying [Carrot’s] services…expanding our business activities”. The legal section further states that Carrot “may use the data collected [to]…provide custom, personalized content and information, including advertising...and otherwise plan for and enhance our service”. Further, when accessing their site from a mobile phone or using the Carrot app, Carrot may collect and store users' GPS coordinates which may be used to “estimate [user] location and to provide...more personalized content and/or services”. Although these terms may be included to cover any eventuality and are not an indication of how the Carrot currently uses data, given the significance of data analytics in the current day it would be surprising if no revenue was derived from the information collected.
Based on the limited information available online, it appears that Carrot Fertility’s business model is that of an outsourced benefits administrator service, specializing in fertility care. It is also possible given its digital platform that a secondary revenue stream is derived from advertising and user data collected from their site and app.