Carrot Fertility Pitch

Delivered March 9th, 2018. Contributors: Erika O., Michael B., Cara R. and

Part

of three

Part

Ancillary Benefits

Among employers in the United States that offer IVF benefits, 76% to 100% of the IVF treatment cost is usually covered by the employer, while the remaining fraction is covered by the employee. While the portion of the egg freezing cost that is typically covered by employers offering egg freezing benefits is not readily available in the public domain, there is a good chance that the whole egg freezing cost is covered. This is because the cost of egg freezing is much lower than the cost of IVF treatment. Of the various ancillary benefits, dental insurance appears to be the most important. With a prevalence of close to 100%, it is the most prevalent of all ancillary benefits. 
PERCENT OF COST COVERED BY EMPLOYERIVF
---

Based on data published by FertilityIQ, a provider of fertility-related services in the United States, it appears that employers that offer IVF benefits typically cover 76% to 100% of the IVF treatment cost. The remaining portion (0 to 24%) of the IVF treatment cost is then paid for by the employee.

According to FertilityIQ, of 200 IVF patients in 2017 that participated in its survey, 126 (63%) had no coverage, 10 (5%) had 1% to 25% coverage, 12 (6%) had 26% to 50% coverage, 14 (7%) had 51% to 75% coverage, and 38 (19%) had 76% to 100% coverage.

No coverage — 126 or 63% of 200
1% to 25% coverage — 10 or 5% of 200
26% to 50% coverage — 12 or 6% of 200
51% to 75% coverage — 14 or 7% of 200
76% to 100% coverage — 38 or 19% of 200

From these figures, it can be observed that of 200 IVF patients polled, 74 IVF patients were with coverage. 

10 + 12 + 14 + 38 = 74

Of these 74 IVF patients with coverage, 51% had 76% to 100% coverage, 19% had 51% to 75% coverage, 16% had 26% to 50% coverage, and 14% had 1% to 25% coverage, as shown below. Over half of IVF patients with coverage had 76% to 100% coverage.

With coverage — 74
1% to 25% coverage — 14% or 10 out of 74
26% to 50% coverage — 16% or 12 out of 74
51% to 75% coverage — 19% or 14 out of 74
76% to 100% coverage — 51% or 38 out of 74

The sample these percentages were based on is small, but FertilityIQ's report is the only study in the public domain that provides the percentage of IVF treatment covered by employers. No other relevant information can be located even after a thorough search through reports on employee benefits and articles on IVF as an employee benefit. 

Across eight major cities in the United States, the total IVF treatment cost ranges from $20,010 (Boston) to $25,883 (Los Angeles).

Employers that are considered most generous in terms of IVF coverage include Bain, BCG, Chanel, Bank of America, KKR, Ropes and Gray, Gates Foundation, Facebook, Pinterest, Spotify, Pyramid Hotel Group, City of Baltimore, Conair, Unilever, Johns Hopkins, LinkedIn, University of Maryland, News Corp, Google, and Salesforce. They offer either 3 to 4 IVF cycles + pre-implantation genetic screening (PGS), 5 to 6 IVF cycles, $100,000, or unlimited coverage.

Egg Freezing
---
My searches through reports and articles on employee benefits and fertility treatments revealed that the portion of the egg freezing cost that is covered by employers is not available in the public domain. However, given that the cost of egg freezing, $10,000 to $15,000, is way lower than the cost of IVF treatment, and that many companies have begun extending the benefit to its employees since Facebook offered it in 2014, it is likely that employers that offer egg freezing benefits cover 100% of the egg freezing cost. 

 Tech companies that offer egg freezing benefits include Apple, eBay, Facebook, Google, Intel, LinkedIn, Netflix, Salesforce, Snapchat, Spotify, Time Warner, Uber, and Yahoo. Several of these companies, as noted in the section above, offer very generous IVF benefits. Spotify, for example, offers unlimited IVF coverage. Facebook, on the other hand, offers four IVF cycles plus one PGS. Considering that the cost of egg freezing is around half of the cost of one IVF cycle, the likelihood that there is full coverage of the egg freezing cost is high.
MOST IMPORTANT ANCILLARY BENEFITIn answering this part of your request, I assumed that ancillary benefits refer to benefits that are "usually layered on top of medical coverage." Dental insurance and vision insurance are examples of ancillary benefits, according to Investopedia. While I was unable to find any source in the public domain that identifies the ancillary benefit that ranks the highest in terms of importance, I found a report by the Society for Human Resource Management (SHRM) that provides helpful insights.

According to Tables 3 and 4 of SHRM's report "2017 Employee Benefits," which presents the society's findings from its latest survey of 3,227 HR professionals in the United States, the prevalence of the following health-related benefits significantly increased during the period 2013-2017:

1. Health savings account (HSA) — from 42% to 55%
2. Employer contributions to HSAs — from 26% to 36%
3. Wholesale generic drug program for injectable drugs — from 20% to 31%
4. Vision insurance — from 82% to 88%

Based on Investopedia's definition of ancillary benefits, it appears #3 and #4 can be considered ancillary benefits. Given the statistically significant increases in the prevalence of these two benefits and the fact that over 300 employee benefits were covered in the report, it may be safe to assume that there is real demand from employees for these two benefits. Among the health-related benefits in the report that can be regarded as ancillary benefits, dental insurance, vision insurance, and prescription drug coverage had the highest prevalence in 2017. Their prevalence rates were 96%, 88%, and 95%, respectively. Since dental insurance had the highest prevalence, it may be safe to assume that it is the most important ancillary benefit. Its close-to-100% prevalence over the past five years signifies its importance to employees.

Since you are interested specifically in IVF and egg freezing, I would like to note that, according to SHRM's report, the prevalence of the following health-related benefits significantly decreased during the period 2013-2017:

1. Consumer-directed health care plans (CDHPs) — from 31% to 23%
2. Medical flexible spending accounts (FSAs) — from 72% to 65%
3. Long-term care insurance — from 31% to 22%
4. Mental health coverage — from 89% to 81%
5. Contraceptive coverage — from 82% to 75%
6. Infertility treatment coverage (excluding IVF) — from 34% to 26%
7. IVF coverage — from 30% to 24%

The prevalence of contraceptive coverage, infertility treatment coverage (excluding IVF), and IVF coverage decreased during the period 2013-2017. The prevalence of egg freezing for non-medical reasons, on the other hand, increased from 2% in 2015 to 3% in 2017.

According to fertility treatment provider WINFertility, however, 68% of employees would change jobs if they were offered fertility benefits. Also, according to a survey conducted by Willis Towers Watson PLC, the percentage of employers planning to offer fertility benefits will increase from 55% in 2017 to 66% by 2019.
CONCLUSIONEmployers in the United States that offer IVF benefits mainly cover 76% to 100% of the total cost of IVF treatment, and employees take care of the rest. The portion of the egg freezing cost that is typically covered by employers is not publicly available, but it is likely that the whole cost is covered as the cost of egg freezing is way lower than the cost of an IVF cycle. At present, dental insurance emerges as the ancillary benefit with the highest importance. Its close-to-100% prevalence among employers is indicative of its usefulness among employees.

Part

of three

Part

Competitive Landscape - Carrot Fertility

Based on reported revenue and services provided, we have identified Carrot Fertility's top three competitors as IntegraMed Fertility, the Colorado Center for Reproductive Medicine (CCRM), and Shady Grove Fertility (SGF), each of which offers both IVF and embryo freezing. IntegraMed is by far the largest, with a reported $304.8 million in revenue, and is different in that its business model is to provide services and support for its partner and subsidiary clinics. CCRM and SGF, on the other hand, are centered on collecting fees for patient care.

The requested information for each of the above has been reported in the project spreadsheet. Below you will find a deep dive of my findings.

A NOTE ON METHODOLOGY
To calculate market share, one must first determine the size of the market. According to the abstract of a recent market report, "The U.S. IVF Services Market was valued at $2,213.1 million in 2015 and is projected to reach $4,472.2 million by 2022, registering a CAGR of 10.6% from 2016 to 2022." This would put the market at $2,447.7 million in 2016. Since we are still very early in 2018 as of the time of this writing, we deem it most likely that corporate data repositories have not yet updated their revenue numbers for 2017. We will, therefore, use the 2016 market size to calculate market share.

 Owler, which provides both a list of top competitors and revenue estimates for private companies, proved to be our best resource for identifying Carrot's top three competitors. As Owler sometimes uses broader categories than are appropriate to the criteria of the question, we carefully reviewed each competitor to ensure that they specifically provided both IVF and egg freezing in their list of services. This eliminated several of the higher-revenue candidates, e.g., Celmatix. We believe based on the size of the networks of CCRM and Shady Grove Fertility that Owler may be underestimating their revenue. However, we were unable to locate another public source that contradicts Owler, and so will use its revenue estimates as given.

INTEGRAMED FERTILITY
With $304.8 million in revenue, IntegraMed Fertility is Carrot's largest competitor, and in many ways overshadows it. IntegraMed offers the Attain IVF Programs exclusively through its network of "39 centers at 153 locations across 32 states and the District of Columbia." Based on the aforementioned 2016 market size, we calculate IntegraMed to have a 12.5% share in the IVF market (304.8 / 2447.7). The company recently opened a new Center for Reproductive Medicine (CRM) in Winter Park, FL, which includes a "greatly expanded IVF lab with comprehensive services, including IVF, ICSI, egg freezing, fertility preservation, and preimplantation genetic screening (PGS)." In addition to their wide reach, a 2010 article (the most recent available for the following information) states that the Attain IVF Refund Program, which funds "the financial cost of a patient's decision to embark on a series of IVF treatments... has strong consumer appeal and represent an important competitive advantage for IntegraMed affiliated fertility centers." 

IntegraMed's business model is to offer its services to its network partners in three tiers: marketing partner, practice management partner, and equity partner. IntegraMed draws its revenue from partners who pay for its services or from subsidiaries that it invests in. 

CCRM
As described on its homepage, "The Colorado Center for Reproductive Medicine (CCRM) is one of the nation’s leading fertility clinics providing a wide variety of fertility treatments ranging from basic infertility care to the most advanced in vitro fertilization (IVF) technology available today." Headquartered in Lone Tree, CO, CCRM has a reported $10 million in revenue, giving it a market share of just 0.4% (10 / 2447.7). It has a network comprised of "35 physicians and a team of research scientists, embryologists and professional staff dedicated to helping patients achieve their dream of having a baby." We could not locate a public source that directly spells out its business model; their "For Physicians" page states only that they have "a highly differentiated business model focused on patient outcomes." We infer that their model is based on receiving revenue directly from the patients.

CCRM offers a wide range of services, including panoramic care, fertility assessment and treatment, IVF, genetic screening, egg freezing, and oncofertility. It considers its main competitive advantage to be its pioneering in IVF technology, such as successfully growing embryos "to the blastocyst stage (day 5 or 6)," when they are more likely to successfully implant, thereby enabling the transfer of single embryos "to minimize the risk of multiple births for women undergoing in vitro fertilization (IVF) without compromising the chance of a successful pregnancy," and discovering several medical advantages to using frozen embryos. 

SHADY GROVE FERTILITY
Based in Rockville, MD, Shady Grove Fertility (SGF, henceforth) has a reported $6 million in revenue, which gives it a 0.25% share of the IVF market (6 / 2447.7). SGF, now in its 26th year of operation, has a network of 29 locations with a total of 35 physicians across the country which offer both basic infertility treatments as well as IVF, frozen embryo transfers, elective single embryo transfers, and genetic testing. While not outright stated, their business model appears to be based on collecting fees from patients and, as Forbes notes, charging "a yearly fee to store the embryos--an annuity until the eggs are used (if they are ever used)." 

SGF repeatedly states on its site that its chief competitive advantage is that their culture is "different" and that they "do what’s right and we do it in all the ways it should be done." In other words, they promote themselves on their high ethical standards, which they claim is "the reason we’ve had more babies born than any other fertility center in the country" and have "earned the trust of so many people who look to us as thought leaders with a culture of continuous innovation, service, partnership, and community that helps make dreams a reality." 

CONCLUSION
While offering similar services to the patients, Carrot's top three competitors have very different business models and competitive advantages. The above findings on IntegraMed Fertility, the Colorado Center for Reproductive Medicine (CCRM), and Shady Grove Fertility (SGF) have been summarized in short form in the project spreadsheet as requested, though we believe that the longer explanations above will ultimately prove more enlightening and useful.

Part

of three

Part

Carrot Fertility - Partners

Carrot Fertility works with employers to create self-funded benefit plans for employees seeking fertility treatment. As the need for such services increases, Carrot strives to fill the gap of traditional insurance plans that do not cover such services in the absence of an infertility diagnosis. The company does not directly provide medical services; however, there are at least 3 medical experts on staff who are available to clients. 
BUSINESS MODELCarrot Fertility is a start-up designed to ease the process and reduce the cost of fertility options such as egg freezing and in-vitro fertilization (IVF) for employed persons. The company works with employers interested in providing self-funded coverage through a direct reimbursement model as an employee benefit (primarily for companies with 200 to 2,000 employees) and, thus far, claims numerous companies in the tech sector as their clients. As evidenced by their mission statement, the company strives to "enable fertility care for all. We partner with modern companies to help employees access the care they need, when they need it — without breaking the bank." 

Please note that Carrot does not partner with service providers directly, though their website may include links to third-party websites. Carrot does not receive compensation from clinics or providers for referrals. The terms of use clearly indicate that "any professional information [offered] in the course of providing the Service ... [are] for informational purposes only and should not be construed as professional advice." As further evidence that Carrot is not a medical provider, they clearly state that "Carrot is not subject to the regulations that govern Covered Entities under the Health Insurance Portability and Accountability Act (“HIPAA”)." Instead, they partner with employers to provide benefits to their employees as a supplemental benefit. 

Additionally, Carrot manages the process through the use of proprietary software which enables employees to communicate with fertility experts by text, voice, and video, and facilitates customized treatment plans, including setting appointments and ordering medications. Employees can also access user-friendly content through Carrot's website.
THE NEEDResearch conducted by The Centers for Disease Control and Prevention (CDC) found that 12% of women ages 15 through 44 years in the U.S. have trouble conceiving or carrying a baby to full term. While 9 out of 10 Americans consider infertility treatments a part of health care, insurance coverage is lacking. The Society for Human Resource Management determined that only 24% of employer health plans cover IVF, while 26% cover other infertility treatments. 

Traditional insurance coverage limits access to fertility treatment when there is no medical diagnosis of infertility. However, there is a growing demand for women who want to preserve their fertility in order to optimize career choices, as well as the need for access by same-sex couples interested in building families.  Existing coverage products generally restrict access to critical procedures, resulting in thousands of dollars paid out-of-pocket for such treatments. Carrot's approach is to equip companies with modern benefits to fit the current fertility treatment landscape.
MEDICAL EXPERTS Tammy Sun, Dr. Asima Ahmad, Juli Insinger, and Arun Venkatesan are listed as Carrot's co-founders. Shem Lewis, RN and Dr. Amanda Adeleye are noted as two of the company's experts. Thus, we conclude that the company's primary medical team consists of:

  *  Dr. Amanda Adeleye — a Clinical Fellow in Reproductive Endocrinology + Infertility at UCSF, with an educational background that includes Columbia University,

  *  Dr. Asima Ahmad — a Clinical Fellow in Reproductive Endocrinology + Infertility at UCSF, having graduated from the University of Chicago's Pritzker School of Medicine and completed her residency at Yale, and 

  * Shem Lewis, RN — a nurse with over 10 years of experience working at top-notch fertility centers who earned her graduate degree at the University of Chicago and nursing degree at the College of Marin.

No other medical professional were identified, though there may be additional connections, particularly through UCSF.
CONCLUSIONCarrot Fertility addresses the increasing need for fertility treatment as a workplace benefit by working with employers to create self-funded reimbursement plans. The company does not directly provide medical services but facilitates the treatment process for clients.