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The State of the Fertility Industry
Wednesday, August 18, 2021

As demand, coverage and investment are all on the rise and transactions proliferate, we explore certain attributes of the fertility services industry.

Driving Factors

In 2019, there were 58.3 births for every 1,000 women ages 15 to 44 in the U.S., down from 59.1 in 2018.[1]  This marked the fifth consecutive year in which the fertility rate declined.  Many factors may be driving down the rate, including the lingering effects of the Great Recession, delays in marriage and an emphasis on career and educational objectives prior to having children. As women wait longer to have children, there is increasing interest in assisted reproductive technology (ART), including in vitro fertilization (IVF). Other demands for fertility services are driven by LGBTQ couples as well as people who wish to better understand their genetic makeup.

Investment Trends

The U.S. fertility market is estimated to be valued at $8 billion, inclusive of IVF, genetic testing, reproductive issue storage and donor services.[2] IVF services, in particular, comprise a $3 billion market, and such services are projected to grow at a ~10+ CAGR through 2024P.[3]

Investors have taken note of the demand and opportunities in the fertility industry.  In 2019, investors invested over $624 million in the space, up from $200 million in 2009.[4] Investments have occurred with respect to ART-dedicated clinics, broader womens’ health clinics, fertility benefits companies, wearables and technology providers, lab testing companies, fertility finance companies and tele-fertility providers.

Regulatory Issues

While most consumers pay out of pocket for fertility services, there are a growing number of insurance payors that will provide coverage as well a growing number of employers who offer fertility benefits.[5]  The percentage of employers covering fertility medications, IVF treatments, genetic testing and egg harvesting/freezing services are all on the rise.[6]

While most fertility clinics do not receive reimbursement from Medicare, it is important to determine whether any governmental reimbursement is received, particularly in light of the growing focus on state Medicaid coverage for fertility services.  Any federal government payment, directly or indirectly, would open up potentially catastrophic federal False Claims Act liability.  And of course, many states have “all payor” statutes that would impact the activities of cash-pay fertility clinics.

In addition to potential liability related to billing and referral relationships, traditional state law license issues are presented.  Some states may require licensure or accreditation for certain types of fertility clinics.

For employers and investors alike, it may also be relevant to understand the latest fertility benefit requirements laws.  Some states like California and Texas require basic fertility benefits while other states like New York mandate the coverage of IVF services in certain situations.[7]

In addition to existing laws, certain voices are calling for increased regulation and oversight of the fertility industry.[8]

[1] https://www.pewresearch.org/fact-tank/2021/05/07/with-a-potential-baby-bust-on-the-horizon-key-facts-about-fertility-in-the-u-s-before-the-pandemic/.

[2] https://www.harriswilliams.com/industry-update/fertility-market-overview-0.

[3] https://healthcareappraisers.com/birth-of-a-boon-the-rise-of-fertility-clinics/.

[4] https://www.forbes.com/sites/forbesbusinesscouncil/2020/01/17/five-fertility-industry-predictions-for-2020/?sh=3159319672eb.

[5] https://intrepidib.com/fertility-services-the-next-wave-of-physician-specialty-investment/.

[6] https://www.benefitspro.com/2021/04/23/more-employers-offering-fertility-family-planning-benefits/?slreturn=20210717125258.

[7] https://healthcareappraisers.com/birth-of-a-boon-the-rise-of-fertility-clinics/.

[8] https://www.forbes.com/sites/naomicahn/2019/08/08/when-fertility-clinics-get-it-wrong/?sh=43dcda761f4a

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