It’s not often that people relate the word “Affordable” with IVF. But the Affordable IVF Model is a thriving business model in a world full of expensive treatments. Despite questions about their revenue, rates, and processes, the model is growing and providing high-quality care to a vast amount of patients across the country. What can all clinics gain from this model, especially heading into a post-COVID-19 world?
On this special live episode of Inside Reproductive Health, Griffin spoke with three leading doctors whose clinics follow the Affordable IVF Model: Dr. Robert Kiltz of CNY Fertility, Dr. Paul Magarelli of Magarelli Fertility, and Dr. Mark Amols of New Direction Fertility Centers. Together, they talk about just how they make the Affordable IVF Model work, as well as answer common objections to their services.
This episode was recorded during a live webinar. As the COVID-19 Pandemic continues and new issues arise, we are putting out new information to help you and your fertility business. Follow us on social media for updates on upcoming webinars and how to join them live. Find this information helpful? We’d love it if you’d share with a friend or colleague in the fertility space.
Need help navigating marketing through this unprecedented time? Check out our COVID-19 Toolkit from Fertility Bridge.
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Welcome to the Coronavirus Business Response Series of Inside Reproductive Health. Here, you'll be updated on the latest insights on managing and owning a fertility business or IVF center during the COVID-19 pandemic. We put out free podcasts, webinars and articles as soon as new topics arise, so make sure to subscribe to stay updated. The best way to help us in return is to share this episode with someone in the fertility field that would find it useful. Now here's the founder of Fertility Bridge and the host of Inside Reproductive Health, Griffin Jones.
GRIFFIN JONES 0:55
I just want to maybe start the conversation off with the reason why I invited the guests that I did-- Dr. Kiltz, Dr. Magarelli, and Dr. Amols--is because they've all used the affordable IVF model in different parts of the country. And I have said for years that I think that it's going to be an economic downturn that makes that model scale. And I want to explore what that is like for those that are curious, for those that think that it's the end of IVF as we know it, for those that think it’s the best thing, I want to solicit the experience of our guests that are on board. I want to start with this concept of timing and Dr. Amols before this kicked off, you and I were talking about the fact that you were surprised that this hadn't taken off sooner. Meaning, I think what you meant by that, and I'm paraphrasing, that there hasn't been a scale of affordable IVF. What did you mean by that? And why do you suppose that is?
DR. MARK AMOLS 1:54
Yeah, you know, I think if you look at the industry in other places they'll say like, plastic surgery, look at dentistry, almost all of those medical treatments had to eventually go down to kind of a more affordable scale and more volume. And usually when you have something that's a high cost, eventually people find a way to make it lower cost, and then it takes over, because volume will always make more money in the end over just a few cycles at a high cost. And so I'm surprised it hasn't because, again, we're doing it very well, Dr. Kiltz is doing very well, Dr. Magarelli is doing very well. It's not a hard model. And eventually, I mean, like I said, like anything, even when it comes to all the other fields of medicine, people seem to eventually narrow it down to lower cost, you know, and help more people. And it’s the concept of a big pond versus small pond, do you get a lot more fish for a lower price and then you have more patients or do you keep going after these individual fish? And it's just harder. So like I said, What's nice About our model is you really benefit from a downturn like this. So you know, when when things go down, we still do fine when people are doing well, we still do well. And so I'm surprised the model hasn't taken off more. I mean, look at Target, WalMart, those are examples of, again, high volume, affordable cost.
JONES 3:17
And so for those that aren't familiar with you, Dr. Amols, you are in suburban Phoenix, is that right?
AMOLS 3:22
Correct. We're in one of the suburbs of the Phoenix Metropolitan.
JONES 3:26
So you're in one of the largest markets in the country. Dr. Magarelli and Dr. Kiltz have both done this model in smaller markets. Dr. Mag, you're in Colorado Springs, why did you decide that this model could work in a market that size?
DR. PAUL MAGARELLI 3:42
Well, I wasn't looking at it as simply a market issue. I was looking at more of an access issue. So for me, when I sort of gravitated towards doing an affordable model, I mean, I live near Denver, I mean, I'm 45 minutes outside of Denver, so that’s certainly a big market, a famous IVF market.
JONES 4:03
Well, now that Denver has grown out so damn far!
MAGARELLI 4:09
Yeah, so it was more--I have about 40,000 military folks who every two years go through the bases here in Colorado Springs. So we have an influx of very young, reproductively-active couples. So that was a resource that I knew that A) didn't have a lot of money, you know. B) at the time when I introduced it, we were in the middle of the Iraq and Afghanistan war, and so a lot of folks really needed help gaining access to what I consider one of the best fields of medicine. So it was a risk. I mean, I don't have a population 2-3, 5 million, but it turned out we grew 600% in less than four months in terms of my market. So as Dr. Amols was describing, once you give access to care, you'll be surprised at the number of folks that want it. And we, as a country, have one of the lowest utilization rates for IVF compared to most industrialized countries. And that is because of the fees. Really no other reason we have high success rates, so it's not performance, but it's really just access. And so by making access available, instead of doing, which we've done in the United States, 200,000 cycles, that hasn't changed really in about 15 years. 2 hospitals in China to do approximately 200,000 cycles! So it was more a matter of let's get more folks care.
JONES 5:38
Dr. Kiltz, you have one of the most-known operations for the affordable model in the East Coast. And people might think New York, and they might hear Central New York and think of the New York part of it, but Syracuse is a small market--600,000 in the metro of Syracuse and maybe some more throughout Central New York. And you have one of the highest volume programs in the country because you're bringing in people from out of state and from New York City. When did that start to happen?
DR. ROBERT KILTZ 6:11
25 years ago, nearly when we started. Obviously, Syracuse is a small market, small town. I'm from Los Angeles, been here, and I came up here to get away from the big city! But the recognition that people are travelling--
JONES 6:27
Mission Accomplished!
KILTZ 6:29
Well, that wasn't my intention, though. My intention was to come and practice medicine, do what I love to do. But I realized that there were some barriers from the way we were doing it. When I started IVF in 1997, here in Syracuse, I charged $2,000 for a self pay IVF. We have gone up a little bit over the years, but we've always been focused on affordability, access, and quality, and people are traveling for medical care and have been for many years. In IVF and Fertility Care, for sure they're traveling. And we know the very largest programs in America bring people from all over the world, and all over the country. So just like the more expensive places do that, recognizing that there's a much greater pie in the lower cost IVF than there is in a more expensive IVF. If, as Mark was saying, you know, the models of Target, and you can just say Walmart, and many other companies that are highly successful. And so that wasn't our plan, in our mission. Again, we became doctors and I became a physician in order to help people not, you know, sit around and do five cases a month, which made no sense. And if you look at the ability to be efficient, we are highly inefficient in this fertility world. And so that's not to tell anyone that they should do it differently. I just chose to do it this way. And I know Paul and Mark did the same thing. So I think there's plenty of access opportunities, but in general, most people are not going to lower the prices because there's so few of us that do what we do. There's not a need to do that.
JONES 8:12
We have a question that came in from that discussion of quality. And I'll let any of the three of you take a stab, but I want to give it to Dr. Mag first because he talks often about making the state-of-the-art the standard and the question Dr. Mag is how is quality defined?
MAGARELLI 8:28
Well, for me, quality is defined as performing a medical procedure in a method that has been demonstrated to be most effective for the outcome desired. So for me, quality is utilizing all of our technology and techniques for that patient, to optimize the response to the medications, to optimize the growth and development of the blastocysts, to optimize the way in which you do the transfers, and you manage the patients, to optimize and use all of the systems that have been known to be effective like ICSI, like a 5, 6, 7 blastocyst culture. vitrification, you know, frozen embryo transfers, use everything possible. It's like, if you break an arm and you go to the emergency room, quality care would be a cast. Something that isn't quality would be a bunch of band aids to help you. It'll work. With enough band aids, it might help your broken arm, but no other field in medicine can give what I consider less care and consider it good care. So to me, quality is providing what we all know and all of us here are board-certified, all of us have been in this for many years. We know what works, the patient doesn't. So let's provide them with the best of the best that we have to offer, and then let their biology determine their success. So for me, quality is defined that way.
JONES 9:59
I'm not a clinician, but I know that not all of our clients use ICSI on every cycle for example, what about those that say, well doing ICSI on every cycle, that's not necessary? Or do we really know how much PGT impacts successful pregnancy rates? Should we really be doing that on every cycle? How do you respond to questions like those?
MAGARELLI 10:18
Generally? Or just me?
JONES 10:24
I brought you on because I want to hear the Magarelli answer!
MAGARELLI 10:28
Okay! Well, the answer is yes and no. The answer is not every technology works for every person in every situation in every circumstance. You can offer it, you can offer it in those circumstances. We are a learning profession. It’s the art of medicine. We grow and discover and yes, when ICSI first came out, it was considered only for a certain subset of male factor. And then it was broadly used and it is broadly used in about 80% of most are somewhere between 60 and 80% of most IVF cycles, not because it's better for the sperm, it’s because you make more embryos. PGT-A was hailed as a miracle and I embrace it completely--85% of my patients do PGT-A. However, with increasing data there may be a loss function to wastage--they call it embryo wastage--where you may lose a high quality embryo because it was misread. So you have to be flexible, you have to--you don't just fix it. But my issue with those who are detractors is that they may not offer it to all patients because they “want a low cost IVF” rather than is that right for the patient? To me, there's a big difference between How can I make it look cheap, and then hence possibly have a poor outcome, versus How do I make it optimal and let the patients choose. It’s not going to discount their cycle. You don't have to do ICSI in my place. There's no charge for it up and there's no charge for it down. It's your choice. But it's easy to say, Oh, well, I only grow to day one, because that's the most optimal. Whereas for someone, a day five transfer might be the best for them, you have to look at that and offer all of it. And then the patient can subtract. Or the experience. I know all of the doctors here have had the same experience where some folks just magically do better with a day three transfer. And, and it goes against logic, but they do. So you offer it. I had a patient today who failed a day five and now I'm going to try a day three transfer. Why? It might save me a little money. But the goal is how do I get her a baby? So that's kind of my short answer to that detractor.
JONES 12:46
So this concept of quality comes a lot when we're talking about the Affordable model. Dr. Amols, you mentioned earlier the Target model, the Walmart model, if we're thinking of just bringing something to bare at scale. And some people will say, well, Walmart that's not Saks Fifth Avenue, that's not Barney's, it's a lower quality in their mind. How do you respond to this issue of cost must be related to quality?
AMOLS 13:14
So I wanted to take a step back. So earlier you asked me, we talked about why I didn't think this model had taken off. I'm just talking from a business standpoint, when you see these CCRM’s down building on their stuff. From a business standpoint, I meant, I'm surprised it hasn't. When I use Walmart/Target example. I'm purely only talking about the example of volume. Okay? You're absolutely right when you said I think what you were asking earlier about the quality issue is that we're under the gun more than any other clinic. When the other clinic pays $15-20,000, amazingly, they get nothing out of that cycle. They walk away and go, Ah, this didn't work. They go to a clinic like mine, Dr. Kiltz, Dr. Magarelli’s, and they don't get through they go Oh, it's probably because it was lower cost. So we are really actually under the gun more than I think most clinics because we're always against that. And that's one of the reasons you rarely hear anybody say we're the cheapest. Our goal has never been to be the cheapest. We've been wanting to be affordable. And the definition of quality is if you're doing best practices, and as long as we're doing best practices, you know, I would consider us quality Now, one thing I want to talk about is, what got me into this actually is because my own personal IVF story. So my wife and I spent $20,000, my wife doesn't make many eggs. And so we had to go through IVF. And we spent a lot of money and we barely got pregnant, but we did. We were very fortunate. And it just was curious. I've always been a numbers person, I’ve always been a business mind, I wanted to figure out how much does it cost per IVF cycle? Why is there a difference in cost between clinics? And when I looked it up, what was surprising was it actually isn't that expensive. And so it's interesting, like your title is Secrets of the Affordable IVF Model. But really, there's not a secret. None of us are doing anything tricky. None of us are getting less. If anything, we're probably getting more than most clinics. We're just not overpriced. So when I first started and people said to me, You know what’s the trick? What are you doing? I said there's no trick, I just make less. And I'll even give you another thing that's really interesting about my client is that I love what they're doing. In fact, when I was going to start, I was scared to death I called up Dr. Magarelli and I said that I had this idea, I heard you're doing it. I'm scared to death, am I gonna go poor? Like what's gonna happen here and he told me, Don't worry, it's gonna go fine. It works. And so one of the things I wanted to do was, I actually want to be one of the top clinics in the country, meaning success rates. So if you look at all of us, you look at national rates, we're doing well, but we're-- the 2018--we’ll probably be in the top 10-15. So it has nothing to do with quality and anyone who says that is just saying that to distract from it. Again, we have some of the highest rates in the country. And yet we're a third the cost of the most of them. This is about all of us are in this for the same reason, which is we want to help more people. We want to be able, as you said, more accessibility for people who can't afford it. Dr. Kiltz said, and I agree hundred percent, there are people who come to us and say, “I would have never had a kid if it wasn't for you. I could never afford to go anywhere else.” And that's a great feeling when you know that someone who scrounged up from family members to make $5,000 and have a baby, it's a great feeling.
JONES 16:14
Dr. Kiltz, this concept, you and I have talked about it before, which is who's responsible for making care affordable. And as Mark says, maybe it's maybe I'm making a little bit less money. And you have mentioned that before. But I remember one thing that you said to me, that always stands out to my mind, Rob, is you and I were in Washington, DC a few years ago. We were there for access to care, and we're advocating for insurance coverage. And at that time, we're advocating for benefits for veterans. But you said at the end of the day, these folks, meaning everyone that was there, and I'm paraphrasing, so I'll let you clarify that, but who's responsible? It's us and so talk a bit more about how you're able to do that.
KILTZ 17:04
So the question is, why does it cost what it does? And I got paid $2,000 for nine months of OB care and deliver a baby. And when I started my practice, I was delivering babies. And I was trying to come up with a price of IVF. And I realized, well, I no longer do a nine months of care, up at two in the morning to deliver a baby, why should it cost more than it did? And I actually didn't know what it cost around the country. I just charged $2,000. But I would say ultimately, we're all running our own businesses. We're all practicing medicine. I think on the quality side, we're all members of the societies, we’re inspected by every organization, and our numbers are all reported. And we understand that outcomes that are shown in the statistics aren't always apples to apples, and we all know that. But, it's really a decision of how do we want to practice and how do we want to run our businesses? And the model of of how many IVF cycles do you do in a day, or in a month, or in a year, each of us has to pinpoint that for ourselves, and the amount of people that we work with and the team members we have and putting it all together. I know that I run a very large ship today, that our overhead is very different than it used to be. So when it was just me in a smaller space and fewer employees, 14, it was easier than now it's 300 employees and having all of that to run. So you got to keep the machine working a little bit in the process. But ultimately, we each decide. You know, there's no magic, that some big something in the skies, gonna, you know, tell us all what to do. We just have decided to do it the way we do it. And sometimes it's difficult as human beings to do it that way because we all feel like we have to conform. But really, all new things, changing things happen through nonconformity. And no one's here to try and tell everyone else they should do it this way, I wouldn't suggest it actually. But you know, it's something we are passionate about and enjoy doing. And we definitely--we do internal financing for everyone. We sell IVF on Shopify, and really just kind of offering new and different things, which aren't so crazy when you look at medicine in so many other areas or selling any other widget. But at the end of the day, it's not a Ford, a Porsche Ferrari, we're comparing, it's a baby. And they're all babies. And ultimately, people are traveling to Europe and all of the places to get affordable IVF. We just happen to put it right here in our backyard.
JONES 19:48
So I want to come back to some of those new and different things and how you do some things in house, so I've made a note of it. We've had a couple of questions that are coming back to the same thing. It has to do with this issue of quality, and so I feel like we need to address it some more because one question, one person asked, What about pregnancy rates? And then the other person asked if rates would indicate that someone would need to go two or three times at one center and only one time at another center? How is that more affordable? That sounds like a loaded question to me. But I think it also goes back to Dr. Amol’s point. So you can look at at the success or you have the same data that everyone else does on CDC--
KILTZ 20:34
May I interrupt, Grif?
JONES 20:35
Please!
KILTZ 20:36
So first of all, should we be comparing clinics outcomes?
JONES 20:40
Not according to start for marketing,
KILTZ 20:46
Then why are we having this conversation?
JONES 20:47
Because that's the--
KILTZ 20:28
But it is not true. Because it depends on the patient population, if it depends on many, many things, okay? And so it also depends when you're doing PGS or freeze all or not, whether you're doing blasto--there's so many things that come into this, that we can spend the rest of our lives talking about that. I would say, in general, across America, the real numbers are probably very, very similar. It's just a matter of who you're taking care of as much as anything else.
MAGARELLI 21:18
If I can interject--I agree with Dr. Kiltz completely. That's been the biggest bugaboo since the 1980s when this idea of we're going to report data, and that data is going to be put out there, but please, please, please don't compare clinics. And of course, what is the first thing that happens is people compare. But I want to get to the heart of the issue. Look at the CDC data. Look at the live births since 2010. And the live births per IVF start is declining. It is not increasing. pregnancy rates are increasing and they're impressive, but live births per cycle stored has been declining precipitously, almost 30% since 2010 with the onset of a lot of technologies. So there may be a biologic potential there that we're hitting. But if you really--if let's say we homogenize all 400 IVF centers in the United States, and it comes out to approximately 2.2 IVF cycles if you do a fresh, untested embryo transfer. If you look across the board for the past 10 years it’s 2.2 IVF cycles per baby. And that's not counting regions, that's the United States: 200,000. If you do IVF with PGT-A, it's approximately 1.8. So let's say in every case, everyone's going to do two cycles to make a baby, regardless of where you are, what country, what elevation, New York, California--it doesn't matter. If that's the case and just let's flatten--I hate to use the term flatten the curve--but let's just let's just look at that number. In Denver, it's approximately $25,000 per cycle, two cycles, let's say two cycles is $50,000 to a baby. My clinic, that would be probably around $14,000 to a baby. Very different, very different model, but still, it's 2.2 tries to make a baby. In Dr. Kiltz’s situation, it would probably be about $6,000 to a baby. Now, as Rob said, it's to a baby. So if nationally our numbers are 2.2, it hasn't changed or even gotten worse to a baby over the past 10 years, that supposition of quality is in error because it's to a baby. It hasn't changed. There aren't really that many--there might be five or six outliers, but that doesn't count for the field. So if you go to the field, 2.2 is a good number. Just figure out what it's going to cost you, if it's in your budget and you want to go to a place that has a two story waterfall, and it's got a, you know, Mercedes outside, great. Or you just go to the regular folks, get your baby, and that's what you do.
AMOLS 24:06
So I don't mind being the devil's advocate here. I think that Dr. Kiltz is absolutely right. When we talk about statistics, you have to look at the patient population, there's no question about it. And when you're doing what we're doing, you get people who have failed multiple times, who are coming in now for their six, seventh, eighth IVF. So you have to understand it is a different population. And none of us--one thing that's really unique, all three of us--none of us turn patients away. We take all the CCRM patients that they get canceled in the middle of their cycle, and we take them over. So he's right. However, it's a fair question. Because the point is people do know the difference between Walmart, and you know, a really high-quality store. And so I think the thing here is, is that, in the end, as Dr. Kiltz said, we're using the same places they are. We use the same equipment, my clinic, we use only benchtop incubators. That's it. Every patient gets their own incubator. And if anyone's concerned about the rates, the thing is that again, you have to look at is donors, that would be the only thing I would tell you to never really compare donors, because that's really the same population. But it's a fair question to ask. It's one of the things when I started, I felt there was a thing I had to defend more than anything. And that's one of the reasons like I said, that we want to be better. So just for the people who are asking that I just want to--I got the statistics here. So the national average in 2018, for the percent of live births for retrieval was 54.5%. For transfer, and it was 48.5%. Now, I'm not going to talk about other clinics, I’m just going to talk about mine. But just to show you, our retrieval percentage for live birth was 64.1%. So we were 10% above the national average, when we look at the transfers were 61.4%, almost 15% higher than the national average. So the point I want to make here is that being low cost doesn't mean low quality. They have nothing to do with each other. Now, can another clinic have lower rates? Well, yeah, if they're seeing more older women. We're very fortunate, I'm in the population where I see a lot of young people. And matter of fact, we don't even tell our patients our actual pregnancy rate because we don't think it's fair. You know, when I'm getting same sex couples who I'm doing, you know, reciprocal IVF on, that's not a fair rate to give to someone who's been trying for six years. So we actually give a lower rate than with our actual real--we have a very high percentage--but we give a lower rate because we know it's not a fair number. And so that's why he's right. You can't compare it. But what I would say to people is, if we have this high rate, and we're this affordable as well, and then other places have a lower rate and they charge the full amount. Clearly, cost and quality are not together. And I think another thing that's really important is not just that we're lower cost, we're transparent. I mean, if there's anything that I think is great about us, all of us have our costs on our websites, you know, we're not trying to hide anything, we're telling everything and we're packages. That's the thing I love about what we all do is no one comes to my place and goes okay, so is $6,000 for IVF, $3,000 the walk in the door, $4,000 to ICSI by the time they get done, they're like, oh, wow, I thought was only $6,000? And it's $18,000. Whereas all of us, you can look at our website and go, that's what I'm walking out the door with. Other than medications, obviously no one is selling their medication, other than that, that's separate. That's another thing that I think makes us a really unique model. And so when I go back to the point of why I say, I'm surprised everyone hasn't got there yet. We are going to become a mandated country, it's going to happen. It's just a matter of time. And we talk about the secrets of the affordable model, one of the things that's most important, Kiltz hit on it earlier, it’s got to be efficient. There is so much inefficiency in IVF. The places I worked at before, I can’t imagine going back to what we used to do--spending an hour with someone talking about something that literally in five minutes, we could talk about or my nurse could do in 15 minutes. The point is, is that the reason everyone should start doing this model is because when it goes to a mandated country, and they're only making $4,000, $5,000 per IVF cycle, you're going to need more volume, and if you can't do it, then you're going to be in trouble. And so one of the things we are poised I think to do well, no matter what happens. And I do have one question I’d like to ask them as well. One of the things that's funny when I started with everything included. Matter of fact, we included anesthesia, ICSI, it was hundred percent out the door, and we had to remove it, not because we needed money, but I actually ran into issues that when you are a low cost model, people for some reason don't see the worth in things. And so for example, I would have a patient perfect sperm, I'd say we did standard insemination, hundred percent fertilization, and they get mad at us and say, I'm so upset. Why didn't you do ICSI? Well, we had 100% fertilization that seems pretty good. And they're like, Yeah, but I wouldn't have done this if I would have known you weren't gonna do ICSI. And, and so we finally had to charge even $500 for it, just to make it worth something. And so I wanted to talk to you guys and ask you, do you run into those same problems where something so goofy as ICSI with someone at 100% and they're saying, you know, Why didn't you do it? And I just wonder if you guys run into those issues, too?
KILTZ 29:06
It’s the nature of human beings to find something to complain about. If you just accept it and listen to it and move on, that works really well. So no matter what you do--and I wanted to make a point that almost all clothing is made in Bangladesh or Pakistan, it doesn't matter whose label is on it. So ultimately, there's no difference in quality, in general, in most everything and anything. Walmart, that has the same stuff that's sold pretty much everywhere else. So I think that we're all really just out here to practice what we do and help people out. And the fact that we are lower cost, and I don't think the higher cost models are going to go away. They will continue to be successful as we will continue to be successful because it's a blue ocean and blue sky, it's huge. The amount of people that don't get served by what we do is tremendous. And so there's plenty of room for everyone. And I always come back to you can never compare the numbers, because there's so many variables and as scientists, and the fact that we are members of a society that say you can't compare them, I'm still always amazed by the fact that we try to.
JONES 30:30
What about this idea? Because it harkens back to what Dr. Amols was talking about, and Dr. Magarelli, you mentioned, when you're talking about per baby price, if you're thinking of it in terms of outcome, and Dr. Amols, you’re talking about different packages. One thing that--a hypothesis I have is that if you are goingfor the affordable model, you can't half-ass it, at least from a marketing perspective. What I've seen is you--let's say someone's in the backyard of someone doing $13,000 average cycle price and they say we're gonna market that we do 10, that it doesn't work. That what makes it work is having a huge delta and really letting that be a big part of the differentiator that you all are using. Do you think that that's true? That's what I've found to be the case. That I don't recommend people say yeah, we've got a $9,500 base IVF cycle price that I think people get killed in the middle. What do you all think?
MAGARELLI 31:36
Oh, I think people get killed in the middle. And I think that what happens is that they substitute or subtract services to get to that number. That's what I think. And then it’s like half in half out. When I decided to do this high quality, affordable model, I just have to say this out loud because Mark mentioned that he called me, well I called Robert, so this troika we have here is how this all--it started with the man on the bottom of my screen, Robert Kiltz, then it came to me then it went to Dr. Amols and it's amazing that you've got us all here because this is the family, The Three Musketeers. And what I had to do, and it took a lot of conversations with Dr. Kiltz was, this doesn't make sense. He’d say Okay, let's do the numbers. So you have to jump in. When I jumped in, I told my team, ti's very likely all of us are going to take a pay cut. Absolutely, everybody across the board took a 15% pay cut. And I said, and all of us have to be in it. Because quite frankly, I don't know if the volume is going to be growing fast enough to meet the bills. You know, and at that time, I was a fairly large program. And so you can't just discount a little. You have to make--if this is the area you want to be, look at your numbers, look at your costs, your real cost--not your cost plus profit--your real costs, figure out what margin you want and then probably don't accept the margin, subtract that margin and just go for the raw score. I don't think you can do this one toe here, one toe there, and you can't do it by subtracting services. I mean, I know I'm harping on that. But that's the key is none of us subtract services. All of us have all services at the highest level. And I think that would be my answer to your question about the middleman doesn't work. Because I had a marketing person who told me to raise my prices, which put me in the middle and my volume immediately fell. So I had to scurry back to where I had been. And so that's would be my recommendation.
KILTZ 33:42
Fixed costs. We have a tremendous amount of fixed costs in this business. The variable costs are actually small. So our buildings, the rent, insurance, the staffing. And so I equate us like a bus or an airplane. You have seats that are empty, and you have capacity to grow. It's just basic economics of running a business, right? Obviously, if you're charging $20,000, you know, people can do that. But I looked at my model where I was and what I was doing and made a decision that my capacity was greater and we can do more. I even lowered my prices more in order to fill the capacity, at the same time, was able to meet our goals and greater.
AMOLS 34:36
I want to address your question. So you were asking the question about the middleman.
JONES 34:40
Yeah, do people get squashed in the middle?
AMOLS 34:42
From a business standpoint, this is actually very common for humans. If you have a great steak that costs 20 bucks, and then the other guy says to you, Hey, I got steak, too. It's 15 bucks. It's pretty common sense. Most people go, You know what, for 25% more, I'm just gonna go with what I know works better. I'm going to go with the filet mignon. But when you drop down to let's say, five bucks or six bucks, then most people go, you know, it's worth the risk. It's worth at least trying. And I used to even tell patients, I used to love when they came to me and they said, Oh, well, what if your lower rates. I said, well, let's do an experiment, let's say I am 20% lower, you can do three cycles at my clinic for the cost of one cycle there. So if you actually look at cumulative pregnancy rate, we would actually have a higher rate than them at the same cost. And I want to make one comment about Dr. Kiltz said, and I'm just gonna give a real world example versus using a plane. If I put one person's embryo in my liquid nitrogen containers, I still pay the same amount to keep that liquid nitrogen in that container. So if I don't fill that thing up, it's just wasted money. And that's what he's talking about. You know, when you buy equipment, when you buy a media, they don’t give you one one per patient. You get a whole bunch. Remember, if you buy more of it, you get a better discount, and so it actually lowers your costs. So as Dr. Magarelli said, you got to jump into this. You can't do this kind of half in, half-assed type of thing. You got to do it 100%. You jump in. And like I said, your costs will go down, your overhead will go down at first, because, again, you're spraying it over more patients, and you're being cost efficient. And I ran to the problem, unlike Dr. Kiltz, we actually are so packed, I can't take any more patients. So really the smartest thing for me, I'm a bad business person, I should raise my prices. But again, that was never my goal. My goal has always been to make it affordable. So I'm also looking to get more doctors to build on to what he does. And that's he's right. I mean, you just keep it full like a plane, don't let it be half empty.
JONES 36:34
Well, that's I think that's a really good way of describing why the middle gets squashed. Because to that point earlier, when someone asked, well, isn't doing three cycles at one place, less cost effective than doing it one elsewhere. That's probably why the middle doesn't work so well because that would be true if it were the middle, but when you're talking about $4,000 IVF base cycle prices, or you’re talking about real affordable, that'd still be more cost effective--doing three with one model than doing one at another place. I think that's a really good way of putting it. You also--Go ahead.
AMOLS 37:16
Are you familiar with the concept of cost-disruptive model in business?
JONES 37:20
In business? No, not if it's the same thing as price anchoring.
AMOLS 37:24
So when you look at the Walmarts and the Target, one of the things they looked at in businesses, is that when you just went a little bit lower, you looked cheap. When you went ultra lower, then what happened is people were willing to take the risk. And what ended up happening was a lot of your competition had a more difficult time because now people were going there. And so this is actually a very common model in business called the cost-disruptive model that is used and like I said, it works. It's worked in every industry.
JONES 37:54
It's a really great point. And for those--there are some people on this call that I have counseled against marketing towards that middle. And now you know why!
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JONES 39:12
You concluded your point with another point, which is now I'm at a point where I'm so busy, I can't even see all of the patients. One way would be to raise prices and make demand go down a bit. The other is to scale and Dr. Kiltz, that's probably what you have really, that you've really focused on the last some years and when I had you on my show last year, you talked about the bottleneck often being the REI. And you've talked about training, OB/GYNs and Physician Assistants and perhaps Nurse Practitioners or just advanced providers in general. And when I sometimes will, we work with groups and we will get them to a point where it's like, what more do you want? You’re at a four week waiting list and we got to do a six week waiting list, it's like there's a bottleneck here. Does the use of advanced providers and other physicians--is it requisite to scaling a model like this?
KILTZ 40:13
Well, it's not requisite, it's just another way to do it. There are a limited number of REs and our model has typically been to spend an hour with the patient and do our consultations and our follow ups. That gives us limited time due to retrievals and transfers and maybe surgical and other things. And as we're seeing this shifting and changing the way we practice medicine, just in the last several months, we realized that to do an ultrasound and IUI and even managing and monitoring our patients can be done a lot more efficiently. That can be done by a skilled fertility RN and also our practitioners. And also as we've utilized gynecologists for a number of years to do retrievals and transfers that can be well trained and do an excellent job at it. So we know some of the top fertility doctors in the nation, in the world, are not board-certified or even trained in a fellowship in REI, which I think is unnecessary, but it just happens to be where we're at. But I think the way to scale and provide more access, more affordability is to look to those methods to do that. My practitioners will do consults, either video, phone or in person in the past. Our gynecologist will help us with our surgery, retrievals, and transfers. At the same time, we’re able to focus on the things that I think we're really trained to do, which is manage and develop and teach and train others to be part of this because the only way we're going to make it more affordable and more accessible for more people is more of us to be able to do that. And it's happening in more and more areas of medicine all the time. That's where it's branching out. Anesthesiologists, I have mostly Nurse Anesthetists doing the anesthesia today. And we can look at that in every other area of medicine. I think we need to open that up and even trained practitioners to do potentially retrievals and transfers. I'm throwing it out there. I think certainly, they're doing IUI and most everything else in our practice.
JONES 42:22
I see a little bit of reluctance to accept this. I also see a general acknowledgement that this is the case. I can't consult on it because it's clinical. The only reason it touches my purview is because it has to do with capacity and how many people we bring in. And if that capacity is raised, we bring in more people. But I have heard people raise the objection, or the concern that they'll be--well is the REI just going to be useless in 20 years? And I don't see that unless, you know, Watson and artificial intelligence has evolved to the point where we're all useless and that's going to happen eventually, hopefully not in 20 years. But I see a little bit of this idea that well, I need to--as the REI, the patient is paying to see me or expects to see me. And I don't know that that's always true. And I use this analogy and I know it's gonna piss off every REI on this webinar because I know you're not dentists and we're not talking about dental and I know that Fertility Care is much different from dental. So I'm providing that--I'm laying that down right now. But I went to Inspire Dental which is one of these large scale affordable dentists backed by or owned by either private equity or on the public market. And I go in, it's a nice experience. It's very standardized. I go back, the dental hygienist almost diagnoses me. He's cleaning my teeth, says what he thinks it is. The dentist comes in for two minutes, really confirms that, leaves and then when my follow up is scheduled. It's the dental hygienist doing the advanced cleaning. And I as a patient, I'm okay with that. And I think the bottom line is that patient needs to be and feel cared for. And I think that there's a little bit of reluctance. The doctor feels like, well, I need to be--I need to be in every ultrasound. I need to be doing retrievals, whatever it might be. And I don't know that the patient necessarily sees it that way. Can you all talk a little bit more about what really should be the role versus what should be support staff or advanced providers?
MAGARELLI 44:33
Well, I'm not going to say what should be, but I will tell you my thoughts about that. I was one of those Duke-trained, UCLA-trained, big headed, egocentric, narcissistic physicians who felt if I didn't do it, it wasn't done and it wasn't done right. And that does work if in a model in which you're seeing very few patients and you're all getting that personal care, and as long as you're not worried about that many 10s of thousands or millions of people who aren't getting care, you can feed your ego that way. Over time, what I've come to learn is, it is really my responsibility as a professor or professional, to make my team provide the service, make my team be able to manage issues, and I be the guy who takes care of the fascinomas or the oddities to allow for efficiency that Dr. Kiltz was mentioning. And I will tell you like Dr. Kiltz, I have been fascinated and scared at first, but fascinated with the use of gynecologists, but these gynecologists are doing major surgeries that I wouldn't do and why would I be concerned about them sucking some eggs through a small little needle through the vagina. It doesn't make--it's almost illogical that they couldn't do it. So by utilizing them, I was able to grow the practice rapidly. Patients were getting care and I followed them point by point, number of eggs retrieved, number of embryos created, embryo transfer rates, pregnancy rates, and I could not find a difference. We both went up and down 1% depending on the month because we split it. So from the standpoint of it is always going to be the reproductive endocrinologist, just like any captain of a ship, you don't expect the captain of the ship to be down in the in the propeller room and in the ballast tanks and in the mess, you expect the captain of that ship to manage the ship to go in the direction and reach the port safely. That's what our jobs are as reproductive endocrinologists and we are a lucky field. We deal with healthy folks. So it's even less risky because we are not dealing with sick folks. We're dealing with very vigorous young, 18 to 40 year old folks. So that risk equation is lower than persons dealing, you know, 90 to 100 years old with a cardiac condition. So it does work. It is safe. As Dr. Kiltz mentioned, the 1, 2, 3, or 4 most famous reproductive programs in the country are run by either gynecologists, Maternal Fetal Medicine doc, or a perinatologist and yet, the impression is they're the best and they're the ones we should go to for because they're good marketers. So that is not going to give you the qualification. It is exactly like Dr. Kiltz said, my job is to train them, to follow up on them, to QA QC on them, and to ensure that the quality is always there, and to innovate. That's the other part. You don't expect your gynecologist or your practitioners to innovate, to take a new concept to apply it. And that's my job as the professor or Captain, down the future, is to help them just to separate the wheat from the chaff about what are the technologies that are effective, cost-effective, efficient, and perform. I can't have everybody in my clinic doing that. But I can do that if I had them doing these other tests, which are easily trained as well. And they're actually better at it because they're focused on one thing. We have to be focused on 100 things. So that would be my answer to that situation.
JONES 48:17
Dr. Amols, you want to add to that?
AMOLS 48:19
Yeah, I can. So I think there's a couple things there. It depends on the patient that's coming in, right. So obviously, if someone's going for egg freezing, they don't care [inaudible] they just want to freeze eggs. You have a person trying to come for a baby, they want that kind of touchy, touchy feeling. And I think that's a normal thing. As a doctor, we want to have that. And I would say it's not so much--there's almost nothing that has to have a doctor. I mean, I think nurse anesthetists have shown, if you teach someone a specialty, they can do it very well and as well as a physician. So I think there is this point where there's nothing we really have to do, but we do still have to be involved. And I think part of the art of what we do is being able to make the patient feel where they're 100% when we’re not. I have patients tell me all the time. I'm in the room for five minutes sometimes. And you know, I tell them sorry, if you felt rushed or like, No, I never feel rushed with you. But I'm with them for five minutes. They're with another doctor for 20-30 minutes in the room. And then they come back and tell me that they learned more from me in five minutes than they did from them in 20-30 minutes. So I think part of what you're seeing is true. You have to as a doctor be able to engage your patients. And I agree completely with what Dr. Kitlz said earlier. I mean, you could have practitioners doing I mean, you really could there's no reason they couldn't. It's not like this skill is this amazing skill that we learned in fellowship. I mean, most of us didn't even do some of them in fellowship. But the point is, is that there are these certain patients though, who absolutely want the doctor every visit so at my clinic, it's a little bit different. Everyone does it different. Doesn't make a right or wrong. I do all the ultrasounds for IVF. Only IVF. Everything else I do have people doing for me. So I have an ultrasonographer checking for cysts. Nurse Practitioner helps me. There are patients who I tell them right from beginning, if you are wanting me at every visit or you wanting 20 minutes from every time, I'm not the right clinic for you. You're better off going down the street paying someone $20,000 who can do it. And that's where I'd agree with Dr. Kiltz because they're gonna be clinics like that forever. These clinics that people want the doctor doing everything 100%. But in reality, there are studies that have shown a nurse, nurse practitioner doctor during the IUI, no difference in pregnancy rate. And I'm pretty sure if you look at even the nurse practitioner probably doing the retrieval, there probably would be no difference at some point, you know, if again, if they've been taught the skill set. So it really doesn't need all of us. None of us are that powerful. It's the lab. The lab is what gets people pregnant. Our job is very miniscule, maybe 20-30% at most, when it comes to stimulation. But in the end, we can still do that without physically doing that. And so what I would say to those patients are, I mean, those other doctors who want to do this, engage with your patients, talk to them, be a human, and they're not going to feel like they're not getting care because when you are with them, you give them 100% of your attention.
JONES 51:00
And I might even take that a little bit further from the patient's perspective of feeling cared for. The not just advanced providers or the nurses, but all the way down to the welcome staff. It is the aggregate of everyone involved. And I won't say who it was if this person wants to acknowledge that it was their clinic, they can do so because they're in the webinar--but we worked with a client for years, that when we did their social media for them, the the celebrity of their group was the phlebotomist. People just adored this phlebotomist and she's drawing blood the same way that all phlebotomists do physically, but she did something to really touch people and that can come from multiple people in the practice. So we just have a few minutes left. And so I'd like to conclude with your opinion from all three of you on this because Dr. Kiltz you were talking about doing new different things. You know, you like doing so many things in house and you mentioned a lot of the things just take away and add to the cost. You mentioned in-house financing, you talked about IVF on Shopify. And I want to get your opinion in closing from each of you, either what innovations will come from the affordable care model? Or what innovations will impact and allow the affordable care model to scale even further. So what innovations will come from or aid the affordable care model?
KILTZ 52:29
Well, first of all, thank you guys very much for being part of this and inviting m.e I really enjoyed it tremendously. I don't know many of the answers. And I think what we're doing is we're learning by doing something different. But we're also learning from many different models, but change is the most critical thing that we must learn as practitioners. If we cannot change, we will die. And it's always learning from others what they're doing. Fertility just happens to be this thing that we've sort of felt that this is the way it is and when we see these changes going on, it's uncomfortable. I wasn't trained as a business person. I didn't know anything about business when I started my practice almost 25 years ago, but I've learned and I continue to look at other areas and what are people doing in business that I can utilize in changing and growing what we do. And whether it's going to be more artificial intelligence, but ultimately, as you mentioned about the phlebotomist is, is really the person that people are drawn to. We're all in some ways--ultimately, the human touch is so important, as Mark talks about, you know, the patients and going and meeting them. We love that! We don't want to lose that. In many ways, we created something that so many people wanted to come to, so we need to always be innovative, and making it accessible and affordable. And that's some of the things that I really love to do more than anything, but we all need to be doing something we're passionate about. Every single day, and if you're not passionate and having fun in this business, there's plenty of other things to do in life.
AMOLS 54:06
You know, I don't know if I can answer your question either about how to make it scale. I think what I would like to maybe give us the people who are interested in doing this, want to know a little bit about how to do it, I think, you know, again, hopefully, they're not scared to go into this. But one of the things that's interesting is that, once you start it, the biggest fear, I think the getting into is someone looks at my cycles and goes, Oh, my God, I don't think that Dr. Amols ever gets to go out and see his family. And it's actually not true. I mean, I come in at 8, I leave by 5pm, I get almost every weekend off, I get to work one or two weekends a month at most for a few hours. And I don't want anyone else to think that I'm making very little money. I do very well. And I'm pretty sure they do very well as well. And that's because again, it comes down to volume. And so what this is about is if you want to open the practice, where you're able to now allow more people to do IVF, who originally couldn't. And what's interesting is those people usually are pretty healthy. I mean, I get people who don't even need IVF who do IVF. And I even tried to talk them out of it. But the point is, is that it's not hard to get into. The trick is being efficient, and being able to talk to patients. Now, if you're not able to talk to patients, I don't think you're gonna do well anywhere, whether in our model or someone else's model, because who cares if you get to spend 20 minutes with a doctor. If they suck, and they don't like talking to them, it's still gonna be the same bad 20 minutes, whether it's five minutes or 20 minutes. So I think the biggest thing for people who are wanting to know about this is don't be afraid that you're working forever till the end of night. You won't be. But you’ve got to make sure you get a nice efficient system. Definitely talk to all of us. We've gone through the pains and stuff in the grind. And don't be afraid you're not gonna make money either because you will, because again, you may not make as much per patient, but you're so efficient, that you're able to make more. You're just doing it with more patients.
MAGARELLI 55:53
So doing it with love, is what Dr. Kiltz is saying. Dr. Amols is saying is do it with the business acumen. And the question is can and all of us are saying this, we are successful in what we do. I think COVID has taught us something, and it certainly has taught me something is that I am actually more intimate with my patients now doing a Zoom meeting with them. And I'm much more efficient in terms of my office and functionality than I would ever have imagined ever in my career. I can tell you that probably 40% of them are still in bed as a couple talking to me on my Zoom. And to have the husband there and to have the partners there to have that intimate discussion, so I'm not going to lose that, but I probably am going to be able to double or triple the number of interfaces I have with them. And then as we all have said, hand them off to trained professionals to do the next steps. And then when we need to be involved, if it is the retrieval, and if it is the transfer, if it is the surgery, we do it, but if it turns out we have even a practitioner, a gynecologist who could do it just as well, trust that they can, track it--I'm a researcher--track it, and then as long as they can, you can assure the patient they're going to get the result. So I think Rob said change, change, change, but you know act with love. My dear friend, Dr. Amols is saying there's a business component to this, we can do it. He likes to be in there every minute to touch his patients so that he can show them he's there. I can tell you I've spent many a day with Dr. Kiltz walking up and down the clinic. He knows every patient, he knows every person, he knows every every staff member and what's happening with their children. It is being personal and interacting. We all are well-trained. We all have a passion to help people. And if that is your--and by the way, you will work hard. You have to also be willing to work hard. This is not something you're going to do half time. This is long hours. And yes, you can design a Sunday off or a weekend off or two. But this is long hours. And if you don't want to do long hours, this won't work for you.
JONES 58:12
Well, gentlemen, it's been a great conversation. We’ve gotten lots of thanks and kudos in the comments. And I say, gentlemen, because people might say, why are there four men on a panel? Well, you're stuck with yours truly, and these are the three guys that are doing it. These are the three people that I know that are doing it. And I would love to have you all back on because I do think that this model is going to advance even further as near as six to 18 months. And so I'd love to have you back on in six months and revisit this because we had so many questions that we didn't have time to get to a lot of them. And Dr. Amols, Dr. Magarelli, Dr. Kiltz, thank you all so much for coming on this live show for Inside Reproductive Health. I look forward to having you back.
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