IVF KPI’s part 1: Dollars to Baby

(From book chapter first draft, unedited. KPI = key performance indicator)

When I meet a new founder, I challenge them to define the value proposition of their product or service, using a pretty straightforward metrics:

1) dollars per baby

2) time to baby

3) life disruption to baby

How did I come up these? Through twenty years of listening to IVF patients go through their own decision-making.

Let’s take them one by one.

1) dollars per baby = (cost of cycle) / (probability of having a baby per cycle)

Why do people go to more expensive clinics with higher success rates? Easy, because they’re cheaper.

You have $17,000. You need transportation to work (and elsewhere), and you want to start a family. You have blocked fallopian tubes, or severe male factor, and need IVF to conceive. The cheapest new car on the market, a $17,000 Nissan Versa, costs $17,000. IVF costs $17,000 a cycle.

“What’s the big deal? An IVF cycle costs the same as a cheap car, and everyone who wants kids should be able to afford a cheap car.” (Actual conversation I had with a potential IVF Fund investor.)

Well, uh, no. Because no one wants to buy an IVF cycle. People undergo IVF to have a baby. If I walk into a Nissan dealer with $17,000, I have a near certainty that I can drive out with a brand new Versa.

If I walk into an IVF clinic with CDC or SART reported outcomes of 40% age-adjusted, indication-adjusted and AI predictive-analytic’ed probability of live birth, I need to spend $42,500 worth of $17,000 cycles to have a baby.

There is a market disconnect in the IVF world: suppliers (IVF clinics) are selling IVF cycles. Consumers (patients) only care about having a baby, but are only given the option to purchase a procedure that carries a chance of having a baby.

No one wants to buy an IVF cycle, and an IVF innovation business plan based on the cost of the cycle itself is a bad model.

You need to model based on cost of outcome.

And IVF outcome is a cruel variable, with a stark optionality.

Upfront cost = ($17,000 + ( tons of time and inconvenience) + (some physical pain) + (very small but not zero risk of medical complication)

Good outcome = a baby

Bad outcome = nothing, or worse

To model the demand side for an IVF innovation based on cost to the patient, not adjusted for outcome = building an inaccurate, misleading model.

(Next: modeling time to baby)