Wall Street greed’s latest target: fertility clinics

This post was guest authored by Kyra Sadovi.

Actual Extend Fertility ad targeting millennials that ran on Instagram in 2017.

The fertility sector is a burgeoning gold mine in the eyes of private equity firms. It is projected to be worth $4.5 billion by 2022, and is growing by 10% a year

Private equity firms are an especially vampiric corner of Wall Street. They raise money from investors and take out huge, unwieldy loans in order to buy companies — and then shift all of that debt onto the company they just bought. They suck the life blood out of a company in management fees and then cash out, their responsibilities to workers, consumers, and communities be damned. That kind of investment model — called a leveraged buyout — has destroyed all kinds of industries. From retail to newspapers to medicine, wherever private equity goes it leaves laid-off workers and broken pension promises in its wake. 

The fact that firms are now looking to turn a profit from an industry that deals with medically vulnerable women should concern all of us. 

Private equity’s fertility investment strategy centers around marketing to drum up business, in this case in planned egg freezing. This is pretty much what it sounds like: a patient decides to freeze their eggs for an extended period of time so that they can be used later, usually after enough years that their fertility has declined. Or rather, when private equity would have them believe their fertility has declined. 

The marketing strategy that private equity firms use for egg freezing hinges entirely on fear. They explicitly target 20-something cisgender women, weaponizing the language of “Lean In” feminism to push an alarmist narrative: women are infertile by age 35, so if we choose to invest in our careers but we also want biological children, we have to freeze our eggs at age 25 to be responsible. 

No part of that message is true. The reality is that most women are not infertile by 35 — the biological cutoff is more like 40, and even so fertility varies widely from person to person. Egg freezing is in no way affordable, nor does it have a high success rate. The process is also taxing on the body, especially for young women. 

All of this means that egg freezing is a huge gamble, both financially and medically, for people who in many cases don’t need to take it. And when private equity firms are involved in a gamble, the house always wins.

Let’s take apart their pitch:

Women are infertile by age 35

Despite what these firms want you to think, egg freezing is a completely unnecessary procedure for most people. Many of the private equity-owned egg-freezing firms say that fertility drops significantly at 35. But any group that claims so is citing the oft-referenced study of French birth rates from between 1670 until 1830, which is not exactly a good indicator for fertility rates in the 21st century. Meanwhile, contemporary studies have consistently found that the age at which egg count suddenly and sharply decreases is 40, not 35. And not all people have trouble conceiving in their late 30s — which means that someone could be goaded into spending tens of thousands of dollars on a procedure they don’t need.

Millennial women are frivolous spenders

Egg-freezing companies like Trellis (owned by IntegraMed America, which was bought by Sagard Holdings) and Prelude (Lee Equity Partners) appeal to who they think Millennial women are: frivolous, career-driven, and shortsighted. Prelude’s website includes testimonials like this:

Not only could I administer the correct drugs and take care of myself but I actually began to understand what was going on with my body. I realized that I’ve never paid this much attention to my body before – and I teach fitness classes part time!

Meanwhile, Trellis encourages women just years out of college have their priorities in order: 

Just think: for about the price of all those “extras” you spend your money on (the weekly blowouts and fitness classes), you can create options for preserving your fertility.

Extend Fertility (Regal Healthcare Capital Partners) was actually called out for its invasive advertising when it released an Instagram ad campaign that popped up on the feeds of 20-somethings in the New York City area.

Women still can’t have a career and procreate

The whole egg freezing marketing pitch presupposes that women should just accept that having a family is incompatible with building a career, rather than fighting for a fairer world where fathers — and employers — are equal partners in producing the next generation of workers. It asserts that in order to succeed in their career, women need pregnancy insurance: pay your premium and monthly fee just in case you are infertile by the time you want kids. You know what else would act as insurance for women hoping to have families? An economy that doesn’t penalize your career for having kids. A partner that co-parents and shares the burden of any career productivity losses associated with raising children. Labor laws that recognize that reproductive labor isn’t an afterthought but the bedrock of responsible worker protections.

Egg freezing is safe

Egg freezing involves an intense hormone treatment and surgery: it’s a serious medical procedure. While it’s considered safe, it was only downgraded from “experimental” status by the American Society of Reproductive Medicine in 2012. But women still face risk of ovarian hyperstimulation syndrome, which, while rare, can result in death. And younger women — the target of all this marketing — are more likely to experience it than older women.

Egg freezing is a guarantee 

For all the risks, there might not be much of an upside. By virtue of the nature of the business, there is little data on their success rates — most of the people who have used the service don’t want to get pregnant yet. But according to multiple studies, there is reason to worry that these people will return to thaw their eggs after five to ten years and find that, despite everything they’ve been promised, they still can’t conceive. By then, though, private equity firms whose investment horizon averages five to ten years, will have cashed out and gotten out of town, no longer liable if they ever were for the empty promises they instructed their portfolio company to make.

It’s already happening. In an op-ed in the New York Times, Ruthie Ackerman described her unsuccessful egg-freezing journey. After multiple tens of thousands of dollars spent in vain on procedures and countless hours passed hoping against hope that her efforts would pay off, Ackerman’s eggs never grew into surviving embryos. Her unfortunate story is likely to become more and more common as egg freezing grows in popularity.

Egg freezing is affordable

The amount of money that Ackerman spent is, while high, also not unusual. Despite Extend Fertility’s price comparisons of egg freezing and acai bowls, the procedure is expensive. One cycle can cost anywhere from $6,500 to $8,600, not including “extra” costs like medicine or anaesthesia. In order to have a 97% chance of pregnancy, 40 eggs need to be retrieved — which can take up to four cycles for some people. The price of storing the frozen eggs adds up to $600 every year.

Not surprisingly, these companies have come up with payment plans to lure prospective patients in. They even direct potential clients to affiliated medical loan servicers.

Private equity firms can deliver healthcare

Private equity investments in healthcare don’t always end well — they have slashed costs and quality of care standards in addiction treatment, urgent care, and nursing homes. Many of these stories end in tragedy because the incentives of the medical field and private companies are inherently incompatible. The former requires practitioners to “recognize responsibility to patients first and foremost, as well as to society, to other health professionals, and to self,” according to the American Medical Association’s code of ethics. The employees of a private company, though, are tasked with making a profit.

Women are already particularly vulnerable when it comes to receiving the healthcare they need. Study after study tell us that women — and disproportionately women of color — are already systematically neglected and undermined by healthcare professionals, particularly in fertility and reproductive care. Beyond healthcare, women of color are systematically discriminated against  in everything in many facets of life, from college admissions to wage disparity. Private equity firms are turning to the fertility industry to make a quick buck, and the most likely outcome is that they will continue to extract wealth from women, people of color, and especially women of color.

Private equity is a constructive actor in our economy

Unfortunately, private equity-owned companies are becoming more and more involved in our everyday lives. And in taking control of fertility clinics, they have finally bought up the last step of the proverbial American dream: reproduction.

Americans have been told the same myth since the founding of the country: the United States is special. So long as you work hard to pull yourself up by those fictional bootstraps, you can achieve the American dream. That dream usually consists of four parts:

  1. Getting an education
  2. Using that education to find a job with a living wage
  3. Saving up enough to buy a home
  4. Having children with the same (or better) opportunity for success as their parents

For most Americans, and especially my generation, that dream is a fantasy. Marginalized Americans have been barred from reaching those benchmarks by exclusionary public policies, structural racism, and gender inequality. Private equity has piled on, investing in predatory schemes that exacerbate inequality and promote the exclusion of already vulnerable people.

For example, students of color and especially women of color are often targeted by for-profit colleges owned by private equity firms. These colleges use aggressive sales tactics to convince students to take out thousands of dollars in student loans, and often land them with bogus degrees that don’t help them get a job.

Private equity firms are preying on homeowners, too. After the financial crisis, private equity firms bought up foreclosed homes, turned them into rentals, and jacked up the rent cost. In the lead-up to the crisis, women of color were 265% more likely to be sold toxic mortgage loans than white men. Private equity firms eating up housing has decreased homeownership, and made rental even more unaffordable.

And private equity firms are destroying jobs. Women of color are already the least paid for equal work than any other group, and often discriminated against and barred from promotion. Now, private equity firms are buying up companies, especially in the retail sector, and forcing companies to “restructure” in a way that is causing massive layoffs and cuts in benefits.

Now, private equity has weaseled its way into the fertility industry, all but assuring that people hoping to get pregnant will be deceived into getting saddled with mountains of medical debt, with no guarantee of a successful pregnancy later. In short, the only people for whom this is a good deal are private equity fund managers — 82% of whom are men.

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