The Kindbody Story: E3, Rocketship to Nowhere

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1:14And when losses do happen, the Hartford can pair that risk control work with insurance coverage grounded in underwriting, risk engineering, and claims experience developed over time. Learn more at thehartford.com slash risk mitigation. Support for this show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500.

1:51Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC.

2:30Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. Bloomberg Audio Studios. Podcasts, radio, news. This series features conversations about pregnancy complications and loss. Please take care while listening. By the beginning of 2022, Kindbody was riding high. It had opened 13 clinics in 10 cities. And then, in February, the company announced a plan that would double its size. Kindbody said it would acquire a larger competitor, a fertility chain called Vios Fertility Institute. Unlike the venture capital and corporate world that Kindbody's founder Gina Bartese came from, Fios was more of a family business.

3:23It was founded in 2015 by a doctor named Angie Beltzos. Angie is unique. She is extraordinarily talented as a physician, and she is even more talented as a clinical leader, just as a leader in general. That's Gina talking to Griffin Jones, host of the Inside Reproductive Health podcast back in 2022. She knows a tremendous amount about business, about productivity, about margin. With Fios, Kindbody immediately doubled its number of clinics from 13 to 26. And Gina wasn't done. She had her sights set on doubling the number of clinics again. We're opening Seattle. We're opening Dallas, Houston, Orange County, Miami, Charlotte.

4:15But we're opening in Washington, D.C. next week. Our plan calls for 50 locations within the next two years. In one of their first appearances as a new company, executives from Vios and Kindbody rang the bell at the New York Stock Exchange. That summer, doctors and executives from the two fertility companies gathered for a retreat in Chicago to kick off this new chapter. At the front of the room was Gina, selling a vision of the future. A former marketing executive from Kind Body remembers that day. We're coming together. Vios and Kind Body, we're all on board. We are not using her real name. She, and others you'll hear from in this episode, asked for anonymity because Kind Body has threatened legal action against employees they believed were talking to journalists.

5:05A voice actor is reading what she told me. Here's where our focus is. Here's a motivator for the team. I mean, Gina knows. She knows how to command a room, an excited room. And it was really just focused on, here's the growth. Here's how we're going to do it. And we're all going to be so rich at the end of this journey. Gina Bartese declined to comment for this series. A spokeswoman said this was because of, quote, multiple factual inaccuracies, as well as continued biased reporting, given Bloomberg's lack of context provided to readers regarding the fertility industry, kind body, and her role as an experienced leader in the field.

5:45Asked to identify specific inaccuracies, the spokeswoman declined to comment. Part of the Vios deal was that after the acquisition, Gina would step back as CEO. She would stay on as chairman of the board, but would hand over the reins of day-to-day operations in an effort to make room for the Vios executives. Gina knew a lot about employee benefits, egg freezing, and how to raise money. But the next phase of growth needed leaders who knew how to grow multiple IVF clinics at once. And Gina saw the founder of Vios, Angie Beltzos, as the person who could do that. Here's Gina again on the Inside Reproductive Health podcast.

6:27Now, I will tell you, Angie has upped the game. A lot of doctors I've talked to are very comfortable doing 150 cases a year. And they say that, listen, I do 10 to 12 cases a month. I sell an IVF cycle for$25 ,000 and that's my model. With Angie's help, Gina envisioned higher volumes of IVF. You look at the physician productivity of her doctors and it's extraordinary. One of her lead physicians did more than 1 ,000 cases last year. That's extraordinary. KindBody's leaders also had their sights set on an initial public offering. The kind of move that can bring a big payout for those who got into the company early.

7:08They use the rocket ship analogy a lot. We are on a rocket ship to the moon. And then he always talked about like the rocket ship. We're going to like blast to the moon and help everyone's fertility. We're going to get yellow planes. Everyone's going to have a yellow plane. Who's going to buy the first plane? Amid all the talk of private jets and worldwide expansion, the acquisition had saddled Kindbody with more financial pressure. And it came at a time when the startup was already struggling with operational issues. From Bloomberg and iHeart Podcasts, this is IVF Disrupted, the Kindbody story.

7:48I'm Jackie DeValos. Support for the show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On Public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions and executing your strategies exactly as defined.

8:31An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month-end close that takes weeks.

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10:29Baja Mar, life spectacular. That spring, the two companies came together. Employees were told it was the start of Kindbody's most exciting chapter yet. One of the executives who came over from BIOS, who were calling Emily, remembers the promises made. An actor is reading what she told me. It was a huge part of the deal was that people wouldn't lose their jobs because the two companies came together that there was more than enough work to go around. If we had redundant positions, we were growing. So let's figure out how to reallocate someone, train someone on something new. But the deal, and Kindbody's aggressive growth plans that followed it, were based on overly rosy assumptions, according to what I heard from current and former executives.

11:20The company didn't disclose how much it paid to buy Vios, but former executives tell me it was substantial. Kindbody had used up a lot of its cash, and the expectation was that the deal would result in more people coming through the doors. The Vios locations were already up and running, and they were quickly remodeled to fit the Kindbody aesthetic. These clinics were also profitable, something Kindbody couldn't say about many of its other clinics. According to internal documents I saw, Atlanta, Austin, and some California locations were burning through cash. This wasn't part of the plan. When they'd originally opened, Kindbody had expected the retail-centric clinics would attract a flood of new people looking for fertility services.

12:07They also expected deals with employers to translate into a steady flow of business. But former employees and executives told me it was more of a trickle. Part of the reason is because people just weren't using their IVF benefit at the rate Kindbody had projected. Another challenge was that IVF patients take time to cultivate, to build trust with. Even so, the company continued to spend and expand. They were banking on patient volume catching up. Here's Emily, the former Vios employee again. The honeymoon-ish period was probably maybe nine months. We weren't getting IVF patients in the door. We weren't building the IVF volume to then grow and hit the projections that we had.

12:56If you work backwards, the numbers were created on bad math. So yes, of course, you have to make hard decisions if you're not hitting your projections. By the fall of 2022, layoffs began. And according to Emily, they were done in waves. The first round of layoffs just laid a horrific foundation. for profound anxiety. There were often rolling layoffs. There might have been an initial batch, and then everyone felt like, okay, I'm safe. And then two, three, four weeks later, others would trickle out. And that hit to productivity cannot be understated. People were not able to do their best work ever again.

13:42Really. There was always this concern that they would be next. According to internal documents, The cuts hit hardest among those working directly with patients, medical assistants, billing staff, and a role KindBody called Financial Navigators. Financial Navigators worked remotely, handling patients across all KindBody clinics. Here's one of them. So I feel like the Financial Navigator is probably next to the doctor. We will basically come in. We will go over your benefits. We will verify anything. We will be the person who gets any authorizations if you have insurance. We will then counsel you on anything that's going to come out of pocket for you.

14:28If you didn't pay, then you can't start your cycle. We're essentially the last person you talk to before you start treatment. For patients, financial navigators were more than just number crunchers. They were guides through a complex and costly journey, where a single cycle of IVF could cost as much as$16 ,000. But as the layoffs continued, the remaining navigators found themselves overwhelmed. Here's another. There was probably 10 or 12 people on our team. And then at one point, there was three or four of us. And we were in charge of all of the markets, all of the offices. And then it was just like, here's more work and here's more work and here's more work.

15:13to the point where we worked on the phone with each other and on meetings with each other, just breaking down crime. We had to do the phone calls. We had to collect the money. We had to check the cycles, the schedules. We had to do all of it. And we had no help. I was drowning. We were like, this rocket ship is like nosediving right now. And if we're not going to jump off right now, we're all doomed. There's no one on this rocket ship that is going to survive. The two financial navigators said they worried the mounting workload would open them up to mistakes.

16:11codes, you'd have to go and start the whole process again, which is a two-week process, which is then now putting off the patient's treatment. With IVF, timing is everything. You're trying to sync up multiple biological processes that normally happen naturally over weeks, from getting the eggs to mature at just the right time to ensuring the uterine lining is perfectly ready for implantation. If your timing is off, even by a day or two. The whole cycle could be unsuccessful because embryos need exactly the right conditions at exactly the right moment to have the best chance of developing into a healthy pregnancy.

16:50But if you made a mistake, it was the worst thing in the entire world. Patients' frustrations with Kindbody started showing up in negative reviews online. The company was now being criticized for exactly what it claimed to be fixing. Confusing bills, hidden costs, and a lack of transparency. Patients described getting unexpected charges weeks after procedures, insurance claims that were filed incorrectly, and authorizations that arrived too late. These weren't just administrative headaches. For patients already stretching their finances to afford fertility treatment, these mistakes could mean the difference between starting a cycle or having to wait months to save up again.

17:37In the C-suite, some executives were losing confidence. Kindbody's high-profile CFO had quit after less than a year on the job. And then the chief scientific officer left the company. I reached out to both of them, and neither wanted to speak to me for this podcast because they signed non-disclosure agreements. In written comments, Kindbody told me it hired more customer service staff and made significant improvements to its billing processes. It disputed that the former chief scientific officer lost confidence in the organization and said executives leave companies for various, often innocuous reasons.

18:18For doctors and lab staff, the chief scientific officer leaving was more than just another executive departure. He had been the guardian of their scientific protocols, the person ensuring that the complex, precise work of creating and handling embryos was done right. Here's Emily, the former Vios executive again. I think you can see some of the personnel changes in the chief scientific officer role and a lot of movement in terms of who was in charge of labs and people had to step in in interim fashions and people left. Physicians were concerned. You can't just go grab a benchtop scientist. It takes years, years to train a skilled embryologist.

19:03And if you treat them as disposable people, the word spreads. The pressure to do more with less was already trickling from the corporate offices all the way down to the labs. And in Atlanta, another preventable mistake would change a woman's life forever. That's coming up.

19:28Support for the show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On Public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or if my cash balance goes above$20 ,000, move the excess into my direct index. You approve the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined.

20:07An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end clothes, it's time to get Brex AF, a gentic finance that eliminates that work before it starts.

20:50Learn more at brex.com slash AF. Discover a spectacular island destination with crystal blue seas, endless sunshine, and the cool Bahamian breeze. Bahamar, located in Nassau, Bahamas, offers your choice of three luxury hotels, over 45 fine dining and nightlife venues, John Batiste's all-new jazz club, the Caribbean's most luxurious casino, and one-of-a-kind experiences for the entire family, like our 15-acre tropical water park, wildlife sanctuary, world-class golf course, and so much more. Visit Bahamar.com today. By the time Vernita Pearsall started at Kind Bodies Atlanta Clinic in the fall of 2022, the cracks were starting to show.

21:32It seemed as if there was a revolving door when it came to employees in the Atlanta office. Vernita had seen her share of medical practices, but nothing quite like this. While other kind body locations were also struggling, she says Atlanta was in free fall. At one point, a lot of the executives came to the office in Atlanta due to things occurring with so much turnaround. I saw an internal presentation that backed up what Vernita was seeing. The Atlanta Clinic had a staggering 64 % turnover rate among its clinical staff. To handle the volume, staff was told to move patients through their appointments even faster.

22:19It was that feeling of a conveyor belt. Going in, going out, next. Going in, going out, next. And it looked aesthetically like a soothing place. But in all actuality, that was not the case. It was pretty much, let's get them in, let's get them out. Former employees told me staff inside the embryology lab, which required the most precise and time-intensive work, was burned out. They struggled to keep up with the patient load that kept growing even as their team kept shrinking. A lot of times they were there before I started, and they were there after I would go home. And they had to work many weekends, many holidays.

23:14In text messages shared with me, one embryologist in Atlanta told a fellow staffer, I have to be coach, quarterback, and wide receiver. We do not have the space, equipment, and people for this level of volume. It's dangerous and not sustainable. I spoke to five former embryologists who worked in the Atlanta Clinic. They all described the same crushing workload, the constant turnover, the feeling that it was only a matter of time before something went wrong. And then, one day in March of 2023, it did. Among the dozens of patient reviews and complaints I encountered while reporting this story, one stood out.

24:00A Google review that described a disappointing experience at the Atlanta Clinic. It was a devastating error. One that would reveal just how dangerous Kind Body's staffing crisis had become. Here's Vernita reading the review. She put, I recently had a very disappointing experience with Kind Body Fertility Clinic that I cannot in good conscience recommend. Unfortunately, they gave me the wrong measurement of medication during my treatment, which led to a lot of complications and stress. Despite all the issues, we were able to proceed with one embryo for transfer. Wow. On the day of the transfer, however, things went from bad to worse.

24:49The clinic staff were unable to identify, oh my God, which embryo was ours because they had some unlabeled embryos in their storage. This was extremely frustrating and concerning and left us feeling very uncertain about the entire process. I spoke to four employees who were at the Atlanta location the day this review is about. None would speak on the record, fearing legal retaliation from Kindbody. But the patient herself agreed to talk with me when I traveled to Atlanta to investigate what happened. She asked not to be identified, explaining that as an immigrant in a tight-knit religious community, even sharing her story could have serious consequences.

25:38A voice actor will read what she told me. We are religious people, and our community will avoid us if they hear about this. I'll call her Ayana. She was 39 years old when she walked into Kind Bodies Atlanta Clinic that March morning, carrying with her three years of hope and heartbreak. She'd been through multiple egg retrievals, most unsuccessful. Out of the few eggs they'd managed to retrieve, only one had developed into a viable embryo. She was there that day for her transfer, the culmination of her fertility journey. That was our only opportunity. Instead, she and her husband spent three hours in a waiting room before learning what happened.

26:19On the transfer date, when we reached there at 12, like midday, and they told us like about three o 'clock, like they were like, I don't know how to say it. They were like messed up. They call everyone and put us in one room, and I don't know, they hold us more than three hours. When the doctor finally came in to explain, Ayana could barely process the words. They just stand in front of me. I was crying. They told us they don't have the embryo. Their one embryo, their only chance at having a child, had been mislabeled. The clinic had an embryo, but they said they couldn't be sure it was a Yana's.

27:09The only way to confirm would be through genetic testing, a procedure that carried its own risks. Many patients choose to genetically test embryos before a transfer to make sure they have the correct number of chromosomes. It helps detect abnormalities that can result in serious genetic conditions. That process, though, has its own risks. It involves taking a little piece of the embryo and can sometimes damage it. Some doctors recommend that patients who don't have a lot of embryos to work with skip such testing. Ayana and her husband had opted not to do genetic testing before, and they didn't want to do it now.

27:50Because of her religious beliefs, Ayana said she would have carried the baby even if they had detected an abnormality. But they told us we have one option, which is they need to test it to know if it is ours or not. The situation pushed us to do that. Despite her misgivings, she went ahead and got the test. A kind-bodied doctor called and confirmed the embryo was indeed theirs, but revealed something else, an abnormality. Ayana said the doctor didn't tell her what the abnormality was and didn't explain the results. The doctor only told her that the embryo had to be discarded. Normally, when an embryo is genetically tested, patients get a copy of the report, and a doctor or a counselor walks a patient through what it means.

28:41But Ayana told me she and her husband weren't given any paperwork, and no one explained what the test had revealed about their last embryo.