The Kindbody Story: E4, Fertility Care, Meet Sales Targets

0:00The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Sinesta Travel Pass is the most rewarding way to travel. Sign up at Sonesta.com for instant savings, bonus points, and perks like early check-in, late checkout, room upgrades, and free stays.

0:42Choose from 1 ,100 hotels across 13 brands and unlock their best rates when you book with Sonesta Travel Pass. Here today, roam tomorrow. Join now at Sonesta.com. Terms and conditions apply. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day. A fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned, it's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise, and personal attention.

1:29Together with independent agents, Cincinnati Insurance focuses on relationships, not transactions. Their approach is grounded in experience, follow-through, and trust built over time. Bad days happen, and when they do, you deserve an insurance partner who understands risk, respects what you've built, and is ready to help you move forward. The Cincinnati Insurance Companies. Let them make your bad day better. Find an independent agent at CINFIN.com. Bloomberg Audio Studios. Podcasts. Radio. News. The global fertility market is worth an estimated$46 billion and is expected to more than triple in the next decade.

2:15In the U.S., a company called Kindbody was once one of the fastest growing players in the field. IVF Disrupted, the kind body story, examines the consequences of that rapid growth and what happens when startup culture collides with the delicate science of creating life. Today on the show, we're bringing you episode four. If you missed episodes one through three, go back and listen. They dropped in the Big Take feed last week. And one more note. This series features conversations about pregnancy complications and loss. Please take care while listening. The day Elizabeth decided to start trying for a baby, she was 38 years old.

2:58She and her husband had been happy as they were, traveling, building their careers in Chicago, enjoying their freedom. But something was shifting. Her mom was sick. The years were passing. There was this sense that maybe they'd regret not trying. It just kind of felt like, you know, that opportunity to have kids. the window could be closing. I had kind of naively really thought that it was going to work quickly for us. Then it didn't. And after trying for months, we were talking to our OB and then she was saying, you know, at your age, you don't have to try. I've spoken with dozens of women like Elizabeth during my investigation of Kind Body.

3:39And there's this moment that comes up again and again. This pivot point where they decide to seek help with fertility. It's vulnerable. Intimate. And it often comes with a clock ticking somewhere in the background. Elizabeth and her husband had tried naturally for seven months before her doctor recommended she look into fertility treatment. So Elizabeth started looking into specialists covered by her insurance. Kind Body was one of her options. I saw it and was like, women doctors, and the way they made it seem like it was just so easy to do and seamless. Right away, I just was like, oh yeah, this is the easiest choice I've had to make.

4:18She and her husband got an appointment right away at a Kind Body clinic in Chicago. I had heard from friends that it can take a long time to get into clinics sometimes, and so I was excited and pleasantly surprised that we were able to get in right away. I see it as a red flag now. However, at the time, I was very excited to be able to just jump right in. Elizabeth had several friends who had gone through fertility treatments before, so she knew a little bit about her options. Because IVF is expensive and invasive, Elizabeth wanted to start slow. And so I was interested to hear about other things like IUI or using Clomid and different things like that.

4:58IUI stands for intrauterine insemination. It's when sperm is injected directly into the uterus. Clomid is a medication that stimulates ovulation. Unlike IVF, these treatments don't require an egg retrieval, and so patients don't need as much medication. In IVF, patients often take multiple medications to stimulate the ovaries to produce eggs, and there's also painkillers required for an embryo transfer. Doing IUI or taking Clomid can be a much cheaper option. Elizabeth liked the doctor she met with at Kindbody. She felt she was knowledgeable and personable. But something didn't feel right about the way the doctor laid out the treatment options.

5:40They didn't mention anything about Clomid or other drugs like that. They had like a slide maybe briefly talked about an IUI. But then really just the most of the hour long kind of presentation was about IVF. So we just said, yeah, you know, we're just a little nervous about doing IVF. Let's just hear about the other steps. I can't remember her exact verbiage, but something along the lines of, you know, So given my age and the fact that we had been trying now for a while, she kind of presumed that I'd want to jump right in and do IVF. My initial reaction was that it seemed like they were pushing IVF.

6:18IVF is the most expensive procedure that KindBody offers. And the number of patients who go through IVF has a huge impact on KindBody's bottom line. What Elizabeth didn't know at the time was that Kindbody was quickly running out of money. Behind closed doors, executives were freaking out and facing tough questions from investors, including private equity backers. I heard from people in these meetings that investors were worried that the company wasn't hitting its targets and would need more money. In an effort to boost profits, Kindbody came up with a plan. One that pushed patients into more aggressive treatments.

6:57Treatments that left some women asking, was this really necessary? From Bloomberg and iHeart Podcasts, this is IVF Disrupted, the kind body story. I'm Jackie DeValos.

7:22So how did we get here? To a point where Kindbody, which had been a femtech darling for venture capital and private equity investors, was now scrambling for money. I want to take you to an important meeting in the summer of 2023. when Kindbody directors gathered for their quarterly meeting at a luxury hotel in the Hamptons. I saw the minutes and talked to people who were there, and they said there was a feeling of desperation at this meeting. The company had been talking to investment bankers to explore an initial public offering, IPO, a move that could potentially transform the founders' equity stakes into enormous wealth.

8:03But first, they needed better numbers, more revenue, less spending, or maybe both. And at that moment, the situation didn't look good. Kindbody had merged with Vios Fertility Institute over a year earlier, doubling their clinic count overnight. They had a new CFO, had raised millions of dollars from big investors, including JP Morgan. And despite multiple rounds of layoffs, they were still burning through cash. Internal documents I saw painted a rough picture. The company had spent nearly$60 million in 2023 through September and was losing an average of roughly$7 million each month. According to the documents, of the startup's 33 clinics, only six were profitable.

8:52So, Kindbody executives laid out their plan to try to improve the company's finances. It would set specific quotas for their physicians in an effort to hit revenue targets. One of the metrics that KindBody tracked was the number of retrievals they performed. It's a key step in IVF. Retrievals are when doctors attempt to extract eggs from the ovaries. The procedure involves blood tests, ultrasounds, and hormone injections. And it's one of the most lucrative procedures KindBody offers. Retrievals make up about half of the revenue collected from one round of IVF. In a presentation outlining its turnaround plan to investors, KindBody ranked all of its doctors only by the average number of monthly egg retrievals they were performing.

9:40Those who fell beneath a benchmark average of 23 were labeled as falling below expectations. If it was going to turn a profit and go public, the doctors at KindBody would need to raise the number of monthly egg retrievals they performed. Some doctors would have to double their retrievals. I was told many physicians didn't feel comfortable with the new targets. And over the next three months, four doctors resigned. Angie Beltzos, who was KindBody's chief physician when it introduced the quotas, didn't respond to a request for comment for this series. This push to do more IVF cycles was invisible to Elizabeth when she had her first consultation at Kind Body Chicago Clinic.

10:24But for the people treating her, the pressure was on. To start, Elizabeth and her husband tried Clomid and then an IUI. And when those treatments didn't work, they decided to finally try IVF. In Chicago, Kind Body's prices started at$14 ,500 per cycle. and that price doesn't include genetic testing or embryo transfers. Although she had some insurance coverage, Elizabeth was still on the hook for about$6 ,000 in out-of-pocket costs. When she finally decided to pull the trigger, Elizabeth says she had trouble getting a hold of the people who were supposed to guide her through the process. During IVF, timing is everything.

11:07Missing even a single dose of medication can derail an entire cycle, wasting thousands of dollars and pushing treatment back by months. It's all very, very strict in that regard. At least that's how they described it to me. Once Elizabeth's insurance authorized her IVF medications, she called Kindbody to make sure the clinic had put in the order to the pharmacy. Knowing Memorial Day was approaching, Elizabeth tried calling a few days before to avoid delays. No answer. On the Friday before the holiday weekend, she started to panic. She called their national helpline. No one could help. Her husband, desperate, left work early to drive to the clinic and bang on the door.

11:50So the fact that I wasn't getting these answers or responses, I mean, my anxiety levels were through the roof. It felt like this strange gas lighting or something where I was just, like, confused. But behind the scenes at Kindbody, there was a financial reason Elizabeth might not have been able to connect with her providers by phone. Documents I saw laid out Kindbody's policy to, quote, bill all visits. To do this, employees I talked to said they were instructed to encourage patients to come into the clinic in person or hold virtual video visits. The goal was to bring down the number of phone calls that they couldn't bill.

12:33In theory, this policy makes sense. Many patients told me they liked seeing their doctors in person. But in practice, they said it made the IVF process more stressful. It was really difficult to get an appointment with doctors after an initial consultation. And because of kind body staffing problems, they would be seen by an ever-changing set of nurses or patient coordinators instead. One-on-one time with the doctor was rare. For Elizabeth, the costs continued to pile up. On top of the$6 ,000 she was spending for the procedure, Elizabeth says Kindbody was trying to sell her add-on services. There was genetic testing, which cost over$4 ,000 per embryo, and other treatments that she'd never heard of.

13:21My good friend who went, you know, through another clinic, she kept kind of mentioning, like, because I was like, so did you pay for the extra, however, a couple hundred bucks for embryo glue? She was like, embryo glue? Like, I've never heard of embryo glue. And I was like, oh, like, we just paid 400 bucks this round, you know, for embryo glue and all of these, like, add-ons. That was like thousands of dollars per retrieval, these add-ons. The idea of embryo glue is to help an embryo implant on the wall of the uterus. A doctor at Kindbody told Elizabeth that she should also consider a medication that would encourage the embryo to implant.

14:00So was this. We had to go in a few days before the transfer date and do this, like, neupogen wash, which was a couple hundred bucks or 700 bucks out of pocket. And again, I'm just telling my friend, and she is just, like, shaking her head, like, I don't, like, what is this? Experts I spoke to see the science behind embryo glue and neupogen wash is shaky at best. It's not definitively proven to improve chances of getting pregnant. But in that moment, Elizabeth went through with it, despite her doubts. But I, again, didn't want to question the doctor. If she said this is going to improve our chances, then, you know, let's go for it.

14:40We've got the one embryo. Let's, like, do whatever it takes. it just it's like a situation where you're going in making these calls for this round of IVF and you're already you know how invasive it's going to be and you know how hard it's going to be on your body and you know how much money insurance is paying for it and that you're then going to be paying for it so you're not going to cut corners if your doctor says I recommend this it's going to increase your chances by five percent or whatever it may be like that's not the time to be like no I'm going to save this 400 bucks for whatever it is so you just you know you You have to trust the person of authority there.

15:15You have to trust the doctors making those recommendations. By the fall of 2024, two IVF cycles had left Elizabeth emotionally and financially drained. In total, she spent more than$12 ,000 on the IVF treatment and add-ons. Her disappointment and frustration were compounded by the fact she said she was also getting bills in the mail for things Kindbody had assured her were covered by insurance. I spoke to nearly 50 patients, and nearly all of them had what they called surprise costs, during the treatment and after. Eventually, Elizabeth and her husband ended up moving to another fertility practice after switching their insurance.

15:57It's literally night and day, the difference. Elizabeth said her new doctor doesn't try to upsell her. Instead, she told her she could skip genetic testing of her embryos altogether. I was like, I remember my jaw was dropped because I was so, I don't know, indoctrinated into it being like, you are over 36, you will genetic test. But genetic testing is a huge out-of-pocket cost. It took me a while to wrap my head around because, again, I just thought there was no way, if not through genetic testing. But the way she described it to us was that that is not something we need to be doing. She says it makes her look back on her time at Kindbody differently.

16:40Even though she genuinely liked the doctor she had there, she has doubts. At Kindbody, in my heart of hearts, I do not want to think that the doctor that we worked with for months there is just trying to get us to do more IVF rounds. I just don't want to think that. But when you just look at all the pieces and how they're all kind of adding up, it's just really hard not to come to that conclusion in my mind. We'll be right back.

17:33or the confetti. Retirement accounts, yep. High yield cash, yes again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market.

18:03All investing involves risk of loss. See complete disclosures at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. not noise proof of how we can help companies get smarter by putting ai where it actually pays off deep in the work that moves the business let's create smarter business ibm

18:42with bali from ishares you get access to both monthly income and growth potential in one simple etf it's the best of both worlds discover bali ishares large cap premium income active etf iShares, the market is yours. Visit www.iShares.com to view perspectives for investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Risks include principal loss in the use of derivatives, which could increase risks and volatility. Monthly income is not guaranteed. Prepare by BlackRock Investments, LLC. I spoke with dozens of current and former employees who worked at KindBody around the time Elizabeth was having her treatment.

19:15And they told me there was this intense pressure to sell services that made many clinical staff, including doctors, deeply uncomfortable. at your white coat ceremony, which is the first thing you participate in before you start med school. You take that oath, and that oath is, first, do no harm. This is Lauren again. She's a former Kind Body medical staffer who asked not to be identified. So we've given her a pseudonym and are having a voice actor read what she told me. Lauren said that from the beginning at Kind Body, doctors had metrics that were closely tracked to measure their performance.

19:54One of these metrics was the number of cycles they performed. So that could be an egg-free cycle or embryo creation, and then the actual transfer of the embryo to hopefully create the pregnancy. There were also other procedures that counted toward a doctor's metrics. Some of these were part of the IVF process, but not always. For example, mock cycles. A mock cycle is like a trial run. It simulates an embryo transfer. The goal is to see how the body reacts and allow the doctor to work out the kinks before the actual procedure. Doctors tell me they can be helpful for patients who have had trouble getting embryos to implant, but they aren't necessary for everyone.

20:37Lauren told me that kind body doctors often recommended mock cycles, which can add hundreds of dollars to the bill. Well, there was one in particular that would have patients do mock cycles or multiple mock cycles or different types of procedures, because essentially that would increase her numbers in regards to her cycles, which then essentially increased her revenue.

21:04Lauren told me that another closely watched metric was a doctor's conversion rate. This measured how often a patient who came in looking to learn about fertility services was then turned into a paying customer. And to Lauren, measuring that rate sometimes created the wrong kind of incentive. So, you know, if I had in a month, say, 20 patients who are 22 years old, and they're coming to me freaking out, saying, oh my God, do I have to do egg freezing this month? Because otherwise I'm never going to have kids. and I do my job and I go through the information and tell them and educate them about biology and about what this means and about their own statistics at that age and so on and so forth.

21:48And then they decide to not do egg freezing. That's a count against me. Whereas some providers would use scare tactics to essentially make these patients want to go through cycles and get revenue. I was never, ever going to do that. I'm not a salesperson when it comes to medical care. Doctors were incentivized to do more cycles. Former employees told me KindBody gave year-end bonuses to doctors with high rates of converting consultation into IVF. Former executives, doctors, and other employees stressed that steering patients toward more lucrative services was a direct result of Kindbody's funding structure.

22:35To them, the decisions made to appease private equity and venture capital backers had an effect on clinical care. This isn't just Kindbody, though. Experts told me it happens to some degree among a lot of fertility clinics that are backed by big outside investors, like private equity. The advantage of private equity investment is that it lets IVF clinics expand their footprints and treat more people, which increases access. What's the effect of private equity on IVF? Well, there's a 2018 study done by Alex Borsa, a researcher from Columbia University. His study found that IVF clinics with any sort of big institutional investor, like private equity, do more IVF procedures than others.

23:24He looked at all the clinics in the U.S. Just 15 % had a private equity affiliation. It's a relatively small slice. But those clinics did almost a third of all IVF cycles in the country.

23:41Like a lot of parts of medicine, private equity has entered the fertility field in a big way in the last 10 years. One reason they've been particularly drawn to the space is because it's less regulated than many other fields. I spoke about the way this investment has impacted the industry with Travis McCoy, a doctor at Piedmont Reproductive Endocrinology Group, which operates six clinics in South Carolina and neighboring states. I came out of fellowship and training in 2010. There may have been some private equity groups, but none that I had ever heard of. And so your choices were really to take an academic role at a university or go into private practice.

24:25These days, Dr. McCoy says he frequently gets offers from private equity firms eager to acquire the practice. I bet we at least get one at least once every two weeks. And sometimes it's companies you've heard from. Mostly it's companies you haven't. There's big dollars that are dangled. That's Dr. Edward Tarnowa. He also works at Piedmont Reproductive with Dr. McCoy. Both doctors said they've resisted selling to private equity because they're afraid of what strings become attached. Dr. McCoy said that by staying independent, Piedmont can control how it staffs clinics in a way that wouldn't be possible if a private equity firm was scrutinizing expenses.

25:06Is payroll a huge expense for our practice? Absolutely. Payroll's the biggest expense. And so could we make it tighter and more profitable? Yes. So you would start consolidating jobs, which means you start to increase the workload on each of our staff members. Well, everybody knows it doesn't take a genius to know that leads to burnout. Now, the patients see when I don't have as many nurses and people answering the phone and taking care of their portal messages. They see that and they get frustrated with that. The embryology labs, those are a little higher paid staff. And so, hey, if I can pare them down, then, you know, I'm cutting profits.

25:50I'm cutting out salaries. But then you start to get into the safety issues. I would rather have a payroll that's a little fat and plumped up and, you know, a little tougher to meet. But we know we're doing the right things for our patients by doing that. Dr. Tarnua said that inviting private equity into a practice has profound implications for patient care. If there's somebody sitting behind a desk that you've never met that's looking at, you know, a spreadsheet and wondering why the revenue dips, they're going to ask for other ways to get that revenue. hey, speed this person up to treatment that they might not be quite ready for.

26:30Push IVF. I never want to push IVF. I mean, our field is about options, and that is a two-way discussion between us and the patients in terms of pros and cons and experience and how they value efficiency. What have they done before? What is their tolerance for disappointment? Cost insurance, those things all matter, and that's a complex equation, and it's not IVF for all, which I know some centers would like it to be. There's some fertility centers out there that offer nothing but IVF. And that's mind-boggling to me because there's other options and that's just trimming it down to a service that they're trying to sell.