Smaller clinics weigh mergers or sales as competition tightens with larger networks
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BY INSIDE REPRODUCTIVE HEALTH
In recent years, independent fertility practices have found themselves under intensifying pressure as industry consolidation reshapes the landscape. Many smaller, privately owned clinics, long operating with a degree of autonomy, are now grappling with significant hurdles as larger networks dominate recruitment, marketing, and patient referral channels. This trend is pushing smaller practices to confront critical decisions about their future, including the potential sale or merger of their businesses.
“Remaining an independent fertility practice has become much more challenging over the last few years as the industry consolidates,” said Robert Goodman, Vice President of Healthcare at Midcap Advisors. “Consolidated networks are well-funded, have professional teams with experience at the top of their organizations, have built critical mass, and have had the time and capability to execute on their plans.”
Goodman highlights several challenges confronting independent fertility practices. One significant issue is attracting and retaining qualified reproductive endocrinologists (REIs). Larger networks often boast full-time recruitment teams that actively engage potential hires, offering attractive sign-on bonuses and competitive starting salaries. Independent clinics, meanwhile, typically lack both the financial resources and dedicated recruitment capabilities, making it increasingly difficult to secure top talent in a competitive field.
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Marketing and Patient Acquisition Challenges
Marketing presents yet another obstacle. Many smaller practices still rely heavily on word-of-mouth referrals, social media, and local reputation. In contrast, larger networks invest heavily in marketing campaigns that leverage digital channels and sophisticated data analytics, making it easier to reach prospective patients. Goodman notes that independent practices “lack the marketing muscle to compete at a high level,” though many do their best to rely on reputation and outcomes to attract patients.
This gap in marketing capabilities also impacts visibility with fertility benefit managers and insurance payers. As insurance companies tend to prefer larger networks that can offer consistent, scalable services across multiple locations, independent practices often miss out on these crucial partnerships. Limited leverage with payers also restricts smaller practices’ negotiating power when it comes to reimbursement rates, further straining their financial viability.
Strategic Options: Assessment and Alliances
In this landscape, Goodman advises independent fertility practices to assess their strategic options carefully. The first step, he suggests, is for these clinics to evaluate whether partnerships or mergers with other independent practices in the same region could yield benefits. Practices can examine potential synergies, such as merging IVF labs, consolidating administrative functions, or sharing marketing resources to achieve economies of scale.
According to Goodman, practices considering such partnerships need to address fundamental questions: “Are there other independent fertility practices in the same region? If so, is there a potential fit to increase the size and footprint of the practice?” Exploring compatibility requires evaluating factors like physician age, clinical outcomes, and alignment of business objectives.
A merger can yield considerable advantages, including greater bargaining power with insurance payers, the ability to offer competitive salaries, and the means to expand patient referral networks. However, successful mergers depend heavily on shared values and goals. “It’s like a marriage,” Goodman notes, pointing out the need for both financial and cultural alignment. “Some last for 50, 60, and even 70 years, and some don’t last more than a few months despite best screening efforts.”
Timing and Planning: Avoiding a Forced Sale
The decision to merge or sell requires careful timing and foresight. Goodman underscores the importance of proactive planning for practice owners nearing retirement age, warning against waiting until circumstances necessitate a sale. “One should not put themselves in a position to ‘have to’ sell because of age, health, or other reasons,” he advises. Instead, he recommends owners consider a sale when both they and the practice are in a strong position, allowing for a smoother transition and optimal valuation.
With a growing number of fertility practice owners approaching or surpassing the traditional retirement age, this issue has become increasingly relevant. Goodman observes that the nature of patient relationships—a core aspect of fertility care—also shifts with age, affecting long-term practice sustainability. Younger REIs are generally more prepared to build and maintain the relationships that are central to patient care, whereas older practitioners may find this increasingly challenging.
Future Trends: Consolidation Shows No Signs of Slowing
Looking ahead, Goodman anticipates that the consolidation trend will continue, with larger networks likely becoming acquisition targets for even bigger healthcare entities. This creates additional complexities as acquirers face more sophisticated standards and higher expectations. “The business world is cyclical, and the fertility space is no different,” he notes, implying that strategic planning is essential for all players to remain competitive.
FREE Practice Ownership List
Who Owns Each Fertility Clinic In the U.S.? Discover the Ownership Status of 450+ Fertility Practices
Get a comprehensive list of every fertility clinic in the USA. Updated October 2024
Find out if they are:
Independently owned
Part of a fertility clinic network
Affiliated with an academic/health system
Stay informed about consolidation trends in the fertility industry
Perfect for independent practice owners and industry professionals--see who is still independent!
Download it now for free – just fill out a short form on the next page and get instant access.
This News Digest Story is paid featured content. The advertiser has had editorial input and control over its creation. However, the views and opinions expressed in this article do not necessarily represent the views of Inside Reproductive Health. The sponsorship of this content does not imply an endorsement by Inside Reproductive Health.
