October 19, 2023 • 29 mins
Bloomberg's Jackie Davalos joins this episode to talk about Kindbody, a startup that operates fertility clinics around the US—and the challenges the company has faced as it expands.
Read more: Embryo Errors, Flooded Clinics: Kindbody and IVF's Risky Business
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Episode Transcript
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Speaker 1 (00:00):
At kind Body, our clinics are unique. They're not your
typical doctor's office. They're not sterile white walls. They're warm,
they're inviting, they're more spa like.
Speaker 2 (00:08):
We have a radical that's an ad for a venture
backed startup called kind Body. It's a rapidly growing company
that operates dozens of fertility clinics around the US, and
it's gotten attention for its warmer, millennial friendly approach to
in vitro fertilization and other procedures. But Bloomberg's Jackie Devallos
(00:29):
reports that current and former employees and some patients describe
a bonus driven business model, understaffed clinics, and inconsistent safety
protocols that they say contributed to errors.
Speaker 1 (00:43):
There were a few accidents that involved embryos being dropped,
being left out that had disrupted an IVF cycled, and
so that cycle was disrupted because of a mistake that
the clinic had made. And so a couple of these
accidents and left a real impression on some of the
employees who had been working there who saw this firsthand.
Speaker 2 (01:12):
I'm Wescasova today on the big take the challenges of
building a new kind of fertility clinic. Jackie tell us
about kind Body.
Speaker 1 (01:27):
Kind Body was founded in twenty eighteen, and it was
founded by a woman named Gina Bartazi, who was a
real veteran in the IVF industry. She had started two
other businesses that had grown to become what was one
of the largest fertility networks in the country at the time,
and it came onto the scene at a time when
feminist ideals were really strong. Trump had just gotten elected
(01:51):
and the me Too movement was underway. She left right
before the company iPod and started kind Body, which was
intended to be a disruptor in the fertility industry, and
it wanted to achieve that by being a little bit
more accessible. It was what they called the soul cycle
of fertility. Really bright design, this colorful, warm esthetic, and
(02:18):
it was very intentional to attract this millennial woman that
was prioritizing her career and wanted to take control of
starting a family rather than feeling pressured to do it
at an age when they didn't feel ready. And so
they spoke to that message in their marketing and the
way they designed the clinics.
Speaker 2 (02:39):
And what kind of services does kind Body provide?
Speaker 1 (02:42):
So the company provides predominantly IVF, so that's in vitro
fertilization treatment as well as egg freezing. So if you're
a young woman who wants to put off starting a
family but you don't want to be caught off guard
in your forties, you can freeze your eggs and the
company stores them for you, retrieves them, takes you through
(03:03):
that process, and then for people who are ready to
start a family, kind Body helps you do the IVF
process if you've had trouble conceiving through traditional methods. The
company pitches itself as giving women the choice, and for
many women they don't really know when they want to
start a family, which is where egg freezing really comes
(03:24):
into play. And for people that have had infertility troubles,
IVF is kind of the first route you go to,
and they offer that at all of their clinics. The
difference between kind Body and some of the other players
out there is that they do this all under one roof,
and kind Body was saying, well, we have our own
brick and mortar clinics, and by doing so, not only
(03:47):
do we bring costs down, but we can control the quality.
We know exactly what standards we have in our labs,
we don't have to wait for clinics to get back
to us, and it kind of removes that additional layer
of friction between the patient and the doctor there.
Speaker 2 (04:01):
And so how has it worked so far?
Speaker 1 (04:03):
The company's gotten the support of celebrity investors like Gwyneth Paltrow,
Chelsea Clinton, Gabrielle Union, and it's gotten a lot of
clout throughout the country because it's expanded its clinics into
really buzzy metropolitan areas in New York and in San Francisco,
Santa Monica, and Los Angeles, Chicago. It also underwent this
(04:25):
major acquisition of a network in the Midwest that expanded
its footprint pretty much doubled the size of its network
to thirty three clinics now actually, and so they have
really gotten off the ground, not just appealing to consumers
who walk in and want to see out this treatment,
but also through the employer benefits side. So it's two
(04:46):
very different customer bases. So now you have companies like
Tesla and Rivian. Walmart is a major client for them
where they become the preferred provider for their employees.
Speaker 3 (04:59):
Walmart's teaming up with a fertility company to offer benefits
for employees looking to expand their families. The nation's largest
retailer is partnering with kind Body to offer benefits like
IVF and fertility testing regardless of sex, sexual orientation, gender identity,
or marital status.
Speaker 1 (05:19):
And so because of that, they've had to open up
more clinics in eras where those clients are, and that's
expanded their footprint quite a bit.
Speaker 2 (05:29):
So, Jackie, as you say, this company's been around since
twenty eighteen, what made you want to write about it now?
Speaker 1 (05:35):
At the time, I had been reporting on kind of
the health tech space and the impact of venture capital
dollars flowing into a sector where the stakes are really
high and the priorities that investors have that end up
being imposed on the companies that they back can sometimes
conflict with patient care. And this had come onto my
(05:59):
radar after looking at my own Instagram and my own TikTok.
I'm a thirty two year old woman and exactly the
kind of demographic that kind Body targets, and I had
gotten some of these ads for a while and got
curious about why that marketing was pretty targeted and if
anyone else was getting it. I had gotten a tip
from a user on Reddit that was commenting on kind
(06:22):
of their experience at the company. They were a former employee,
and they basically told me, you should really look into
those laboratories where these IVF treatments are really happening. And
it didn't take long for me to uncover some other employees,
both current and former staff, that were really concerned about
(06:43):
the quality of care and what the rapid expansion meant
for their ability to provide good quality care to patients.
Speaker 2 (06:53):
So let's talk about that. What exactly did you find
At a couple.
Speaker 1 (06:57):
Other clinics, and namely the Brian Park, New York City location,
there were a few accidents that involved embryos being dropped,
being left out that had disrupted an IVF cycle, which
is basically the process in which a woman in jext
herself with hormones, the eggs are retrieved, the embryos are
(07:19):
fertilized and eventually implanted, and so that cycle was disrupted
because of a mistake that the clinic had made. And
so a couple of these accidents left a real impression
on some of the employees who had been working there
who saw this firsthand. There was a couple in New
York who had sought treatment in the Prime Park, New
(07:40):
York City location and were looking to basically have an
embryo transfer. They had a number of embryos already stored
at the company, and when they got there they were
notified that the wrong one had been defrosted, and they
weren't really in a position to make much of a choice.
So one option would have been to refreeze the embryo
(08:03):
and risk that embryo being damaged, or continue with the transfer.
They decided to continue with the transfer. It didn't result
in a successful pregnancy, and that can happen for a
variety of reasons. Kind Body has said that they acknowledged
the mistake, but pointed to the fact that this doesn't
really happen that often at their clinics. Another thing to
(08:26):
note about this particular incident is that it was the
wrong embryo for a variety of reasons that aren't completely
clear to us. According to current informer employees, it might
have been the wrong quality embryo, it might have been
the wrong gender. It's already a really fraught time. It's
an emotional period for a family, and so even though
it didn't result in a successful pregnancy, it left them
(08:50):
with a lot of reticence to continue IVF going forward.
In total, we uncovered three incidents in New York. One
of them involved the wrong embryo being thought, another one
an embryo was accidentally dropped, and another one was left
(09:10):
out in room temperature and effectively destroyed. And in that case,
it was the woman's last embryo and extremely unfortunate because
the company's way of remedying that was to offer her
unlimited IVF cycles forever, but she ultimately was not able
to conceive at kind Body.
Speaker 2 (09:28):
And what did kind Body say when you asked them
about each of these incidents at the New York location.
Speaker 1 (09:35):
They acknowledged that they had happened and pointed to some
improvements that had been implemented since. And some of those
include color coating dishes and requiring what they call additional
verification for labels to prevent that going forward. Now we
know that one of the earliest accidents occurred in twenty
(09:57):
twenty one. However, we we also found an example in
an Atlanta clinic that just occurred this past March.
Speaker 2 (10:07):
Kind Body also said it conducts a root cause analysis
after incidents, including the ones Bloomberg raised and correct processes
where necessary. In her reporting, Jackie found that examples of
embryos being mislabeled, lost, or accidentally destroyed occurred in four
clinics around the country over the past three years, according
(10:30):
to two current employees and a dozen former employees.
Speaker 1 (10:34):
Some other issues that the company went through included how
they retrofit clinics, and that was done, according to employees,
done in a hasty way that resulted in issues like
gases being omitted into the clinic from sewer pipes that
were left open that occurred in Austin and Atlanta. The
(10:55):
HVAC systems were installed properly that led to a flood
after a leak leading to a ceiling being burst open.
And the reason that significant is because they occurred in
areas that were adjacent or very close to the embryology lab.
And embryology labs require very specific specifications to make sure
(11:18):
that the air quality is monitored appropriately. Things like temperature
and what they call volatile organic compounds things like perfume
can actually impact the development and the quality of an embryo,
and so having a flood coming through the ceiling or
foul smelling gases in Austin seeping into the clinic are
(11:39):
actually quite significant risks for an IBF lab.
Speaker 2 (11:44):
And I imagine you asked kind Body about that as well.
Speaker 1 (11:46):
Yes, and they admitted that they had issues when these
clinics opened up, that they remedied these issues in a
timely manner. But from what we understand, current informer employees
in other clinics, like in Brian Park, which is one
of the longest running clinics, have continued to struggle with
(12:08):
HVAC issues as early as twenty twenty. The company says
that they immediately addressed them.
Speaker 2 (12:16):
In a statement, kind Body also said no patients, tissues
or embryos were directly impacted, and it said that to
suggest that kind Body's laboratories are substandard and not meeting
industry norms is false. After the break, how does kind
Body compare to other US fertility clinics, Jackie? How were
(12:45):
you able to find patients to speak to?
Speaker 1 (12:48):
Sources obviously could not disclose their identity for privacy reasons
and health laws and HIPPA that prevented them from doing that,
but there were some that had left reviews on sites
like Yelp and Google and Reddit, and it was months
of trying to track these people down. But the more
(13:09):
specific accounts I was able to get from current and
former employees, the better I was able to do that.
But it was really hard because people want to move
on from this, and even when in some cases where
their embryos were mishandled and it was traumatic at the time,
in some cases they ended up having a baby, and
so in their minds, they want to move on from
(13:30):
that incident, given the outcome eventually was a positive one
for their family.
Speaker 2 (13:35):
And you say you've spoken to quite a few employees
at different locations at the company. How were you able
to find them and why were they willing to speak
to you.
Speaker 1 (13:44):
I spoke to nurse practitioners, doctors, lab professionals, everyone across
finance to sales to marketing. So over three dozen people
I connected with had different types of experiences that intersected
with these accidents. The clinical professionals, so the doctors, the embryologists,
(14:07):
the lab professionals felt compelled to speak to me because
they saw how quickly the company was expanding and they
were concerned that more accidents could happen. They had initially
thought about some of the mishandling incidents kind of like
startup growing pains that this can happen at many companies.
(14:29):
It's not unusual in the fertility industry for accidents to happen.
It's risky business. But many employees shared with me that
the company was expanding at an even faster clip, and
with this IPO kind of looming as this big goal,
what it would take to get there and what that
would mean for patients, The potential for more mistakes was
(14:51):
really concerning for them.
Speaker 2 (14:54):
Jack, As you say, IVF is an imperfect science, it's difficult,
and people make mistakes. How how different is kind Body
from the thousands of other fertility clinics around the country
when it comes to mistake rates or mishaps or things
that just don't go right.
Speaker 1 (15:10):
The government does not have any repository or database for
tracking these accidents. There is a study that we point
to in the story that tracks one lab across twelve
years and they find that these kind of accidents occur
onesid of every two thousand cycles. And kind Body says
(15:34):
that their overall incident rate across all of their clinics
is aboutzero point two percent, and that aligns with what
that study found. However, that studies just looking at one lab,
which is not really comparing apples to apples to kind
Body's incident rate because kind Body would not disclose what
each clinics incident rate was.
Speaker 2 (15:57):
In a statement provided by kind Body, Stephen Cats, the
chief executive officer of ARII Protect, a risk management and
insurance company for IVF clinics including kind Body, said that
kind Body's incident rates are in the lowest quartile of
the clinics that he covers. Katz told Bloomberg that his
firm covers about half of all fertility doctors and IVF
(16:20):
labs in the country.
Speaker 1 (16:22):
Because there's no real mechanism or requirement for other fertility
clinics to report these types of accidents, it's really hard
to know what else is going on in the industry overall.
And that really has to do with the fact that
regulation in the industry isn't where it should be according
to experts who follow the industry, And.
Speaker 2 (16:43):
What did they tell you specifically about that.
Speaker 1 (16:45):
So there's a few government agencies that touch aspects of
the IVF industry. You have the Centers for Disease Control
that are tracking which IVF labs are certified to be
open and then you have the FDA that regulates things
like medical devices used, but they don't actually regulate how
(17:05):
the procedures are carried out. The FDA cares more about
donor services, so how are embryos and sperm being stored,
for example. And then you have independent bodies that are
more like industry groups and a compilation of experts in
the industry that set out these guidelines, but there is
(17:26):
no real enforcement. The CDC is not tracking or policing
how companies are actually carrying out some of these standards
and practices, and because of that, the onus falls to
the companies themselves. They end up self policing in many cases.
And you can get accreditation by organizations like the College
(17:48):
of American Pathologists. You get a nice stamp of approval,
but that's a voluntary process, and so what that offers
to patients is this stamp that gives you some layer
of credibility. But that process, you get an inspection when
you first open. Then you get this self completed checklist
that clinics complete on their own, and then another inspection
(18:10):
is conducted the following year, so that consistent follow up
isn't really there, and that government oversight, isn't there either.
Speaker 2 (18:19):
Is this unique to the US or is this the
way it's done around the world.
Speaker 1 (18:23):
No, you know, you have the UK, they have different
regulations for things like a process called double witnessing, and
that's really important because double witnessing is when you have
at least two embryologists overseeing what's going on in the
embryology lab. At kind Body, there were times when there
(18:43):
was only one embryologist in the lab when some of
these procedures were being conducted, and current informer employees say
that that was a big problem because as they got
more patients, some of these embryologists were getting burned out.
In the UK, for example, it's mandated by law that
you have to have at least two people double witnessing
two humans, and the experts that we spoke to said
(19:06):
that there is no replacement for having another human there
and at accompanied at kind Body. In the US, that
isn't really mandated by law.
Speaker 2 (19:15):
And Jackie, what did kind Body say about this question
of whether embryologists that their labs were burnt out overworked?
Speaker 1 (19:23):
They said that they were staffing their clinics appropriately and
they said that they staff it according to volumes, so
on more high volume days that they would staff it
up with more people. But they also pointed to the
fact that turnover among embryologists is at what they called
the industry level, and that they weren't an outlier in
(19:43):
that way.
Speaker 2 (19:44):
You also report about the pay and incentive packages for
people who worked at kind Body and how that affected
some of the procedures that were performed.
Speaker 1 (19:54):
That's right. Current and former doctors I spoke to said
that kind Body had an aggressive sales culture that when
patients came in for a consultation that nurse practitioners were
required to basically call them back at least three times
before they were taken off this interested list, and nurse
(20:15):
practitioners and doctor said that they felt uncomfortable with that approach,
that even though quotas kind of exist across the industry,
that this is how a clinic makes money. That kind
Body went about in an aggressive way by then telling
doctors at monthly meetings, our numbers are low. We need
to increase cycles. And one of the way they were
(20:37):
told to do that is through a process called dual stimulation,
basically makes a woman undergo the egg retrieval process kind
of twice in one cycle. The dual stimulation procedure is
really designed for women who produce relatively few egs, so
you might see this more common in older women, and
(20:58):
it's a procedure that's common in the fertility industry, but again,
it's not typically used for women that are young and
in good health. However, doctors told me that they felt
pressured to recommend this procedure to even young, healthy patients
in a bid to boost their quotas for the month.
(21:19):
And the reason that's significant for the patient is because
it's very taxing on the body and women don't really
get a break to kind of recover. But from the
company's perspective, they're able to extract more money from a
process like that, it's more costly. Doctors said that they
didn't feel comfortable kind of taking this approach, and that
the quotas were emphasized pretty frequently throughout the year, and
(21:43):
that that pressure has just become more intense as the
company marches toward an IPO.
Speaker 2 (21:50):
And what did kind body say about all of this?
Speaker 1 (21:54):
Kind body pointed to the fact that quotas are not
uncommon in the industry, which is true. They said that
they left the discretion of what procedures to recommend to
patients up to doctors, and they disputed the fact that
they ever pressured clinicians, nurse practitioners included, to ever do
anything that they didn't want to do.
Speaker 2 (22:16):
Jackie, we've been talking about the mistakes that happen in
these labs. But what is kind body's success rate?
Speaker 1 (22:23):
So its overall life birth success rate is about the
sixty three percent, and that's compared to a national average
of about forty three percent as reported to the Society
of Assisted Reproductive Technology.
Speaker 2 (22:39):
That would seem like a pretty good number for them
to tout.
Speaker 1 (22:42):
It is, and it does show that they're able to
be effective at helping people start a family, you know,
and that could be for a variety of reasons, the
types of treatment that they're doing that might be different
from other clinics. That also has a lot to do
with the people and the population that they're serving. So
it's kind of hard to compare apples to apples, And
(23:03):
some folks look at live success rates, but some experts
say that it's not a perfect point of comparison because
someone in Missouri, their demographic might look totally different than
those success rates of New York because people in Missouri
might be starting families at a younger age, and then
therefore they have a better chance versus a woman in
(23:26):
New York who might be in her forties and therefore
having a lower chance of conceiving. So it's not a
perfect number, but certainly one that kind Body is proud
of and they deserve credit for.
Speaker 2 (23:37):
And we've been talking about regulation of this industry, but
this is one number that the government really does pay
attention to.
Speaker 1 (23:43):
Yes, and the Society for Assisted Reproductive Technology has over
four hundred member clinics that report data to that organization,
and then those numbers are then fed up to the
Centers for Disease Control. So the government does track this
to a degree. What they're not really doing is enforcing
the standards and the protocols for how these IVF labs operate.
Speaker 2 (24:09):
When we come back, what's next for kind Body, Jackie?
As you said at the beginning, this company has big
plans for its future. Where are they headed right now?
Speaker 1 (24:28):
They've been very open and transparent about the fact that
they're looking to go public and that their last capital
raise was the last one for twenty twenty three, that
they want to take the next step and go public
as a company, and in doing that, they're opening up
more clinics in Texas, in Bethesda in Maryland, and also
(24:52):
looking to get new contracts from the employer benefit space,
going after some of these corporate clients that are looking
to offer for to as a perk for their employees.
And they're doing a good job of expanding in places
where you would expect to see a soul cycle or
a dry bar in these metropolitan areas.
Speaker 2 (25:13):
Our investors in the company aware of some of the
things in your reporting.
Speaker 1 (25:18):
They're not aware of the full extent of the types
of mistakes that have occurred. They said things like mistakes
happen at any startup, that growing pains can occur, and
that when it comes to opening a brick and mortar clinic,
there is a lot of risks that come with that,
but they're very confident in the company's ability to weather that.
(25:40):
And a big reason for that is because the company's
former CEO, who founded the company, Gina Bartazzi. She ended
up taking a role as executive chairman when the company
went through the merger with Bio's Fertility Institute, and that
was the merger that really expanded their footprint across the country. Now,
(26:01):
investors say that she's still fairly involved at the company.
She does the investor calls, and she's a big reason
why they remain so confident. She has the experience in
fertility and with her somewhat at the helm that the
company is really able to get to the next level.
Speaker 2 (26:22):
I imagine other IVF companies are watching kind Body, Are
any of them starting to change the way they do
business to be more like kind Body.
Speaker 1 (26:31):
The fertility tech sector has really boomed over the last
few years, and in twenty twenty two, these startups raised
over eight hundred million dollars in venture capital funding, and
that's one indicator that shows investors are really eager to
capitalize on the growth in this space and more companies
(26:52):
not just like kind Body that are starting brick and
mortar clinics, but also looking to other aspects of the industry,
whether that's how you track data or people looking to
be more of the middleman and kind of serving as
a marketplace for fertility benefit. So across the board you're
seeing fertility tech startups starting to sprout. Kind Body is
really one of a kind in that it owns and
(27:15):
operates its own clinics, and you don't see very many
startups doing that because it's so hard to do that.
It's capital intensive, it's expensive, and it requires a lot
of expertise to set up these IVF labs. It's expensive
to staff them as well. So kind Body is kind
of an outlier in that way that they're really undertaking
this approach in the industry, this vertically integrated model.
Speaker 2 (27:39):
As you continue to report on the story, what are
you watching for?
Speaker 1 (27:42):
The global fertility market was worth about thirty five billion
last year and it's expected to grow to eighty four
billion by twenty twenty eight. The US is a large
portion of this, and you have other countries like France
and the UK putting up more regulations around how you
track mistakes, what types of practices are mandated by law
(28:03):
in an IVF lab, And what I'll be looking out
for is to see which government agencies start to take
more control of the standards and practices in embryology and
IVF flaps in general in the US.
Speaker 2 (28:18):
Jackie, thanks for sharing your reporting, Thank you, thanks for
listening to us here at the Big Take. It's a
daily podcast from Bloomberg and iHeartRadio for more shows from iHeartRadio,
visit the iHeartRadio app, Apple Podcasts, or wherever you listen,
and we'd love to hear from you. Email us questions
or comments to Big Take at Bloomberg dot net. The
(28:39):
supervising producer of The Big Take is Vicky Ergalina. Our
senior producer is Catherine Fink. This episode was produced by
Sam Gobauer and Jilda Decarli. Jil de Garcia is our engineer.
Our original music was composed by Leo Sidrin. I'm wes Kasova.
We'll be back tomorrow with another Big Take dot the
(29:00):
County to the Don Poking better
At kind Body, our clinics are unique. They're not your
typical doctor's office. They're not sterile white walls. They're warm,
they're inviting, they're more spa like.
Speaker 2 (00:08):
We have a radical that's an ad for a venture
backed startup called kind Body. It's a rapidly growing company
that operates dozens of fertility clinics around the US, and
it's gotten attention for its warmer, millennial friendly approach to
in vitro fertilization and other procedures. But Bloomberg's Jackie Devallos
(00:29):
reports that current and former employees and some patients describe
a bonus driven business model, understaffed clinics, and inconsistent safety
protocols that they say contributed to errors.
Speaker 1 (00:43):
There were a few accidents that involved embryos being dropped,
being left out that had disrupted an IVF cycled, and
so that cycle was disrupted because of a mistake that
the clinic had made. And so a couple of these
accidents and left a real impression on some of the
employees who had been working there who saw this firsthand.
Speaker 2 (01:12):
I'm Wescasova today on the big take the challenges of
building a new kind of fertility clinic. Jackie tell us
about kind Body.
Speaker 1 (01:27):
Kind Body was founded in twenty eighteen, and it was
founded by a woman named Gina Bartazi, who was a
real veteran in the IVF industry. She had started two
other businesses that had grown to become what was one
of the largest fertility networks in the country at the time,
and it came onto the scene at a time when
feminist ideals were really strong. Trump had just gotten elected
(01:51):
and the me Too movement was underway. She left right
before the company iPod and started kind Body, which was
intended to be a disruptor in the fertility industry, and
it wanted to achieve that by being a little bit
more accessible. It was what they called the soul cycle
of fertility. Really bright design, this colorful, warm esthetic, and
(02:18):
it was very intentional to attract this millennial woman that
was prioritizing her career and wanted to take control of
starting a family rather than feeling pressured to do it
at an age when they didn't feel ready. And so
they spoke to that message in their marketing and the
way they designed the clinics.
Speaker 2 (02:39):
And what kind of services does kind Body provide?
Speaker 1 (02:42):
So the company provides predominantly IVF, so that's in vitro
fertilization treatment as well as egg freezing. So if you're
a young woman who wants to put off starting a
family but you don't want to be caught off guard
in your forties, you can freeze your eggs and the
company stores them for you, retrieves them, takes you through
(03:03):
that process, and then for people who are ready to
start a family, kind Body helps you do the IVF
process if you've had trouble conceiving through traditional methods. The
company pitches itself as giving women the choice, and for
many women they don't really know when they want to
start a family, which is where egg freezing really comes
(03:24):
into play. And for people that have had infertility troubles,
IVF is kind of the first route you go to,
and they offer that at all of their clinics. The
difference between kind Body and some of the other players
out there is that they do this all under one roof,
and kind Body was saying, well, we have our own
brick and mortar clinics, and by doing so, not only
(03:47):
do we bring costs down, but we can control the quality.
We know exactly what standards we have in our labs,
we don't have to wait for clinics to get back
to us, and it kind of removes that additional layer
of friction between the patient and the doctor there.
Speaker 2 (04:01):
And so how has it worked so far?
Speaker 1 (04:03):
The company's gotten the support of celebrity investors like Gwyneth Paltrow,
Chelsea Clinton, Gabrielle Union, and it's gotten a lot of
clout throughout the country because it's expanded its clinics into
really buzzy metropolitan areas in New York and in San Francisco,
Santa Monica, and Los Angeles, Chicago. It also underwent this
(04:25):
major acquisition of a network in the Midwest that expanded
its footprint pretty much doubled the size of its network
to thirty three clinics now actually, and so they have
really gotten off the ground, not just appealing to consumers
who walk in and want to see out this treatment,
but also through the employer benefits side. So it's two
(04:46):
very different customer bases. So now you have companies like
Tesla and Rivian. Walmart is a major client for them
where they become the preferred provider for their employees.
Speaker 3 (04:59):
Walmart's teaming up with a fertility company to offer benefits
for employees looking to expand their families. The nation's largest
retailer is partnering with kind Body to offer benefits like
IVF and fertility testing regardless of sex, sexual orientation, gender identity,
or marital status.
Speaker 1 (05:19):
And so because of that, they've had to open up
more clinics in eras where those clients are, and that's
expanded their footprint quite a bit.
Speaker 2 (05:29):
So, Jackie, as you say, this company's been around since
twenty eighteen, what made you want to write about it now?
Speaker 1 (05:35):
At the time, I had been reporting on kind of
the health tech space and the impact of venture capital
dollars flowing into a sector where the stakes are really
high and the priorities that investors have that end up
being imposed on the companies that they back can sometimes
conflict with patient care. And this had come onto my
(05:59):
radar after looking at my own Instagram and my own TikTok.
I'm a thirty two year old woman and exactly the
kind of demographic that kind Body targets, and I had
gotten some of these ads for a while and got
curious about why that marketing was pretty targeted and if
anyone else was getting it. I had gotten a tip
from a user on Reddit that was commenting on kind
(06:22):
of their experience at the company. They were a former employee,
and they basically told me, you should really look into
those laboratories where these IVF treatments are really happening. And
it didn't take long for me to uncover some other employees,
both current and former staff, that were really concerned about
(06:43):
the quality of care and what the rapid expansion meant
for their ability to provide good quality care to patients.
Speaker 2 (06:53):
So let's talk about that. What exactly did you find
At a couple.
Speaker 1 (06:57):
Other clinics, and namely the Brian Park, New York City location,
there were a few accidents that involved embryos being dropped,
being left out that had disrupted an IVF cycle, which
is basically the process in which a woman in jext
herself with hormones, the eggs are retrieved, the embryos are
(07:19):
fertilized and eventually implanted, and so that cycle was disrupted
because of a mistake that the clinic had made. And
so a couple of these accidents left a real impression
on some of the employees who had been working there
who saw this firsthand. There was a couple in New
York who had sought treatment in the Prime Park, New
(07:40):
York City location and were looking to basically have an
embryo transfer. They had a number of embryos already stored
at the company, and when they got there they were
notified that the wrong one had been defrosted, and they
weren't really in a position to make much of a choice.
So one option would have been to refreeze the embryo
(08:03):
and risk that embryo being damaged, or continue with the transfer.
They decided to continue with the transfer. It didn't result
in a successful pregnancy, and that can happen for a
variety of reasons. Kind Body has said that they acknowledged
the mistake, but pointed to the fact that this doesn't
really happen that often at their clinics. Another thing to
(08:26):
note about this particular incident is that it was the
wrong embryo for a variety of reasons that aren't completely
clear to us. According to current informer employees, it might
have been the wrong quality embryo, it might have been
the wrong gender. It's already a really fraught time. It's
an emotional period for a family, and so even though
it didn't result in a successful pregnancy, it left them
(08:50):
with a lot of reticence to continue IVF going forward.
In total, we uncovered three incidents in New York. One
of them involved the wrong embryo being thought, another one
an embryo was accidentally dropped, and another one was left
(09:10):
out in room temperature and effectively destroyed. And in that case,
it was the woman's last embryo and extremely unfortunate because
the company's way of remedying that was to offer her
unlimited IVF cycles forever, but she ultimately was not able
to conceive at kind Body.
Speaker 2 (09:28):
And what did kind Body say when you asked them
about each of these incidents at the New York location.
Speaker 1 (09:35):
They acknowledged that they had happened and pointed to some
improvements that had been implemented since. And some of those
include color coating dishes and requiring what they call additional
verification for labels to prevent that going forward. Now we
know that one of the earliest accidents occurred in twenty
(09:57):
twenty one. However, we we also found an example in
an Atlanta clinic that just occurred this past March.
Speaker 2 (10:07):
Kind Body also said it conducts a root cause analysis
after incidents, including the ones Bloomberg raised and correct processes
where necessary. In her reporting, Jackie found that examples of
embryos being mislabeled, lost, or accidentally destroyed occurred in four
clinics around the country over the past three years, according
(10:30):
to two current employees and a dozen former employees.
Speaker 1 (10:34):
Some other issues that the company went through included how
they retrofit clinics, and that was done, according to employees,
done in a hasty way that resulted in issues like
gases being omitted into the clinic from sewer pipes that
were left open that occurred in Austin and Atlanta. The
(10:55):
HVAC systems were installed properly that led to a flood
after a leak leading to a ceiling being burst open.
And the reason that significant is because they occurred in
areas that were adjacent or very close to the embryology lab.
And embryology labs require very specific specifications to make sure
(11:18):
that the air quality is monitored appropriately. Things like temperature
and what they call volatile organic compounds things like perfume
can actually impact the development and the quality of an embryo,
and so having a flood coming through the ceiling or
foul smelling gases in Austin seeping into the clinic are
(11:39):
actually quite significant risks for an IBF lab.
Speaker 2 (11:44):
And I imagine you asked kind Body about that as well.
Speaker 1 (11:46):
Yes, and they admitted that they had issues when these
clinics opened up, that they remedied these issues in a
timely manner. But from what we understand, current informer employees
in other clinics, like in Brian Park, which is one
of the longest running clinics, have continued to struggle with
(12:08):
HVAC issues as early as twenty twenty. The company says
that they immediately addressed them.
Speaker 2 (12:16):
In a statement, kind Body also said no patients, tissues
or embryos were directly impacted, and it said that to
suggest that kind Body's laboratories are substandard and not meeting
industry norms is false. After the break, how does kind
Body compare to other US fertility clinics, Jackie? How were
(12:45):
you able to find patients to speak to?
Speaker 1 (12:48):
Sources obviously could not disclose their identity for privacy reasons
and health laws and HIPPA that prevented them from doing that,
but there were some that had left reviews on sites
like Yelp and Google and Reddit, and it was months
of trying to track these people down. But the more
(13:09):
specific accounts I was able to get from current and
former employees, the better I was able to do that.
But it was really hard because people want to move
on from this, and even when in some cases where
their embryos were mishandled and it was traumatic at the time,
in some cases they ended up having a baby, and
so in their minds, they want to move on from
(13:30):
that incident, given the outcome eventually was a positive one
for their family.
Speaker 2 (13:35):
And you say you've spoken to quite a few employees
at different locations at the company. How were you able
to find them and why were they willing to speak
to you.
Speaker 1 (13:44):
I spoke to nurse practitioners, doctors, lab professionals, everyone across
finance to sales to marketing. So over three dozen people
I connected with had different types of experiences that intersected
with these accidents. The clinical professionals, so the doctors, the embryologists,
(14:07):
the lab professionals felt compelled to speak to me because
they saw how quickly the company was expanding and they
were concerned that more accidents could happen. They had initially
thought about some of the mishandling incidents kind of like
startup growing pains that this can happen at many companies.
(14:29):
It's not unusual in the fertility industry for accidents to happen.
It's risky business. But many employees shared with me that
the company was expanding at an even faster clip, and
with this IPO kind of looming as this big goal,
what it would take to get there and what that
would mean for patients, The potential for more mistakes was
(14:51):
really concerning for them.
Speaker 2 (14:54):
Jack, As you say, IVF is an imperfect science, it's difficult,
and people make mistakes. How how different is kind Body
from the thousands of other fertility clinics around the country
when it comes to mistake rates or mishaps or things
that just don't go right.
Speaker 1 (15:10):
The government does not have any repository or database for
tracking these accidents. There is a study that we point
to in the story that tracks one lab across twelve
years and they find that these kind of accidents occur
onesid of every two thousand cycles. And kind Body says
(15:34):
that their overall incident rate across all of their clinics
is aboutzero point two percent, and that aligns with what
that study found. However, that studies just looking at one lab,
which is not really comparing apples to apples to kind
Body's incident rate because kind Body would not disclose what
each clinics incident rate was.
Speaker 2 (15:57):
In a statement provided by kind Body, Stephen Cats, the
chief executive officer of ARII Protect, a risk management and
insurance company for IVF clinics including kind Body, said that
kind Body's incident rates are in the lowest quartile of
the clinics that he covers. Katz told Bloomberg that his
firm covers about half of all fertility doctors and IVF
(16:20):
labs in the country.
Speaker 1 (16:22):
Because there's no real mechanism or requirement for other fertility
clinics to report these types of accidents, it's really hard
to know what else is going on in the industry overall.
And that really has to do with the fact that
regulation in the industry isn't where it should be according
to experts who follow the industry, And.
Speaker 2 (16:43):
What did they tell you specifically about that.
Speaker 1 (16:45):
So there's a few government agencies that touch aspects of
the IVF industry. You have the Centers for Disease Control
that are tracking which IVF labs are certified to be
open and then you have the FDA that regulates things
like medical devices used, but they don't actually regulate how
(17:05):
the procedures are carried out. The FDA cares more about
donor services, so how are embryos and sperm being stored,
for example. And then you have independent bodies that are
more like industry groups and a compilation of experts in
the industry that set out these guidelines, but there is
(17:26):
no real enforcement. The CDC is not tracking or policing
how companies are actually carrying out some of these standards
and practices, and because of that, the onus falls to
the companies themselves. They end up self policing in many cases.
And you can get accreditation by organizations like the College
(17:48):
of American Pathologists. You get a nice stamp of approval,
but that's a voluntary process, and so what that offers
to patients is this stamp that gives you some layer
of credibility. But that process, you get an inspection when
you first open. Then you get this self completed checklist
that clinics complete on their own, and then another inspection
(18:10):
is conducted the following year, so that consistent follow up
isn't really there, and that government oversight, isn't there either.
Speaker 2 (18:19):
Is this unique to the US or is this the
way it's done around the world.
Speaker 1 (18:23):
No, you know, you have the UK, they have different
regulations for things like a process called double witnessing, and
that's really important because double witnessing is when you have
at least two embryologists overseeing what's going on in the
embryology lab. At kind Body, there were times when there
(18:43):
was only one embryologist in the lab when some of
these procedures were being conducted, and current informer employees say
that that was a big problem because as they got
more patients, some of these embryologists were getting burned out.
In the UK, for example, it's mandated by law that
you have to have at least two people double witnessing
two humans, and the experts that we spoke to said
(19:06):
that there is no replacement for having another human there
and at accompanied at kind Body. In the US, that
isn't really mandated by law.
Speaker 2 (19:15):
And Jackie, what did kind Body say about this question
of whether embryologists that their labs were burnt out overworked?
Speaker 1 (19:23):
They said that they were staffing their clinics appropriately and
they said that they staff it according to volumes, so
on more high volume days that they would staff it
up with more people. But they also pointed to the
fact that turnover among embryologists is at what they called
the industry level, and that they weren't an outlier in
(19:43):
that way.
Speaker 2 (19:44):
You also report about the pay and incentive packages for
people who worked at kind Body and how that affected
some of the procedures that were performed.
Speaker 1 (19:54):
That's right. Current and former doctors I spoke to said
that kind Body had an aggressive sales culture that when
patients came in for a consultation that nurse practitioners were
required to basically call them back at least three times
before they were taken off this interested list, and nurse
(20:15):
practitioners and doctor said that they felt uncomfortable with that approach,
that even though quotas kind of exist across the industry,
that this is how a clinic makes money. That kind
Body went about in an aggressive way by then telling
doctors at monthly meetings, our numbers are low. We need
to increase cycles. And one of the way they were
(20:37):
told to do that is through a process called dual stimulation,
basically makes a woman undergo the egg retrieval process kind
of twice in one cycle. The dual stimulation procedure is
really designed for women who produce relatively few egs, so
you might see this more common in older women, and
(20:58):
it's a procedure that's common in the fertility industry, but again,
it's not typically used for women that are young and
in good health. However, doctors told me that they felt
pressured to recommend this procedure to even young, healthy patients
in a bid to boost their quotas for the month.
(21:19):
And the reason that's significant for the patient is because
it's very taxing on the body and women don't really
get a break to kind of recover. But from the
company's perspective, they're able to extract more money from a
process like that, it's more costly. Doctors said that they
didn't feel comfortable kind of taking this approach, and that
the quotas were emphasized pretty frequently throughout the year, and
(21:43):
that that pressure has just become more intense as the
company marches toward an IPO.
Speaker 2 (21:50):
And what did kind body say about all of this?
Speaker 1 (21:54):
Kind body pointed to the fact that quotas are not
uncommon in the industry, which is true. They said that
they left the discretion of what procedures to recommend to
patients up to doctors, and they disputed the fact that
they ever pressured clinicians, nurse practitioners included, to ever do
anything that they didn't want to do.
Speaker 2 (22:16):
Jackie, we've been talking about the mistakes that happen in
these labs. But what is kind body's success rate?
Speaker 1 (22:23):
So its overall life birth success rate is about the
sixty three percent, and that's compared to a national average
of about forty three percent as reported to the Society
of Assisted Reproductive Technology.
Speaker 2 (22:39):
That would seem like a pretty good number for them
to tout.
Speaker 1 (22:42):
It is, and it does show that they're able to
be effective at helping people start a family, you know,
and that could be for a variety of reasons, the
types of treatment that they're doing that might be different
from other clinics. That also has a lot to do
with the people and the population that they're serving. So
it's kind of hard to compare apples to apples, And
(23:03):
some folks look at live success rates, but some experts
say that it's not a perfect point of comparison because
someone in Missouri, their demographic might look totally different than
those success rates of New York because people in Missouri
might be starting families at a younger age, and then
therefore they have a better chance versus a woman in
(23:26):
New York who might be in her forties and therefore
having a lower chance of conceiving. So it's not a
perfect number, but certainly one that kind Body is proud
of and they deserve credit for.
Speaker 2 (23:37):
And we've been talking about regulation of this industry, but
this is one number that the government really does pay
attention to.
Speaker 1 (23:43):
Yes, and the Society for Assisted Reproductive Technology has over
four hundred member clinics that report data to that organization,
and then those numbers are then fed up to the
Centers for Disease Control. So the government does track this
to a degree. What they're not really doing is enforcing
the standards and the protocols for how these IVF labs operate.
Speaker 2 (24:09):
When we come back, what's next for kind Body, Jackie?
As you said at the beginning, this company has big
plans for its future. Where are they headed right now?
Speaker 1 (24:28):
They've been very open and transparent about the fact that
they're looking to go public and that their last capital
raise was the last one for twenty twenty three, that
they want to take the next step and go public
as a company, and in doing that, they're opening up
more clinics in Texas, in Bethesda in Maryland, and also
(24:52):
looking to get new contracts from the employer benefit space,
going after some of these corporate clients that are looking
to offer for to as a perk for their employees.
And they're doing a good job of expanding in places
where you would expect to see a soul cycle or
a dry bar in these metropolitan areas.
Speaker 2 (25:13):
Our investors in the company aware of some of the
things in your reporting.
Speaker 1 (25:18):
They're not aware of the full extent of the types
of mistakes that have occurred. They said things like mistakes
happen at any startup, that growing pains can occur, and
that when it comes to opening a brick and mortar clinic,
there is a lot of risks that come with that,
but they're very confident in the company's ability to weather that.
(25:40):
And a big reason for that is because the company's
former CEO, who founded the company, Gina Bartazzi. She ended
up taking a role as executive chairman when the company
went through the merger with Bio's Fertility Institute, and that
was the merger that really expanded their footprint across the country. Now,
(26:01):
investors say that she's still fairly involved at the company.
She does the investor calls, and she's a big reason
why they remain so confident. She has the experience in
fertility and with her somewhat at the helm that the
company is really able to get to the next level.
Speaker 2 (26:22):
I imagine other IVF companies are watching kind Body, Are
any of them starting to change the way they do
business to be more like kind Body.
Speaker 1 (26:31):
The fertility tech sector has really boomed over the last
few years, and in twenty twenty two, these startups raised
over eight hundred million dollars in venture capital funding, and
that's one indicator that shows investors are really eager to
capitalize on the growth in this space and more companies
(26:52):
not just like kind Body that are starting brick and
mortar clinics, but also looking to other aspects of the industry,
whether that's how you track data or people looking to
be more of the middleman and kind of serving as
a marketplace for fertility benefit. So across the board you're
seeing fertility tech startups starting to sprout. Kind Body is
really one of a kind in that it owns and
(27:15):
operates its own clinics, and you don't see very many
startups doing that because it's so hard to do that.
It's capital intensive, it's expensive, and it requires a lot
of expertise to set up these IVF labs. It's expensive
to staff them as well. So kind Body is kind
of an outlier in that way that they're really undertaking
this approach in the industry, this vertically integrated model.
Speaker 2 (27:39):
As you continue to report on the story, what are
you watching for?
Speaker 1 (27:42):
The global fertility market was worth about thirty five billion
last year and it's expected to grow to eighty four
billion by twenty twenty eight. The US is a large
portion of this, and you have other countries like France
and the UK putting up more regulations around how you
track mistakes, what types of practices are mandated by law
(28:03):
in an IVF lab, And what I'll be looking out
for is to see which government agencies start to take
more control of the standards and practices in embryology and
IVF flaps in general in the US.
Speaker 2 (28:18):
Jackie, thanks for sharing your reporting, Thank you, thanks for
listening to us here at the Big Take. It's a
daily podcast from Bloomberg and iHeartRadio for more shows from iHeartRadio,
visit the iHeartRadio app, Apple Podcasts, or wherever you listen,
and we'd love to hear from you. Email us questions
or comments to Big Take at Bloomberg dot net. The
(28:39):
supervising producer of The Big Take is Vicky Ergalina. Our
senior producer is Catherine Fink. This episode was produced by
Sam Gobauer and Jilda Decarli. Jil de Garcia is our engineer.
Our original music was composed by Leo Sidrin. I'm wes Kasova.
We'll be back tomorrow with another Big Take dot the
(29:00):
County to the Don Poking better
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