A cost and outcome model of fertility treatment in a managed care environment

Abstract

Objective: To build a financial model of a fertility practice operating under managed care.

Design: Financial model in Microsoft Excel (Redmond, Washington).

Setting: University-affiliated infertility practice, assuming primary care referral of patients and total revenue a function of the capitation contract.

Patient(s): Female infertility patients and their partners with assumed mean age of 35 years.

Main outcome measure(s): Breakeven capitation rate.

Result(s): Every other month ovulation induction produced the lowest breakeven capitation rates in the model. Breakeven capitation rates increased from $0.85 up to $4.70 per member per month as utilization increased from 0.1% to 1% of health plan members. Decreasing the cost of an IVF-ET cycle $2,050 decreased breakeven capitation rates from $0.05 up to $0.80 per member per month as utilization of fertility services increases from 0.1% to 1% of health plan members. Decreasing average yearly pregnancy rate from 56% to 41% increased breakeven capitation rate from $0.10 to $0.80 per member per month across similar utilization. The average cost of pregnancy per year ranged from $6,787 to $21,075.

Conclusion(s): As utilization of fertility services increases, cost reductions no longer exist to offset increasing breakeven capitation rates. Financial modeling, using actual data, can evaluate any medical decision in terms of outcome and the cost of that outcome. Modeling is an effective means for physicians to educate themselves concerning the cost of their fertility and medical decisions.