In vitro fertilization (IVF) clinics that offer money back guarantees (MBG) for their services achieve a higher live birth success rate with less aggressive treatments than clinics that do not offer a money back guarantee.
In research recently published in the Marketing Research JournalShan Yu, assistant professor at the Lally School of Management at Rensselaer Polytechnic Institute, explored the question: are IVF clinics’ MBG programs marketing gimmicks that take advantage of consumers or a way for clinics to signal a high quality service?
Using a unique dataset compiled from four separate sources to undertake systematic empirical analysis at the clinic level, Dr. Yu found that on average, even when transferring fewer embryos and not sorting the patients based on their fertility, clinics using the marketing MBG tool achieves a higher success rate and does not impose higher multiple birth risks. These results indicate that clinics that offer MBG provide better quality of service than clinics that do not offer MBG.
According to Dr. Yu, consumers and policy makers can use the presence of this marketing practice as a signal of high quality care in the increasingly important area of IVF and other healthcare and service markets. of experts.
“In medicine, marketing practices are often seen as a necessary evil,” Dr. Yu said. “Our study suggests that market-based promotional devices, such as money-back guarantees, can be a necessary good for consumers.”
In a typical MBG plan, patients pay a flat fee for a number of treatment cycles. If the patient does not deliver a live baby at the end of the treatment cycles, the patient receives reimbursement. If the patient delivers a child at any time during the treatment plan, the clinic withholds full payment.
With this type of expert services market, the doctor has much more knowledge than the patient, a factor known as information asymmetry. Because of this knowledge imbalance, many critics argue that the pressure to return full payment motivates clinics to use MBG programs to attract less knowledgeable patients and increase their success rate using more aggressive treatment protocols. or by sorting the most fertile patients to their clinics. Both of these behaviors will reduce consumer welfare in the long run.
In the study, Dr. Yu considered these factors and found that critics’ fears were unfounded. Data showed that clinics offering MBGs improved quality of care by achieving better outcomes despite less risk taking and no triage for the most fertile patients.
“This suggests that MBG programs are not necessarily marketing ploys used to attract less informed and more vulnerable patients,” Dr. Yu said. “Through experience, clinics may have developed a repository of skills and of expertise that makes them confident in delivering MBG programs without taking undesirable actions.”
Research has further shown that clinics are more likely to offer MBGs in states without a mandate for insurance companies to cover IVF treatment costs, suggesting that MBGs also serve as an insurance device. market driven, especially for low fertility patients.
“The results of this study are consistent with signaling theory predictions that reimbursement guarantees may serve as signals of unobservable clinical quality despite incentives for clinics to engage in opportunistic behaviors,” said Dr. Yu. “These findings offer policy guidance and improve patient well-being in a complex market for expert services plagued by information asymmetry.”