Daybreak - IVF treatment can break the bank. So how are states offering it for “free”?

Episode Date: August 13, 2024

Fertility rates in India are not looking good. In fact, it has fallen below the necessary replacement fertility level, which is basically the total fertility rate at which a population exactly replaces itself from one generation to the next, without migration. So to nip the issue in the bud, state governments are now stepping in to offer what private equity-backed fertility centres would otherwise charge lakhs of rupees for: IVF treatment for free. If it sounds too good to be true, that’s because it is. Tune In. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission. We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture,

how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd.

To get an alert as soon as we release our first episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. In the last few years, more and more states across the country have been allocating funds to set up in-v-vertilization or IVF centers. So, Maharashtra, Goa, Tamil Nadu, Rajasthan, The list goes on and on.

The idea is for fertility treatments to be made more widely available and accessible for people across the country. And when I say accessible, I mean free. Yep, more and more state-run IVF centres across the country have started promising free treatment. In fact, free IVF treatment has become such a popular political proposal that it is even starting to find its way to several political parties manifestos in recent. years. The reason for that is India's plunging total fertility rate or TFR. This is the average number of babies being born to a woman in her lifetime. Fertility rates in India are just not looking good at the moment. In fact, it has fallen below the necessary replacement fertility level,

which is basically the total fertility rate at which a population exactly replaces itself from one generation to the next without migration. Things are so dire that infertility is now being thought of a lot like other frequently occurring diseases like TB or malaria or diabetes. And like any other disease, it could happen to absolutely anyone. But not everyone can afford IVF. So to nip the issue in the bud, state governments are now stepping in to offer what private equity-backed fertility centers would otherwise have charged lakhs of rupees for. IVF treatment for free. Now, if it sounds too good to be true, that's because it is. The Ken spoke to at least five different fertility experts and they all had the same thing to say. Not every state is being

able to deliver its promise of free IVF. It isn't entirely their fault because IVF is expensive and complex. It requires high quality technology and personnel, all of which are areas where government setups still need to up their game. What usually ends up happening is people go to a state run clinic, opt for free treatment, and then over the course of said treatment are slapped with all sorts of other charges that they may not have anticipated. So we're talking about things like medications, injections, lab supplies, all sorts of things. And all of them combined can really add up. I'm talking more than one lakh rupees. And that's a hefty price to pay when you think you are signing up for a free treatment, right?

So is free IVF treatment a can of worms that the government should not have opened? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Rahel Philippos, and I'll be joining my colleagues, Nidhar Sharmah every day of the week to bring you one business story that is worth understanding and worth your time. Today is Tuesday, the 12th of August. Last month, the Kenz Shivani Varma visited the Loknai hospital.

in New Delhi. She went to the fertility and assisted reproductive technology or art clinic at the hospital. It was a Monday and the clinic was bustling with activity. So there were about 20 women lined up outside to meet with the doctor and Shivani managed to speak to Jiet Singh, a man in his 30s and the spouse of one of those women. His wife was in her third week of IVF treatment and was at the clinic to undergo an ultrasound and a sonography. Pretty standard stuff. But what was totally unexpected were the costs they ran into

despite opting for the government hospital route. Even though the treatment was meant to be free, Jeeth has ended up with a stack of bills. So the tests, including the blood work, HIV and ultrasound were done for free. But the couple actually ended up paying for things like injections and medicines. Three weeks in, the couple

has already coughed up about $23,000. And this isn't a one-off. Lots of people going down the free IVF route have faced the same fate. Which is why a lot of IVF specialists are very sceptical of calling it free treatment. Anirudha Malpani, one such specialist, said instead of calling it free treatment,

it should be called subsidized IVF. And here's the thing. Subsidized IVF, as you would expect, is usually not as good as the more expensive variety that you would otherwise have paid a couple lakhs for. And that's because setting up an IVF unit isn't cheap. A full-service IVF center. And by that I mean one which offers all kinds of high-tech baby-making treatments

costs anywhere between 1.5 and 2 crore rupees. And that's assuming that you are setting it up in a hospital where infrastructure is already available. Now, generally in the case of government hospitals, IVF clinics can be set up for about 60 to 70 lakh rupees. But Shivani spoke to Vinesh Gadda, CEO of 49, a PE-backed fertility chain, and he said that these IVF centres are generally of very poor quality. Gadia said the only hospital that has been able to run an IVF clinic successfully

is all India Institute of Medical Sciences in New Delhi. And Eames too does it for a price. For context, the central government-run hospital in Delhi, charges about $60,000 per IVF cycle. So it isn't free. These fees account for variable costs like hormonal injections and consumables,

while fixed expenses such as salaries and utilities are borne by the hospital. Gadia says this is a far more sustainable way to do things. It's basically a public-private partnership. But say government hospitals are able to deal with pricing issues. There are still a whole other set of systemic headaches that they are faced with. More on that in the next segment.

Here's a fun fact. The world's second ever test tube baby was born in Calcutta back in 1978. Yep. Back then, India was really ahead of the curve when it came to that sort of thing. But unfortunately, that streak ended pretty quickly. You see, just eight years later,

another test tube baby was born at Mumbai's King Edward Memorial, all thanks to the Indian Council of Medical Research and the hospital's own funding. Six years after that, that very same IVF department was shut down for being too expensive for a public hospital, offering free treatment to the poor. Authorities very quickly realise that providing free or even subsidised IVF treatment is a really expensive affair.

Very often, it's only possible when some generous donors step in to back up the establishment. And that's exactly what happened in 2022 when Anirang, Ruddha and Anjali Malpani, the couple behind Malpani Infertility Clinic, signed an agreement with the King Edward Memorial Hospital to establish an autonomous IVF centre. Now, according to the MOU, the plan proposed an initial setup cost of about 75 lakh rupees, which would be followed by 50 lakh rupees of funding every year for the next four years to cover annual operating expenses.

So it was a pretty sweet deal. Even the Malpani is acknowledged that the treatment cannot be provided for free, but their donations could get the wheels rolling. But it didn't help that along the way, they faced a fair few bureaucratic roadblocks. Getting permission to even donate can be a long drawn-out process. Plus, buying certain disposables and consumables like test tubes or injections can be a pain in the neck.

Malpani says the whole experience can be quite frustrating. And then, of course, there is the long waitlist to deal with. Let's return to Delhi's Loknaiak hospital for a moment. Shivani spoke to a whole bunch of patients. They all said the treatment and test reports took a lot of time. That's another thing that happens when you say free. A whole bunch of people actually show up, which ends up really burdening hospitals.

But faced with declining fertility rates, state governments don't really have that much of a choice. So they have been looking at other ways to offset expenses. Stay tuned to find out. Goa was among the first states to propose free IVF treatment last year at the Goa Medical College and Hospital. But its model is very different from other states, because it uses the hospital's corporate social responsibility funds to procure equipment. But even this route has its share of back-to-back-door privileges and discrepancies. Like, for instance, Malpani said that there are only a handful of cases at King Edward Memorial where treatment is done completely for free.

and this is generally only for people who are politically connected. Other people would obviously be expected to pay. Meanwhile, Rajasthan plans to add IVF to its state-driven Chiranjeevi-Ayushman-Bharat health insurance scheme. So it will cover up to $25 lakh rupees. But one needs to be a permanent resident of the state and below the poverty line to qualify. What's ended up happening, according to Malpani,

is that IVF treatment is increasingly becoming like a box to take for political cloud. Malpani pointed out that government hospitals don't even have strict targets to fulfill, and that these schemes often serve more as political statements about being family-friendly and progressive. So perhaps free IVF isn't the way to deal with dropping fertility rates. State governments and the center need to find a solution. But it can't just be a political plan. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform.

business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted by Rahil Filippos, produced by me Snigda Sharma and edited...