Corporate Ownership and Firm Performance: Evidence from Fertility Clinics

Corporate investors have fueled the corporate transformation of medicine by acquiring and affiliating with healthcare organizations. This paper studies how corporate ownership impacts firm performance. We collect novel data on US fertility clinics that join corporate-backed fertility networks and use difference-in-differences methods to estimate changes in clinic volume and the success of In Vitro Fertilization (IVF). We find that post-transaction, clinic volume (measured by IVF cycles) increases by 25.8%, and IVF success rates (measured by the live birth rate) increase by 2.5 percentage points (6.7% increase). This improvement in IVF success rates is driven by clinics that are directly owned by the corporate parent: acquired clinics increase IVF success rates by 5.1 percentage points (13.6% increase), while affiliated clinics experience no change in IVF success rates. In addition to differences in ownership structure, we provide qualitative and quantitative evidence that resource and knowledge transfer within networks most likely explain increases in clinic performance. In particular, we find that clinics change processes and procedures towards quality enhancement, that larger improvements occur among underperforming clinics, and that clinics expand the IVF market instead of capturing market share from independent clinics. Private equity investment into networks also largely explains increases in clinic volume but not IVF success rates. This paper sheds light on the conditions under which corporate ownership can improve life-changing healthcare outcomes.