Rescripted_Future of Fertility_Dr. Francisco Arrendondo: Audio automatically transcribed by Sonix

Rescripted_Future of Fertility_Dr. Francisco Arrendondo: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Abby Mercado:
Hi, I'm Abby Mercado, an IVF mom, former VC investor, and CEO of Rescripted. Welcome to The Future of Fertility, a podcast dedicated to shining a light on the entrepreneurs and innovators who are changing the face of family building. With billions in funding over the past few years, we'll introduce you to the people, the ideas, and the businesses that are changing the fertility industry and in turn, millions of people's lives. The future of fertility is bright. Now let's get into it!

Abby Mercado:
Dr. Francisco Arredondo, aka. Paco, is the co-founder and chief medical officer of Pozitivf Fertility. A solution to a conundrum that simple, IVF is too expensive. Pozitivf is a next-generation fertility clinic with three North stars, starting with democratization and also including quality and safety. Pozitivf was founded with a purpose, to inspire life-changing impact in the world of fertility services. Paco and I were seated next to each other at a dinner during ASRM this year, and I basically interviewed him the entire time. Sorry, Paco. This guy is a visionary and a legend, and we can all learn so much from him. Plus, if you check out the Pozitivf website, you'll take note that he was a super cute kiddo. Welcome Paco, thanks so much for joining us on the podcast today!

Francisco Arredondo:
Oh, thank you very much for having us. Hey, Abby, It's great to be here.

Abby Mercado:
Awesome. And, so you're in San Antonio today, right?

Francisco Arredondo:
That is correct. We're in San Antonio, Texas, down here.

Abby Mercado:
Awesome. I mentioned to you I'm from Dallas. So love, love that state. Not so much right now.

Francisco Arredondo:
....

Abby Mercado:
Normally I do. Well, cool. Well, thanks again for joining. So excited to have you. So let's, let's start off by having you just tell us a little bit about yourself. And we like to keep it fun, we like to keep it casual. So if you're ending on kind of a fun fact about yourself that few people know, I would love that. So turn it over to you.

Francisco Arredondo:
So, you know, I, I'm involved in fertility since I was in medical school. I love this. I'm from Mexico. And in 1989, when the first IVF baby was created in Mexico, I happened to be working at that clinic. I was, you know, getting some beer money, doing semen analysis and stuff. And so I got hooked, I got hooked. It was the first IVF, you know, I just got so enamored with the profession. And I said, this is what I'm going to do. So I finished my, I finished my medical school, and then I came to the States. I, first I went to Mount Sinai, I did an internship there, and I came to San Antonio to do my residency and I did my fellowship in UPenn, in Philadelphia, and then I did a master's in healthcare management in Harvard. And then, since I couldn't stay more in the States, so I had to go to a underserved area to work for three years. Actually, I ended up staying four years in rural Kentucky. So I was in rural Kentucky for four years, then I transitioned to be an assistant professor at Case Western. And when I hit my 40th anniversary, I said, no, I, I'm an entrepreneur at heart, so let's take a risk. So we came to San Antonio, we opened a small practice, and we grew it to 80 people, two labs, four centers. And four years ago I sold to private equity. I was the chief medical officer of Prelude and Inception, and I sold it. And I was lucky enough to get my last check two months before the pandemia, so I feel luckier than the lobsters in the Titanic. And then, you know, in those two years I wrote the book and that is called MedikalPreneur, the Official Guidebook for Physicians' Success in Business. And while I was doing the research, I read like three books. One of them is Fortune at the Base of the pyramid. Which is basically about a lot of businesses that are done with, in the lower economic class. Two, I read the book about Disruption in Health by Chris Christensen, Clayton Christensen, I'm sorry. And then I read The Infinite Fissure, which is the story about this Indian guy that developed the largest cataract center where everything is for free. This guy is, they don't charge, you pay whatever you want, and actually they have surplus of $85 million a year.

Abby Mercado:
Wow, that's ....

Francisco Arredondo:
Is it, how can we don't do something like this for fertility, where basically, we started, the team that we have and we've been together for years is like, everybody believes that having a healthy child it's a universal human right. So that's, that's Pozitivf. That's where Pozitivf starts. It is, we believe, every single member of our team believes that having a healthy child is a universal human right, period. So what we've faced is that, you know, IVF is too expensive, IVF is too expensive, and we needed to make it more affordable without compromising quality or safety, and that's the philosophy. That's how we came up to do Pozitivf.

Abby Mercado:
Amazing, thanks so much for sharing your background. I have a couple, a couple of follow-up questions. So first of all, I thought it was hilarious that you were doing semen analysis for beer money, so thank you for sharing that, I loved that, too funny. And then I also, I wanted to just quickly touch on your experience in rural Kentucky and, and wondering if that, that piece of your career informs what you do now?

Francisco Arredondo:
Absolutely. I mean, it was so interesting the time in Kentucky, because even though it is a very desperate place to when I grew up, it was actually the same. The people in rural Kentucky had a lot of family-oriented, extreme vision on low education poor. They had very magical thinking, like a lot of places in rural Mexico, they have a little bit more extreme religious vision, different religion, but still much more extreme. So there were a lot of idiosyncratic elements of rural Kentucky that they were natural for me, even though, obviously, I have a thick accent. And I used to have a, a radio program on Tuesdays there. And.

Abby Mercado:
...

Francisco Arredondo:
Because at that time it was, it was so interesting because it was the time that the George Bush remove some of the funding for Planned Parenthood. So I have some friends in the industry and the birth control pill. So we opened the first teenage clinic in rural Kentucky.

Abby Mercado:
Wow, that is really cool.

Francisco Arredondo:
It was super cool. We got a nurse practitioner, we got the birth control pills from all these industry friends and this, and as you can imagine, in rural Kentucky, I had unfortunately, a lot of ministers enemies and they were not really very happy with our costs. But we prevail and we did our stuff and it was good.

Abby Mercado:
Yeah, Kentucky, Kentucky recently ..., which has fantastic news. So you made an impact even years later.

Francisco Arredondo:
And always has been that social element in our practice that we really want to have an impact, we really want to make things accessible to people, and that's where Pozitivf came in as a second win for. So I thought, I thought I was retired, but now I can tell you I am not.

Abby Mercado:
Yeah, no kidding. So you have had, you've had a vast career, you're highly educated, you've done it all. What, what has been kind of the most challenging portion of your career so far? And you've been at the top of the food chain at many of these large clinic networks. So yeah, just so curious.

Francisco Arredondo:
Yeah. No, I, challenging the, you know, we are so lucky to be in this industry. I mean, we are so lucky. This is so generous industry. So the challenge are all first world problems, you know, navigating and trying to understand the, what is the true intentions of certain private equities that enter into our industry, trying to understand what is really the goal. I think that there is so much to, to learn from the business side and the physicians need to be open to that. But one of the challenges in the current scenario that I see is that if you think about histories of industries, every industry has four stages introduction, growth, maturity and finally the climb. So when infertility from 100 women that need for IVF, only ten are getting it, so obviously we're not in a growth phase. I mean, we're not in a mature phase, we're in a growth phase. And typically private equity enters when there is a mature face, because the way they do their synergies is by consolidating and by creating less competition and creating certain synergies like that. So right now in our industry, 60% of the IVF cycles are controlled by private equity, but yet we are in a growth phase. So this is a little bit of an aberration of any industry. And this is where Pozitivf came in and says, well, but we need to, tackle the unmet needs. And, so the challenge, to answer your question is specifically, it is how can we reconcile what it is happening at the level of industry with private equity getting more control of the of the industry. But at the same time, because there's so much good that private equity can bring, which is a lot of money and, and, but, and physicians can learn from it. But, but physicians need to be dictating some of the rules of the game because our first master is the patient.

Abby Mercado:
Yeah I, I'm so happy you told that anecdote just now. You, and just educated us on that. And I just want to repeat this statistic. So 90% of people who need IVs do not have access to it because it's so expensive.

Francisco Arredondo:
So any happens, let's, let's walk out in other industries and stuff. You know, we have, when, Louise Brown was born in 1978, and the first ten years we had pregnancy rates of 10% and 15%. Now we're talking about 55-0, when the best nature can do is 25. So we're duplicating nature already with our technology, okay? So how much more we can be? I mean, can we be 60-70s maybe, but how long is it going to take us? But instead we should take that 50% to the rest of the population. You know, the effort seems to be in a lot of my colleagues, in a lot of the industry is to try to make better pregnancy rates, no.

Abby Mercado:
Increase volume.

Francisco Arredondo:
Increase access to people. What we have is already great, that's one. Two, let's think about, when I grew up, the great majority of people that went to orthodontics were rich people, because there was not affordability. Now they develop certain models where you pay by month, you actually get the Invisalign online, it has been democratized.

Abby Mercado:
Right.

Francisco Arredondo:
In a certain way. Still, there is room to improve, no question. The eye lasix it used to be $10,000 for an eye. Now you can find them for $800-$1,000, same quality. Yet in that same time, IVF has keep on going up and up and up and up and up and up and up and up. And it is sad that I could potentially do a egg freezing this day, for a woman for $2,500. I can guarantee you that we can do it with the techniques and all. But guess what? You need $4,000 of medication. So, I mean, is that fair? Are we as physicians are going to say that is not fair? Period. For the patient is not fair, that I am able to provide a service at 2500, but yet. ... the cost of medication?

Abby Mercado:
It's a problem for sure. Well, so where, I'm going to dig so deep into Pozitivf, obviously. But one more question just about your background before we do dive in. So obviously, you're the author of MedikaPreneur, where you know, so the Official Guidebook for Physicians' Success in Business, which I love, but let me speak a little to as why, why does this matter for physicians and what kind of mindset shift you see or you've seen in your career and being a physician but also an entrepreneur? Like, are you using different sides of your brain? How is this all working together? How are we expecting to for physicians to know all these things about the human body, but to also know all of all of this stuff about business?

Francisco Arredondo:
Yeah, well, I will break it in in a couple of comments. One of them is that, I mentioned it actually in the book that, you have to understand two different mindsets. One is to be a entrepreneur and another one is to be a manager, so administrative, and both are necessary and indispensable, but actually contradictory. The good manager is a person that applies rules and follows them and is actually sticks to a protocol and doesn't color outside the lines. Medical, medical entrepreneur, it's actually the opposite, you have to challenge the status quo, you have to color outside the lines, you have to understand the rules so you can break them. And actually, they are contradictory. And a lot of times people that are good entrepreneurs are actually very bad managers and vice versa. So we have to make that distinction. And when we are developing a company, you have to understand which hat you're wearing. And I remember when we used that, the rules and the elements that make us made us successful in the first three years were exactly the same elements that will preclude us to be successful the next six years. So you need to have that adaptation of am I being an entrepreneur and I being a rule breaker and my being a, a pioneer, or I have a proofing concept that I need to expand and replicate, two different things. So that's, so that's two important things. And physicians, we don't really get any training on that.

Abby Mercado:
Absolutely. Many, many people don't. I face, you know, it's not just physicians, like I have, resonates, that resonates deeply with me because I'm like, I'm an entrepreneur and I think I'm a great entrepreneur. And for me, more of the learnings are surrounding being a better manager. You know, I love breaking rules, not following them. So that makes a lot of sense.

Francisco Arredondo:
Yeah. So and once you have a concept that is developed, you have to follow the rules and maybe you have to hand the company to somebody that has that idiosyncrasy, that has that thought process that you don't have. And that's where the ego has to be suppressed and says, hey, I took it from here, but now for it to go to the next level, you need somebody else. And that takes time because sometimes people get enamored with their baby, either their product, and there's nothing wrong with that. But I think that you have to understand where you're standing.

Abby Mercado:
Yeah. Yeah.

Francisco Arredondo:
I would say that the the the other concept is that the physicians, the always put in our head that we're bad managers and that we're bad .... And yeah, some of us are, some of us are not and some of us we just need a little bit of the software of the mind to be changed. But the evidence is very clear, in any profession that the people that it actually has work in the trenches, when they prepare themselves, are the best leaders. And there is very good studies on hospitals that the hospitals that are led by a well prepared physician as a CEO do much better than somebody that is a non-physician.

Abby Mercado:
....

Francisco Arredondo:
So Cleveland Clinic has always been led by a physician. Mayo Clinic has always been led by a physician from day one, Johns Hopkins, which are the main ones. And that doesn't mean that you cannot learn from others. Absolutely. No, no, no, no. You learn from everybody. You're ... minded. But the credibility from the outside and from the inside and the political will that you will gather from physicians and from other healthcare workers, it's going to be much easier for leverage for somebody that has that background.

Abby Mercado:
... And that's, that's really, I haven't heard that about vantage point. So it sounds like positions are already set up for success. They just don't realize it.

Francisco Arredondo:
And it's not only physicians. I mean, the best Formula One team leaders have been Formula One racers, the best NBA coaches have been NBA players. I mean, you can continue, this is, has been written at ad nauseum in Harvard Business Review that the people that are actually in the trenches will become the best generals.

Abby Mercado:
Yeah. Yeah. I love that. Well, thanks for writing about it. Go get up Amazon and grab yourself a copy, listeners. Okay, well, let's, let's dig more a lot more into Pozitivf. So we've already talked about meds. Like, meds are annoyingly expensive, but share with us the, like how have you chipped away at costs? Like what is what is unnecessarily expensive in the fertility industry and how has Pozitivf ....?

Francisco Arredondo:
One of the things that I recently I was, read a very, very good book that is called Solvable, Simple Solution to Complex problems with a guy named Chevalier from Switzerland. And, it's so difficult when you put people to solve problems. We naturally tend to add things. Or what? Very few times people think to make it better, let's pull things out, let's remove things. And there are so many things in on our IVF. We've been practicing IVF the same way since 1978, it has not really changed. And so when I did the Toyota Production System diploma, and I really learn about the eight types of weights, so there's eight type of weights, and one of them is motion, transportation, inventory, we have over processing, over production and unused people. So you think about in an IVF center how many times the doctor is typing something or is an REIs, extracting eggs, when can be done by somebody else or doing an embryo transfer or demotion that things to the pandemia was eliminated by the video conferencing. But if you go to any fertility center, you go in, the patient goes and gets a blood drawn, then goes to a bathroom, empty the bladder, then goes to another room, gets an ultrasound, and then they get to another room and it gets counseling. So, they move her, and that's what patients literally tell you. I felt like cattle, doctor.

Abby Mercado:
Been there.

Francisco Arredondo:
So what we did is we twisted around. So we are truly patient-centric in our office. In the same room we have, every room has a bathroom, every room has a blood drawn station, it has a ultrasound, has a TV on the ceiling. So the patient, while she's getting the ultrasound, she can see what is happening without twisting their leg or, and everything, so we're truly patient-centric because we, the providers, move around the patient, the patient doesn't move. And that decreases the visit of the monitoring by 50% of the time.

Abby Mercado:
Wow. That simple adjustment? Like, that's incredible. Just like, just that notion of putting yourself in a patient's shoes right there. That's awesome.

Francisco Arredondo:
Yeah, because you have to go and then there's there's only two bathrooms and there's four exam rooms and there's only one blood draw station. So you can imagine the bottlenecks that occur. And that's why a lot of places, we have to have a second waiting room because the patient comes in and has to be waiting for the bladder to be empty, so there's only two bathrooms and there's four exam rooms. So what we did is Toyota production system, one stop shop. We did that.

Abby Mercado:
And like your clothes are like on and off and like you're walking around in a paper gown, you feel uncomfortable, you feel embarrassed, like all the things. Oh, that's awesome.

Francisco Arredondo:
And even when we were designing this, I had push back from my nurses. Now it looks awkward and yeah, it looks awkward. ... Awkward. We're not used to it.

Abby Mercado:
Yeah.

Francisco Arredondo:
But it is, now that patient is like, oh, this is so good. We don't have to, you know, before, exactly what you described. I have to come out with my gown and, you know, everybody will see me. And no, so now we have that. We also have eliminated a lot of the labs that we don't need. In Europe and in other places they don't use extra .... You know, and I will say this, there are certain places in the United States because our system is so screwed up that people order extra ... and progesterone ..., just because they're going to get paid for it, not because .... And the incentive is wrong, period. There are some, there are some centers that order estradiol NLH, and progesterone in every single visit just because they're going to get paid for it. That's the wrong reason why we do things.

Abby Mercado:
It's perverse and sometimes it's outrageous.

Francisco Arredondo:
It's horrible. And the same PGTA and all that, that you don't need it for everybody. And so we just tend to pilot the add ons without the judicious thinking of what is truly adding value to the patient, and what is not adding value to the patient. And that's the philosophy of the Toyota production system that, you know, everybody says, oh, you know, when you improve quality, when you, you decrease price, you have to sacrifice quality and you have to sacrifice safety. Toyota production system says no, you can actually improve quality safety and decrease the cost at the same time. And, you know, if you go to our website, I don't know if I explain you this, but it'll be the logo that we have in Pozitivf.

Abby Mercado:
Listener, he's showing me the logo, he's wearing it. It looks like ....

Francisco Arredondo:
You have a spiral, and that is the democratization because which, we reach 360 and the top circle is basically the quality, top quality that will not compromise. And the circle in the middle is the safety, the circle that is safe, in the middle, protected, that we will not compromise. So and actually, I can tell you, one of the challenges that I've been having is that patients come to us and say, but why is it so affordable?

Abby Mercado:
Yeah.

Francisco Arredondo:
It is not good? Well, no, we are actually have to consistently send the message that the fact that it's more affordable doesn't compromise your quality or your safety.

Abby Mercado:
Yeah.

Francisco Arredondo:
That is actually my challenge right now is that, the challenge, yhe challenge is to tell the people the fact that we are affordable doesn't mean that we're less quality or less safe than other people. Actually, I could tell you that it's more because we cause less pain.

Abby Mercado:
Yeah. So I want to talk a little bit about, I want to talk about, so the second thing I want to talk about is the lab. The first thing I want to talk about is the notion of reproductive endocrinologist not doing procedures. It's like .... So this has become a very hot topic in the world of, of infertility. It's, I think it's reproductive endocrinologist that a, what, 11 years of post-graduate education. That's insane, right? Lots and lots of school so.

Francisco Arredondo:
....

Abby Mercado:
... college. Exactly. You know I have not been to that much school. I went to college, but you know but so tell, I mean, I understand that, understand it from your angle. But tell us a little bit about what the challengers of this model are saying. And I imagine what they're saying is we went to all this school and like now you're going to like, minimize our job. So anyway.

Francisco Arredondo:
That is.

Abby Mercado:
And tell me more, tell me more. So that's like the simple.

Francisco Arredondo:
It's very, it's very simple. People can be divided in two in this world. People with a scarcity mentality and people with abundance mentality.

Abby Mercado:
Yeah.

Francisco Arredondo:
Scarcity comes out of fear. People that are insecure, that are fearful. Abundance comes from confidence. And what we have in front of us is a potential goldmine for REIs and a potential gold mine for REIs while doing good. What else can you, what perfect culture media, what do I mean with that? People with a scarcity mentality focus on competition, on the outcome. People with abundance focus on the customer, the patient and the process. And what they are not seeing is that, oh, protecting, they don't share knowledge. Scarcity mentality, they don't share knowledge. The abundance mentality shares knowledge. Come here. Learn from me, I learned from you. And, and what we need is that the way we present things, I don't know if you know this anecdote about these priests, that there were smokers and they were trying to go to the to the bishop to see if they allow them to smoke while they pray. And one of them went and says, oh, the bishop told me that I could not smoke while I pray. Well, how did you ask them? Well, it says, listen, can I ask you what pray is this? No, you cannot. So strange. Told me that I could. What did you ask him? Well, I asked him if I could pray while I smoke. And says absolutely, you, all the time. He said it's time to pray. So it's how you frame it. And you frame it in a competition manner. Here is like you have 90% of the market that is unmet. 90% of the market is unmet. And we have this mentality that always, the competition, I want to, I want to protect the status quo. I, you compete to stay on top, instead of collaborating to stay on top, you fear change versus the abundance mentality that embraces change. The, the people that shares knowledge is the abundance mentality, is generous with others. The scarcity mentality is, they won't offer help. They, you know, you believe the abundance mentality believes that the pie is getting bigger, even though you have a smaller slice. So you embrace risk. But what I am seeing in our field is that a bunch of us are having a scarcity mentality and I will never replace an REI. I will never replace an REI. But you tell me how anesthesiologists are able to run five ORs with five URAs. You tell me how a radiologist can run three MRI's, two ultrasound machines, four fluoroscopy and two x ray machines by having some people doing the x ray and they sit on an executive level reading the machines. When they get stopped, they go and help and get them out of trouble. You tell me in our specialty, fetal maternal medicine, the high risk pregnancy docs, you know how many deliveries they do?

Abby Mercado:
....

Francisco Arredondo:
Zero.

Abby Mercado:
Yeah!

Francisco Arredondo:
They say, hey, increasing insulin, a delivery in two weeks.

Abby Mercado:
Deliver now, what they said to me.

Francisco Arredondo:
They are actually just giving orders. So why would we have to have to be doing egg retrievals and embryo transfers? Now, I'm not saying that a OBGYN should be doing a case of a PGTM. No, I think that somebody that has the genetic background and all that should be doing that. But the bread and butter is like you have a cardiovascular surgeon doing an appendectomy. Why?

Abby Mercado:
Yeah.

Francisco Arredondo:
Why?. And the most important thing is that from the, if we put ourselves and our main boss, which is the patient, is the society, are not getting what they need, which is 90% of the people are not being served. So we need to break that thinking and think on abundance, remove the fear and be more self confident as fertility specialist that we know what we know, but we can dictate the rules to create a system that is more empowering for the patients and it will produce more money for us.

Abby Mercado:
Yeah. Yeah. No, I love it. I feel like I'm like, I don't need to see my leadership coach this week because all of a sudden all I'm thinking about is an abundance mentality. But it's an excellent, excellent way to put it. Like literally no follow up questions. It makes all the sense in the world. It's time for IVF to grow up and create more families. So, tell us then so we've, we've talked about the provision of care. Let's talk a little bit about like cutting costs in the lab. So how have you, how have you all been able to do that effectively?

Francisco Arredondo:
Yeah, So we're experimenting with different things, but obviously simple. You know, the culture media, obviously we, we use a single media. We are trying to experiment and seeing if the, the lapse technology or the photographic technology will allow you to have less time from the embryologist, because what happens right now is that the major cost in any fertility clinic, so from $100 that you spend to run a fertility clinic, $55 to $60 in the US is labor. So how can you and an embryologist. We have timed embryologist, the actual embryology work is probably 30% ... documentation. Is documentation and doing this and doing that is things that, my goodness, we are so advanced in technology as physicians and as IVF, but we are so backwards in technology that we're using. Let me give you an example. Inventory is one of the things in the Toyota production system that you keep a low inventory, because you have a lot of, you buy a lot of media and days and goes, due dates and the catheters are sitting there, there's a lot of money sitting there. So you would like to have a very thin inventory. So usually any system you have a procurement device or a procurement software that gets them from the suppliers. And then you have an inventory system that tells you how much supply you have. Well, there is not a single software in IVF that tells you when you use this one, send the message so they purchase another one. Well, my last partner, Tony Anderson, he owns hair salons. He says, Paco, look at my phone! You know, I can tell you right here from my phone how many red dye I have, how many blue, how many days, I press a button and I order another one. So this is a hair salon. We can, this is a hair salon. We don't have that in fertility.

Abby Mercado:
Yeah.

Francisco Arredondo:
And we should. So we're working into that kind of technology to eliminate. Because right now, what is it? Oh, we need five cathethers, hey we need five cathethers, let's go in to purchase order. Okay, write the purchase order. In the big companies, oh send that up to the manager. And now the purchase order has to be approved and I will send the email. I'll get the credit card on the phone. ... waste.

Abby Mercado:
Yeah.

Francisco Arredondo:
You know, is seamless. So we are making it seamless that there is, a catheter is used, is scanned, sends the message to the IVF store or whoever it is, they send another one, they already have the credit card, they send us a bill in the end of the month.

Abby Mercado:
That's amazing. Yeah, I heard. I heard someone kind of, I forget who it was. It was, it might have been Claire Thompson's future family. She was on a panel at the HLTH conference this weekend in Las Vegas, and she said, I refuse to be able to order a pizza with one click on my phone and on the fertility industry, so be this old school. And I thought that was really ...

Francisco Arredondo:
Want to have pizza. What's our, right in the morning you go, you click, you get this stuff, you grab it, and actually they say, oh, you must be Francisco. But even the personal ....

Abby Mercado:
Uhm, it's Paco.

Francisco Arredondo:
So it's like, oh my goodness. It's like even the personal touch when you enter and say, we, we can do that.

Abby Mercado:
Yeah. So.

Francisco Arredondo:
We have to learn.

Abby Mercado:
Yeah. So tell me, okay, so now we've been through the clinic. We've been through the lab. You all don't, don't add on things that you don't actually think that the patient needs. Like some of some of these cycles could be actually pretty simple, pretty straightforward. So you're reducing these costs. However, simultaneously, say, for mandating, insurance coverage for infertility, employers continue to cover IVF treatments, fertility treatments for people. How do you see this market kind of all colliding? Do you have any opinions? Like are employers more likely to begin covering this at a more rapid clip if it's cheaper? I hope so.

Francisco Arredondo:
Yeah, I think it's, it's a good question for the following. So let's go. And, you know, history. History. Health care insurance was not in the system before World War Two, period. So World War Two finished, we had no labor force and basically the companies started to offer health care insurance as a perk to attract good workers. And that's how everything developed. And at the beginning it was, you know, very good for the physicians because they charge whatever they wanted, insurance when they determined that 50% of the income of the physician was insurance, they started squeezing them and, we are in the very low, low reimbursement right now. Covid comes in and we have exactly the same phenomenon that World War Two. We have no workers. You cannot offer healthcare insurance because it's already there. So what is the next thing? Well, a lot of the insurance does not cover fertility. And guess what? Your main workforce is 20 to 45. Ha! This is, this is health insurance. Deja vu all over again. And the fertility benefit management companies are smart enough to find that sweet spot where they do not pay the cash prices. And they pay faster and more generous than the insurance companies. So that's why that sweet spot has allowed the fertility benefit companies to rise.

Abby Mercado:
Yeah.

Francisco Arredondo:
So now there's going to be a point that with the fertility benefit manager, companies have 30, 40% of your business, they're going to start squeezing you to them. That's mark my words, ten years from now, 20 years from now. What I do see, what we did is we basically decrease the variability of our services. So if you go back to a general store in the 1800s in rural, in rural America. You enter the general store, you can buy oil, avocado, shoes, corn and in a fork and perhaps a screw. Well, then you start differentiating the stores and now you have the bakery, you have the clothing store, the sports score. Actually, you have the sports and then you have the golf ... differentiation, right?

Abby Mercado:
Yeah.

Francisco Arredondo:
Well, in 2022, the great majority of the fertility centers is a general store. You have pregnancy losses, you have every egg freezing, you have a freezing with cancer. You have gestational carriers, you have IVF or a genetic PGTM, etc.. It's all there when the great majority of the people in that welcoming room have zero affinity to each other. You tell me, what is the relationship of a gestational carrier versus a person that was just diagnosed with cancer and is freezing her eggs, versus another one that has been struggling with a couple of infertility for ten years? They have zero relationship, yet we're treating them as the same.

Abby Mercado:
Right?

Francisco Arredondo:
So we at Pozitivf, we decided to focus on what it is 80% of the solution. We are not doing PGTM at this point. We are not doing gestational carrier. We are not recruiting egg donors because that entails a lot of overhead. We're not doing insurances because the insurances, they you have to have three or four people just to be on the phone, 45 minutes to wait for them and it takes them 90 days to pay. So we just said and actually let's, let's talk about insurance. So you have an Aetna and they say average IVF in the United States id $14,000, for medication is 18,000. You have coverage? Yes, I have coverage. Okay. Aetna, very good. Aetna, whatever. I don't want to say bad about any, United, whatever .... Oh, by the way, medication does not cover Okay. How much is it? 4000 bucks, okay. Oh, and by the way, ... May or may not be covered for 500 bucks. Oh, no, no. We don't freeze embryos. No, no, no, no. Oh, they freeze. No, that's not included. It's another 1000 bucks. Yes. Okay. So it's only 6000 instead of 18,000, is 12,000. Oh, yes, but you're.

Abby Mercado:
You have to do six IUI first. That's my ....

Francisco Arredondo:
..... Deductible. Your deductible is 4000.

Abby Mercado:
Yeah.

Francisco Arredondo:
So now I don't pay 8000. 18,000. I pay only 9000. Great. It's a great discount. So what we said is forget about it. Just give us 6680 and $50 and we want to do your case. Attend. Be, patient. Patient-Physician.

Abby Mercado:
... Yeah.

Francisco Arredondo:
Yeah. That's what we're doing. And, and what we're generating is we're not being a competition to the other centers. I can tell you here in San Antonio, we're not being a competition. They have their own market, right? Which is all the people that are insuring all this. So it's the Ritz Carlton and all the Four Seasons, which the great majority of the fertility clinics in the United States are four seasons in Ritz Carlton. But we want to be the Holiday Inn Express. We want to be giving a very nice good sleep, good breakfast in the morning. You will be relaxed and you can go off your business.

Abby Mercado:
That you don't need 8000 thread count sheets.

Francisco Arredondo:
No!

Abby Mercado:
Yeah. I just want a baby. That's it. I love it.

Francisco Arredondo:
There will always be the people that would like to pay extra for the service, and there's nothing wrong with that. But this is the point, to my colleagues that are afraid of bringing other people into the market is that they're discouraging competition to them.

Abby Mercado:
Yes.

Francisco Arredondo:
It's not even a competition.

Abby Mercado:
It's different. Right.

Francisco Arredondo:
But these this scarcity mentality.

Abby Mercado:
Yeah.

Francisco Arredondo:
It's like, you know, and actually, here in town, I've been referring patients to my previous colleagues and competitors. Competitors because they are not gestational carriers. Are you sending $150,000 case? Yes.

Abby Mercado:
Yeah. Yeah, sure .... Go for it

Francisco Arredondo:
Go ahead. Guess what? Whenever the patients do not, their insurance is maxed out and they have to do another cycle. They can pay $18,000. Guess where they're coming?

Abby Mercado:
It's Paco.

Francisco Arredondo:
We're generating it. It's a blue ocean, so it's a new, a new place. But, you know, I think I feel bad for some of my colleagues that are with the scarcity mentality. I feel bad for them.

Abby Mercado:
Yeah. Yeah. Well, yeah, it's, it's a complex industry and I love how you talk to about the way that the industry, industry has grown, grow and in kind of ... novel ways. So. Well, I have one last question quickly. So we're running out of time. But if you had to rescript and I ask this to our guests, if you have to rescript one thing about the fertility industry, what would it be? We probably already said like at least ten things that you would rescript. But what's, either your top thing or one thing that you haven't mentioned already?

Francisco Arredondo:
I think I have to go with the, with, with the philosophy of Pozitivf, that we believe that everybody has the right to have a family. And I think that it is, it is sad that we should make, we should legislate it to make it mandatory that there is coverage for everybody because we have coverage for Viagra and other things, but we don't have coverage for what puts us on Earth, which is to replicate this ...., have a family and all this. So I would say what I would, what I would put more effort is in the policy level, at the policy level, preventive as well as curative. And that will be my, my efforts.

Abby Mercado:
I love it. Well, this has been absolutely fascinating, educational. I have about seven books I need to read. So thank you so much for coming on to the podcast. Where can people find you?

Francisco Arredondo:
Oh well, www.Pozitivf is P O Z I T I V F.com.

Abby Mercado:
Awesome.

Francisco Arredondo:
And we have a, here in San Antonio we have a wonderful team and we have a lot of fun. Every day we have fun.

Abby Mercado:
That's amazing. That's what it's all about. Well, thank you again, Paco. And I'm sure we'll connect soon.

Francisco Arredondo:
Absolutely, have wonderful day.

Abby Mercado:
Thank you for tuning in to The Future of Fertility. We hope you'll leave here feeling empowered about all of the exciting innovations taking place in the fertility space. If you liked today's episode, don't forget to click Subscribe, and be sure to check out Dear Infertility, our popular podcast/advice column where we chat with experts about all things fertility and infertility and pregnancy loss. To learn more and to join our Free Fertility Support Community, head to Rescripted.com.

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