At a vulnerable time, when women and couples undergoing expensive in vitro fertilisation treatment want a baby above all, fears of commercial exploitation should be the the last thing on their minds.

With demand for assisted reproduction growing fast, a new swag of investors are getting into the IVF industry, raising tough questions about trade-offs between profitability and patient care. Last year’s successful sharemarket float of Virtus Health Care is spurring competitors, with Monash IVF in the market right now raising almost $300 million, as The Australian Financial Review has reported here and here.

Virtus is the biggest IVF operator in the country, running IVF Australia, Melbourne IVF, Queensland Fertility Group and The Fertility Centre. Virtus raised $350 million last June, and the shares issued at $5.68 have since jumped by 43%. In February Virtus reported half-yearly revenues of $101 million, up 8%, and a 10% rise in net profit to $17 million.

Industry insiders are questioning, however, whether such strong revenue and profit growth is sustainable and whether trade-offs are occurring.

One insider has warned Crikey that Melbourne IVF stands to deliver lower returns due to a recent shift to use of blastocyst as against cleavage-stage embryo transfers, which should deliver better pregnancy rates but may also generate less revenue, as women return less often to have frozen embryos transferred. To explain, cleavage-stage embryos (with four to eight cells) are only two to three days old, while blastocyst embryos (with 100 cells) are cultured for five to six days before being transferred into the womb.

Fewer embryos survive to the blastocyst stage. At the cleavage stage, more embryos can be frozen, meaning women can return to have embryos thawed and transferred — which is cheaper because it does not involve ovarian stimulation and egg harvest.

In ballpark figures, a typical fresh cycle might cost $9000, leaving patients out of pocket about $3000 after government assistance. A thaw cycle would typically cost $2500, and leave patients $1000 out of pocket.

The latest figures from the Australian New Zealand Assisted Reproduction Database are from 2011 and show 27% of fresh blastocyst transfers resulted in a live delivery, while for fresh cleavage-stage transfers the comparable figure was only 17%.

Experts say these figures should be interpreted with care, however, as they are not controlled for patient age, previous treatment cycles or other confounding factors.

The ANZARD figures are not broken down by clinic. The Victorian Assisted Reproductive Treatment Authority (VARTA) publishes success rates by clinic in its annual reports, and at first glance the latest figures (see Table 1.1) appear to show Melbourne IVF marginally underperforming. Across Victoria, from 10252 women treated, there were 3177 live-born babies, giving an overall 31% average success rate. The two Melbourne IVF clinics got 1459 babies from 4992 treatments, which amounts to a 29% success rate. Seven Monash IVF clinics got 1465 babies from 4427 women treated, or a 33% success rate.

Again, however, these figures must be used very carefully. VARTA chief executive Louise Johnson says data cannot be compared from one clinic to another and says success rates can be affected by the stage of development of the embryo transferred; age of the women and men treated; lifestyle adopted by each partner; reasons for seeking treatment; and the cohort of people treated by a particular clinic. Some clinics take on more difficult patients who have been treated elsewhere, and clinic catchments vary demographically — the female population in a local area may be younger or older, with huge implications for success rates.

In any case, it is not as simple as cleavage-versus-blastocyst programs. Melbourne IVF does both. In a written statement medical director Dr Lyndon Hale told Crikey that Melbourne IVF had done cleavage-stage embryo transfers since its inception over 30 years ago and blastocyst transfers for the past 18 years:

“Our highly successful blastocyst transfer program was established in the mid-1990s, and some of the first children born through our blastocyst IVF program are now 16 and 17 years of age. Melbourne IVF has recently adopted a more flexible model for embryo culturing that is designed to provide each individual patient with the best possible outcome … The increase in blastocyst culturing at Melbourne IVF is in line with protocols across Virtus Health and not a significant change. Use of our technology is always aimed at improving patient outcomes and success, which in turn facilitates positive word-of-mouth referral, continued improvement in success rates and returns for shareholders.”

But the industry insider says the change is significant, and the move to blastocyst transfers will cost shareholders:

“The question is why was this not addressed in the [Virtus] prospectus? It was always a risk … The only way to compensate for losses is [for Melbourne IVF] to increase market share or acquire new business. Investors should have been aware of this.”

IVF technology is constantly evolving. In the early days, when cultures were not well developed, doctors aimed to transfer embryos as soon as possible. Cultures nowadays are more advanced. Much research is going into identifying those embryos most likely to succeed, using video cameras in incubators to monitor cell division and predictors such as glucose uptake, indicating energy consumption.

In his response Dr Hale emphasised just such advances in Melbourne IVF’s system including the use of an embryoscope, which takes images of the embryos development every seven minutes. He explained:

“Our understanding of the value of longer culture to blastocyst is translating into a growing number of patients accessing this treatment and achieving a faster and more positive outcome through this approach. However, as blastocyst transfers are not suitable for all patients, Melbourne IVF maintains a cleavage transfer option. In fact, treatments are modified during a treatment cycle depending on their progress, as our aim is individualised treatment to optimise results.”

Other doctors warn there are pros and cons with cleavage versus blastocyst-stage transfers. Non-profit infertility network Access Australia points to recent research concluding the risk of pre-term births, and the associated adverse health outcomes, was “significantly higher” following blastocyst transfer compared with cleavage stage transfer. Access director Sandra Dill said the study “highlights concerns for consumers about delaying embryo transfer beyond the three day cleavage stage transfer”.

It’s an exceedingly complex area. Doctors told Crikey the best way to make money from IVF — in fact, the only way — was to put patients first. Success rates are paramount, the science is advancing rapidly, and clinics have to keep up to stay competitive. But investors rushing to profit from IVF should be aware it is an ethical minefield.