Giving Birth: Identifying an Untapped Market Opportunity

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Executive Summary

This report presents a thorough analysis of the current landscape of the birthing industry and identifies an untapped opportunity for a hybrid model that combines the medical security of hospital births with the comfort and personalization of boutique births. A comprehensive examination of available data reveals a significant market demand for such a service, with a growing trend towards non-hospital, boutique births. Our business model proposes creating standalone facilities in key markets, staffed with OB-GYNs and midwives, providing a range of services from prenatal to postnatal care. The phased expansion plan includes launches in New York, Florida, Texas, and California, eventually reaching other states across the nation.

Introduction

Pregnancy and birth are one of the most personal, intimate, and decision-heavy experiences that a family faces. Recently, my wife introduced me to the idea of home births. Her desire, research, and reasoning sparked my curiosity: why aren’t home births more popular? I wanted to find out if this discrepancy had business potential.

In my research, I discovered a world where parents still prioritize safety,  but now also seeking a birthing environment that delivers comfort and familiarity. They have learned that they don’t have to compromise their experience for safety with boutique birth options. As a result, we see rising  demand for Boutiques: births at home (Planned Home Birth) or a Birth Center. 

To answer these questions, I allowed my curiosity to drive me. Below is a bit of what the process looked like and the steps I would take to launch this business.

As of June 30, 2023, this is still the latest release of Birth Data from the CDC.

Insight 1: Boutiques Ascend in a Hospital Dominated Industry

In the landscape of childbirth services, hospitals overwhelmingly dominate, accounting for approximately 97.8% of all births. Yet, nestled within this lies a blossoming alternative: boutique births. Although they currently hold a mere 1.9% of the market share, they've experienced an astounding growth of over 40% from 2019 to 2021. The remainder, comprising about 0.3% of all births, fall outside the scope of this report and will not be considered.

Are boutiques less safe than hospitals? Do expectant parents inherently prefer hospitals, or have they simply defaulted to the more traditional route? 

Insight 2: The Enexpected Superiority of Boutiques

Contrary to common perceptions, boutiques far surpass hospitals in several key health outcomes. For instance, infants classified under 'Abnormal Conditions'—those requiring interventions like transfer to a Neonatal Intensive Care Unit (NICU)—have an incidence rate of 4.08 per 100 births at boutiques, one third the rate of hospitals. Cesarean sections, major surgical procedures typically reserved for high-risk situations, are notably less frequent in boutiques, with hospitals recording a rate 64 times higher.

With superior outcomes in boutiques, a pressing question is raised: Are our healthcare choices driven by facts or mere perception? 

Insight 3: Boutiques – Catering to Low-Risk Scenarios

In hospitals, more than 34 out of every 100 deliveries involve some form of pre-birth risk, which is more than four times higher than the ratio observed in boutiques. This indicates the risk-averse nature of boutiques and could be a contributing factor to their generally better outcomes.

This suggests a trend: At risk? Go to the Hospital. Not at risk? Hospital is optional.

What specific services do hospitals provide that aren't available in boutique births? If these services were made available in boutiques, how would the market react?

Insight 4: The Appeal of Hospitals

Hospitals’ broad array of services create an appealing safety net:

• Anesthesia is used in 80% of hospital births.
• A doctor is present at 80% of deliveries.
• Cesarean delivery is chosen by 23% of mothers without attempting a vaginal birth first. 
• 20% of mothers choose to use antibiotics, labor augmentation, or labor induction. 

Contrarily, these services are virtually non-existent in boutique births.

Therein lies hospitals’ appeal: While boutiques offer a more tranquil, controlled environment with better outcomes, many parents prioritize having immediate access to medical interventions like anesthesia, cesarean sections, or NICU facilities if complications occur.

Recognizing this, there are three key business strategies to consider:

• Natural Birth Boutique: Capitalizing on the 12% of hospital births that are natural, we could establish non-hospital facilities that provide a serene, empowering environment for these births. However, the lack of emergency services may deter potential clients due to perceived risks.
• Cesarean Delivery Suite: Creating a dedicated suite for cesarean delivery outside traditional hospitals could cater to a significant market segment. This facility could offer a more intimate, relaxed experience compared to traditional hospitals, potentially securing ~23.44% of all US births. However, exclusively offering cesarean deliveries could limit the range of clientele, for example, those who want to attempt vaginal first. 
• Hybrid Boutique - Delivery Specialist: A non-hospital facility offering a wide range of birthing preferences can provide a personalized, comfortable birthing experience. This serene environment, complete with emergency services, cesarean sections, and NICU facilities, would cater to the majority expecting mothers.

Naturally, regulatory, cost and logistic complications arise for each of these paths. This is not within the scope of this project but is considered ambitious yet managable. 

Insight 6: Demographic Distribution and Targeting

We have established a comprehensive filtering system that provides insight into the demographics of unique groups. By adjusting variables such as pre-birth risks, hospital intervention, and birthplace, we can generate many distinct subsets. Each subset can then be analyzed in terms of age, education, marital status, and nationality, offering a robust understanding of different customer profiles. Effectively, this system would enable the design of highly tailored marketing campaigns that target specific groups.

Which group should we focus on to optimize customer satisfaction and acquisition?

Insight 7: Where to launch and scale?

The most entrenched region is the Northwest (red map), starting here could offer immediate traction due to the strong baseline interest in boutique births.

The largest birth markets are NY, CA, TX, and FL (blue and green maps), these markets present significant growth opportunities, perhaps we can tip the scale toward boutiques.

Of the largest markets, trend growth remains hottest in Texas (blue-red maps), by entering here at the right moment we could catch and ride the wave.

Which direction we should take leads to three questions: 

Should we launch in the most entrenched region and take over?

Establish mastery in the large markets?

Or jump into the hottest trending zone?

Insight 8: Key Findings from Payment Patterns

Interestingly, more than 37% of boutique deliveries are self-paid, a striking contrast to the 3% rate in hospitals. This high out-of-pocket expenditure suggests that avoiding hospitals is a top priority for some parents. This hints that more parents are willing to leave the hospitals, if only there was a more viable alternative. Further, this highlights a potential gap of insurance accessibility in boutiques. 

What prevents boutiques from adopting similar financial services as those provided in hospitals? Would mirroring the hospitals’ financial services available lure more clients, and if so, what obstacles might surface in this endeavor? Considering, for example, the possibility of exclusive volume deals from insurers or government tax benefits extended to hospitals. 

Another question this raises is, if boutique births are safer and significantly lower cost, why aren’t insurers jumping on it?

Insight 9: Data-Driven Operations Planning:

Our analysis of the data on hand can directly inform our strategic operations planning and financial forecasting in multiple critical ways:

• Patterns in the birth month data can provide us with valuable insights into our monthly demand, allowing for effective resource allocation and improved service efficiency.
• Data from the month pre-care begins helps us anticipate staffing requirements, enabling us to adjust our workforce in anticipation of demand and maintain a high quality of care.
• The number of pre-care visits indicates the necessary prenatal hours per client, guiding our client service management and ensuring a seamless customer experience. 

Perhaps the industry offers more data that can encourage cutting edge efficiencies and quality of service.

Insight 10: Assessing Market Potential

“Childbirth is the most frequent reason for an inpatient admission in the United States, and Cesarean-section (C-section) is the most common operating room procedure in an inpatient hospital stay. Among people who get insurance through an employer, the combination of labor, delivery, and newborn care makes up nearly one in six dollars spent on inpatient care. Childbirth accounts for an estimated four out of every five dollars spent on maternal-newborn health care. Consequently, childbirth is a significant element of health care utilization and spending, particularly for hospitals.”

National Average Pricing:

• Home Birth Delivery: $4,650
• Birth Center Vaginal: $8,309
• Hospital Birth Vaginal: $12,531
• Cesarean Delivery: $17,500

Final Insight: Hypothetical Business Plan for Bloom Maternity

Bloom Maternity aims to redefine parents' experience in giving birth by setting a new standard in maternity that bring comfort, peace, and personalization to the forefront. Designed to rejuvenate maternity care, Bloom Maternity offers fully integrated, standalone boutique birthing facilities. By merging tranquil, personalized birthing experiences inspired by top boutiques with state-of-the-art medical technology and care from leading hospitals, we aim to address the considerable unmet need for personalized, empowered, and safe birthing services beyond the traditional hospital environment.

Our multidisciplinary team of professionals, including OBGYNs, anesthesiologists, certified midwife nurses, and support staff, ensures a safe, personalized birthing experience. We offer a continuum of care from prenatal to postnatal stages, providing expectant parents with comprehensive support and guidance.

To rapidly scale and ensure accessibility, we plan to forge partnerships and acquire leading OB-GYN practices, and work with insurance companies and government agencies. This strategy will not only enhance our services and customer satisfaction but also ensure prospective parents have financially accessible alternatives to traditional hospital births.

Our phased expansion plan focuses on New York, Florida, Texas, and California due to their sizable, trending markets. Subsequently, we aim to extend our footprint to other potential markets across the country. Guiding us through regulatory and logistical challenges, our advisory team brings a wealth of industry-relevant experience to the table.

[This business might actually be suitable for a private equity firm or mid to large OBGYN practice looking to scale]

Data Sources

• 2021 CDC Natality Report (5gb txt file, 3.6m rows, 52 nested columns, 252 features)
• 2017 to 2021 Geographic Data
• 2017 to 2021 Race Date

Future Work

• Demographic Clustering
  • Granular clustering of risks and outcomes (i.e. risks/outcomes by age, race, education, payment type)
  • Incorporate data on religious affiliations
• Cesarean Deep Dive
  • Market value, demographics, and pre-birth risks of parents who choose to do a cesarean without attempting vaginal birth
  • Cesarean births per state
  • What are chances subsequent births are cesarean after the first?
  • Is first birth more likely to have cesarean than later births
  • Does age influence cesareans?
  • Percentage of no-risk cesareans
  • Risks / Outcomes of Cesarean Births with Vaginal Attempt
  • Risks / Outcomes of Cesarean Births
  • Long term impacts cesareans
• Pre-Care and Outcome
  • How pre-care visits impact outcomes
• User LTV and Cost
  • Costs associated with user acquisition and services
  • Lifetime revenue associated per user
• Enhance visualizations 

Cited and Additional Resources

• Planned Home Birth Report on the subject by American College of Obstetricians and Gynecologists
• The Cost of Home Birth in the United States
• Midwife Medicaid Reimbursement Policies by State
• Understanding Variation in Spending on Childbirth Among the Commercially Insured
  • “Childbirth is the most frequent reason for an inpatient admission in the United States, and Cesarean-section (C-section) is the most common operating room procedure in an inpatient hospital stay. Among people who get insurance through an employer, the combination of labor, delivery, and newborn care makes up nearly one in six dollars spent on inpatient care. Childbirth accounts for an estimated four out of every five dollars spent on maternal-newborn health care. Consequently, childbirth is a significant element of health care utilization and spending, particularly for hospitals.”
• Mortality Multiple Cause-of-Death Public Use Record describes the cause of death for mother or infant, up-to 11 months infant age. 
• Fetal Death Record Records of death prior to the complete expulsion or extraction from its mother irrespective of the duration of pregnancy and which is not an induced termination of pregnancy
• Mapping integration of midwives across the United States: Impact on access, equity, and outcomes

Additional Information

Boutique Births and Insurance

Our external research points out that most states mandate reimbursement for home births facilitated by midwives. However, many midwifery practices are small-scale and lack the requisite infrastructure to manage medical billing, thus creating an opportunity to professionalize non-hospital birthing services.

OBGYN influences and Unnecessary Cesareans

Anecdotally, OBGYNs are typically affiliated with hospitals, which leads to several time management concerns, such as the potential encouragement of unnecessary Cesarean sections for the sake of time and profitability. This observation begs the question, why haven't more OBGYNs initiated non-hospital, full-service birthing centers?

Recent discussions in scientific literature and media suggest a significant proportion of Cesarean sections may not be necessary. These procedures are sometimes preferred by hospitals and OBGYNs due to their predictability, shorter delivery time, and higher revenue generation. However, Cesarean sections are major surgeries that can have lasting impacts on both mother and infant, making this a crucial aspect to consider.

On another note, the fact that obstetricians and gynecologists often work separately from hospitals might represent an operational inefficiency. Exploring possibilities for integrating OB-GYN services on-site could result in improved service provision and outcomes.

Planned Vs. Unplanned Home Births

Planning is the key to a successful home birth…