WASHINGTON — Two years after undercover videos rocked Planned Parenthood, the organization has emerged stronger than ever financially — thanks to a massive influx of private donors and support that is now helping the organization evolve and restructure.
But according to analysts, this ongoing shift in the abortion behemoth’s business model actually increases the urgency of the drive to defund Planned Parenthood of government funding, thereby depriving it of the opportunity to continue its current level of operations as it seeks to restructure itself.
The 2016-2017 annual report from Planned Parenthood shows private donations increased over the past fiscal year and nearly equals the revenue from government grants and reimbursements. The excess cash has allowed the abortion giant to pour more than $100 million into strengthening its base of support and invest in updating its business delivery model.
Planned Parenthood reported $543.7 million in government reimbursements and grants — mostly through Medicaid payments — down only $10 million from the previous year.
But private donations and bequests soared to $532.7 million, representing an increase of $180 million in private support since pro-life activists David Daleiden and Sandra Merritt released undercover videos of Planned Parenthood executives discussing their abortion business and how it could provide fetal remains for scientific research.
William Bowman, dean of The Catholic University of America’s Busch School of Business, told the Register the most significant aspect of the report was the “dramatic increase” in private funding for Planned Parenthood in 2017.
Bowman expected the new fiscal year will be a turning point for Planned Parenthood, which appears to be reducing its reliance on government funding by expanding its base of “private philanthropy” beyond its current mega-donors, such as the foundations of Bill and Melinda Gates, George Soros and Warren Buffet.
“If Trump could cut in half Planned Parenthood’s government funding immediately, it might not be able to recover,” Bowman said. “Every year that this doesn’t happen increases the likelihood that they can find more private donors and survive.”
Bowman said that Planned Parenthood has financially done well as a nonprofit: The organization has an average annual profit of $50-$100 million over the past seven years, as revenue has consistently outpaced expenses.
Planned Parenthood’s operations on the other hand, Bowman pointed out, show that it is facing a “flat to declining market in its key service segments.”
Over the past five years of annual reports, Planned Parenthood’s clients have declined from 3 million to 2.4 million. Cancer and prevention screenings have declined by more than 41%, while contraception services have dropped 28%. Abortion services dropped over that same period, from approximately 327,000 to 321,000, although Planned Parenthood’s share of the total U.S. abortion market increased to 35%.*
“This is what has driven the closure of 100 clinics in the past five years, including 32 last year alone,” Bowman said.
However, Bowman pointed out that well-managed companies seek to reduce costs and eliminate inefficiencies in dealing with a declining market.
“I expect they will build fewer, larger facilities to gain economies of scale,” he said.
The Declining Market
Chuck Donovan, president of the Charlotte Lozier Institute, the research arm of the pro-life Susan B. Anthony List, told the Register that Planned Parenthood’s model is currently a “dinosaur” that has not diversified for the current medical market.
“Their client base is shrinking,” he said. “More women are going elsewhere.”
In this respect, Obamacare’s mandates have played a large role in upsetting Planned Parenthood’s marketing approach. The organization has typically relied upon building relationships with patients seeking non-abortion medical services, such as testing and treatment for sexually transmitted diseases or urinary tract infections, contraception and cancer screenings, prior to a crisis pregnancy.
This pre-existing relationship helps to draw the 13% of Planned Parenthood’s 2.4 million clients in the past fiscal year who obtained abortion services there. Income from these abortion services is critical to Planned Parenthood’s bottom line, as upward of half of its $318.1 million in non-governmental health services revenue may come from providing abortions. Guttmacher Institute’s average cost from 2009 for a first-trimester surgical abortion of $545, adjusted for inflation for June 2017, provides a conservative estimate of Planned Parenthood’s abortion revenue of approximately $175 million.
The contraception mandate has allowed people with insurance to access contraception as a covered benefit, leading to a rapid adoption of long-acting reversible contraception (LARCs). LARCs have increased to 19% of the contraceptives Planned Parenthood distributes.
A Planned Parenthood spokesman told the Register that the effectiveness of LARCs means the business may not see clients for additional contraception for three to 10 years afterward.
Research-based recommendations to reduce the frequency of pap smears and breast exams to detect cancer have also played a role in sharply reducing the number of patients Planned Parenthood sees annually for these services.
“Planned Parenthood’s service numbers will vary year to year based on multiple factors, including patient needs and new medical science and research,” Kevin Griffis, Planned Parenthood Federation of America’s vice president for communications, told the Register.
Obamacare’s insurance requirements also allow young adults, who might not have been eligible for Medicaid, to stay on their parents’ insurance until age 26. As a result, carrying insurance means they have wider access to community health centers, which offer more comprehensive services than Planned Parenthood, and can get their prescriptions from neighborhood pharmacies.
“When women can go elsewhere, they will,” Charlotte Lozier Institute’s Donovan said, pointing to CLI research that shows Planned Parenthood has had problems with client satisfaction over the care they receive.
By contrast, the positive associations that pregnancy-resource centers have, combined with the demand for more comprehensive medical services by millennials, show such centers have opportunities to grow.
“The medicalization of the [pregnancy-resource] centers needs to continue and become more deliberate,” he said. Donovan pointed to efforts by Obria, NIFLA, Heartbeat International and the Human Coalition to increase their affiliates’ range of medical services.
CLI has found 90% of these pro-life organizations rely on local community funding, and 80% are not receiving public funding. Moreover, Donovan said pregnancy-resource centers have not received the kind of groundswell of private donor support that Planned Parenthood did, in the wake of the Daleiden videos.
“The pro-life movement needs to be attracting more private support,” he said.
Private Investors Make the Difference
Planned Parenthood has successfully leveraged the Daleiden videos and congressional investigations into a massive fundraising drive, ending the year with $1.6 billion in net assets. But rather than hoarding its cash, Planned Parenthood has funneled private donor support into overhauling its structure.
Approximately $96 million was allocated to strengthening its grassroots activists and lobbying apparatus at the state and federal levels under the headings “movement building” and “strengthen and secure Planned Parenthood.”
The national office also invested $20 million to “deploy 21st-century technology,” which the annual report explained would drive more clients to on-the-ground centers. Currently, 43 out of 56 Planned Parenthood affiliates provide online appointment scheduling, and nearly half of these affiliates book abortions online.
The report showed one million appointments were booked last fiscal year through Planned Parenthood’s online services; 67% were through mobile devices, and 60% of appointments were made after normal business hours. One out of three persons who used its chat/text services had an abortion facility visit within 10 days.
Since Planned Parenthood launched its “Online Health Services” pilot program in several states in 2016, its affiliates in those states have seen a 320% increase in patients seeking birth control or sexually transmitted infection testing services. In California, 7,000 birth-control packs have been delivered through Planned Parenthood’s mail delivery program.
Will Pro-Life Investors Step Up?
Obria, which is helping pregnancy-resource centers expand their services as pro-life medical clinics with a recognized national brand, has invested $1 million into developing its own telemedicine platforms and app to help women and men receive constructive, life-affirming health care and services.
She said the 2017 Planned Parenthood report shows the pro-life movement has no option but to embrace the same technology to compete with Planned Parenthood in reaching those same target demographics.
“Telemedicine is where they are going to book their appointments with us,” she said.
The race to keep up can be difficult without the same deep pockets. Regardless of what happens with Planned Parenthood’s federal funding, Bravo said pro-life donors need to step forward and give Obria and other pro-life groups the resources to compete in the marketplace by providing superior, life-affirming, holistic care.
Bravo, a post-abortive mother herself, said that the advent of the abortion pill with this technology means the bedroom is the new abortion facility. The smartphone has replaced the sidewalk as the 15-to-20-second window to reach women contemplating abortion.
“We can beat them because we can compete,” she said. “But the bottom line is we need funding.”
Peter Jesserer Smith is a Register staff writer.
Planned Parenthood by the Numbers
321,384: Planned Parenthood abortions in 2016-2017
1.6 million: Planned Parenthood abortions since 2012
126: Number of abortions for every Planned Parenthood adoption referral since 2012
13%: Decrease in total services
14%: Decrease in Planned Parenthood abortion facilities
60%: Decrease in prenatal care
41%: Decrease in cancer screening and prevention services
Source: Susan B. Anthony List
*The figures have been updated from a previous version of this story published online, which had reflected trends starting from FY 2012, instead of FY 2013.