Planned Parenthood and the Demand for Abortion

Keith Riler Faith Magazine March – April 2012

Keith Riler carefully shows that American taxpayers are funding the enaction of a sophisticated business plan. This plan efficiently fosters demand for abortion through the ever deeper sexualisation of increasingly youthful Americans. This is all notwithstanding Planned Parenthood's spinning of its financial figures to obscure its nature as an effective business and the nature of that business.

The author is a financial analyst who has been a director of private and public companies in the US. Under this pen-name he is an occasional writer for the daily internet publication The American Thinker.

Much has been said about Planned Parenthood, and there seems to be very little about which the company's proponents and opponents agree. However, based upon its most recent financial results, both sides in the debate over its products, services and public funding should acknowledge that the Planned Parenthood enterprise is a very successful business.

Consider that Planned Parenthood has grown its main business line by 67\% since 2000 and increased receipts of taxpayer-funded government grants and contracts by 79\% since 2001.

Its most recent financial data [1] shows that, on June 30, 2010, the Planned Parenthood Federation of America ("Planned Parenthood") had $1.2 billion in total assets and $1.0 billion in net worth. Since that time, an additional $250 [2] million in government grants and payments has further improved Planned Parenthood's financial position. Clearly, President Cecile Richards has earned her $384,761 of annual compensation;[3] as have the top ten affiliate managers, each of whom earn more than $260,000 a year.[4]

Planned Parenthood's summary income statements for the last two reported years are shown in Table 1.

Given its success, what are Planned Parenthood's sources of revenue? What drives the business and fuels its growth? How reliable and repeatable are the company's results? What's the marketing strategy? Planned Parenthood's summary financial disclosures and fact sheets provide the information necessary to answer these questions.
Key Revenue Contributors - Abortion, Infection Testing and Contraception

Given the controversial nature of abortion, there is heated debate over whether abortion is a key Planned Parenthood money-maker. Because the facts are accessible, this debate is unnecessary.

As one might expect from the nation's largest abortion chain, abortion is a meaningful contributor to Planned Parenthood's health centre income, which income was $404.9 million in 2009. In that period, Planned Parenthood performed 331,796 abortions (27\% of all reported US abortions)[5] which, according to the Guttmacher Institute, a pro-abortion research group and sometime Planned Parenthood affiliate, now cost an average of $468 per abortion.[6]

At $468 a head, Planned Parenthood collected $155 million in abortion revenues in 2009, or 38.4\% of its health centre income. The just-released 2010 numbers indicate a similarly high percentage, at 48.2\%. Planned Parenthood offers over 30 different products and services, making any single 38-48\% revenue contributor very meaningful.

Planned Parenthood claims that abortion constitutes 3\% of the company's services. [7] While technically true, an unorthodox calculation underlies that statistic. Planned Parenthood's 3\% calculation equally weights all products and services; for example, the calculation counts a condom, a pregnancy test and a $468 abortion the same. This is misleading and, as in any financial exercise, the correct assessment is a dollar-weighted one.

Figure 1: Revenue Contributions

Dollar-based analysis suggests that just as (i) a store that sells five ice trays for every freezer is an appliance business, (ii) a company that sells four times the amount of tires as cars is a car dealership, (iii) and Boeing, which sells 99 spare parts for every jet, is an aircraft manufacturer, so Planned Parenthood is in the abortion business.

Abortion is a meaningful contributor to Planned Parenthood's results, but not the only contributor. What are the revenues associated with the other 30+ products and services? [8]

Although Planned Parenthood does not detail its revenues by product line, some of the company's local affiliates publish unit pricing. Using these online "cost calculators" and adjusting for the profile of a typical Planned Parenthood customer, it is easy to discern Planned Parenthood's major money makers. The corresponding revenue percentages, based on the Hudson-Peconic Planned Parenthood cost calculator, are shown in Figure 1. For a detailed breakdown see Table 5, [9] which can be found on the Faith website (www.faith.org).

The analysis suggests that abortions/emergency contraception, infection testing and government-subsidised contraception are the company's major lines of business.

Because contraception distribution is heavily subsidised by Medicaid, the Title X family planning programme[10] and other programmes, low-cost and freebie contraceptive giveaways are not loss leaders for Planned Parenthood.

Business Drivers

The historical data [11] listed in Table 2 shows that, in the face of nationally falling abortions, down to 92\% in 2009 versus 2000 levels, Planned Parenthood succeeded in growing its abortions by 68\%, government funding by 79\% and contraception distribution by 38\% over roughly the same period. The company's operations demonstrate the following correlations (Table 3) [12]

 

 

 

 

 

 

 

 

 

 

 

Several of these correlations are noteworthy. First, Planned Parenthood's abortion count has been highly negatively correlated with national abortion trends, at -85\% correlation. Although abortions have declined nationally, Planned Parenthood has steadily grown its abortion business. Second, Planned Parenthood's abortions are very highly positively correlated with the amount of government funds received by the company, at 99\% correlation. Third, Planned Parenthood abortions and contraception activities are also highly positively correlated, at 81-86\% correlation (depending upon whether male reversible contraception was distributed in 2010, see footnote 2 to Table 2).

These results contradict the oft-heard wisdom that Planned Parenthood's government support is unrelated to its abortion business.[13] At 99\% correlation, Planned Parenthood's government funding and abortions are statistically one and the same.[14]

The strength of these correlations can be illustrated by a comparison to man-made global warming,[15] believed by many to be settled science. In Figure 2, the correlations between government funding, abortion and contraception are compared to the correlation between carbon dioxide and temperature. The chart indicates that the relationship between government funding and abortion is substantially more settled than the relationship between C02 and temperature:

The charts below confirm that Planned Parenthood's abortion business is highly related to its government funding. The scatter plot (Figure 3) demonstrates a near-linear relationship and the bar graph (Figure 4) shows that for every $1 million of taxpayers' money, a consistent average of 949 abortions results:

The inverse of the 949 abortion statistic reveals that Planned Parenthood receives an average of $1,054 from the US government for each aborted child. This 99\%-correlated grant payment, when combined with the average $468 paid by aborting mothers, means that Planned Parenthood receives $1,522 per aborted life, or $501.4 million in 2010 (48\% of all revenues).

High Correlation - Abortions 99\% Correlated with Government Funding and 80+\% with Contraception

There is an apparent inconsistency between (i) a 99\% correlation and (ii) Planned Parenthood's strong assertions that no connection exists between taxpayer support and abortions. The assertions don't square with the numbers.

Fungibility is perhaps a partial explanation, although one that seems insufficient given the very high correlations. Specifically, the government funds collected by Planned Parenthood, whether in the form of reimbursements or profit,[16] might be reinvested in abortion-related activities or promotions. It is also possible there is a more explicit connection between abortion and Planned Parenthood's grants, given the strength of the correlation; however, such an analysis is beyond the scope of this paper.

On the other hand, an explanation of the 80+\% correlation between contraception and abortion is readily available. The answer is straightforward. Most adolescent males will wholeheartedly affirm a connection between the availability of contraception and sexual activity, and scientific data supports that link.

Studies have shown that contraception increases sexual activity,[17] that more contraception means more sex. One study,[18] based on Centres for Disease Control data, established clear linkages between birth control (the pill, the Depo-Provera shot and condoms) and increases in sexually transmitted diseases ("STD"or "STDs"). Use of an effective form of contraception may do little to protect a sexually active individual, especially an adolescent, against infection, and use of multiple methods simultaneously to alter this income provides many challenges.[19] STD increases are a very reliable indicator of increased sexual activity.

Planned Parenthood's data suggests the same link. The company reports remarkably similar statistics for distributed contraception and STDs. Although the data is only available for the last three years, it is noteworthy that the company's contraception and infection figures are 97.5\% alike (11.65 million contraception clients and services, assuming condom distribution in 2009-2010, versus 11.93 million testing and treatment clients).[20]

And more sex means more pregnancies. Why? Because contraception is far from 100\% effective and with mass distribution of contraception comes a commensurate increase in sexual activity. More pregnancies will result because contraception fails in predictable percentages. Consider the well-established failure rates for the most common types of contraception (Table 4): [21]

Spread this contraceptive ineffectiveness over a few million women, and you have yourself an abortion business. Contraception seeds abortions through predictable failure rates. Sociobiologist Lionel Tiger has observed that "contraception causes abortion," [22] and Planned Parenthood data indicates he is correct.

Reliability and Repeatability

Planned Parenthood's business model appears reliable. Consider that if birth control pills have an 8\% typical use failure rate, we can expect eight of 100 women on the pill will get pregnant each year. Because, in this analysis, these women are already Planned Parenthood customers and not desirous of a child, they represent highly likely abortion revenues. The abortion cross-selling opportunity is an obvious extension of the contraception distribution business.

The details are shown in Table 6, which can be found on the Faith website (www.faith.org.uk), but note from the graphs below (Figures 5 and 6) that Planned Parenthood's contraception distribution creates a backlog of abortion demand that typically corresponds to 60-70\% of the company's actual annual sales of abortions. Very few businesses start the year with 60-70\% of their numbers assured and even fewer receive that assurance from never-to-be-repaid taxpayer support.

Although the contraceptive services bars in Figure 5 dwarf the likely pregnancies and abortion backlog, that backlog makes up a substantial percentage of Planned Parenthood's actual abortions as Figure 6 shows. And Planned Parenthood very efficiently converts pregnancies into abortions, over 90\% of the time. [23]

Marketing Strategy

Abortion and sexually transmitted infections, Planned Parenthood's money-makers, depend on the contraception-sexual activity link and reliable contraceptive failure rates. Said differently, Planned Parenthood's business prospers when customers buy into a sexually active, reportedly "safe" lifestyle. Customers have done so, resulting in more abortions and more infections.

Planned Parenthood's average customer repeated business four times in 2010. [24] That customer bought contraception, disease testing, pregnancy tests and abortions. Four times a year is a repeat rate more characteristic of a high-end retail business than an annual well-woman exam. This isn't surprising because, like a clothing boutique or a Botox business, Planned Parenthood is less addressing a rare need than selling a lifestyle. Planned Parenthood's own pricing is evidence of this, with returning customer discounts that can reach 40\%.[25]

Lifestyle promotion is apparent in Planned Parenthood's materials, which focus on a purportedly free and hip lifestyle, a focus particularly aimed at the young. Its 2008-2009 financial report[26] is packed with depictions of what appear to be children. Page 7 depicts a boy being shown how to apply a condom to a wood model. Page 9 depicts three young girls, with the caption "decide which form of birth control is right for you." Page 17 has a fun photo of nine girls and women holding up cardboard signs that read, "OMG" "GYT" (get yourself tested) "BE SEXY" "AND HEALTHY" "GET" "YOURSELF" "TESTED" and "GYT." All are presented as very hip, sexy and natural. To underscore hip-ness, Planned Parenthood uses photographs of and quotes from popular actresses.

Glimpses at Planned Parenthood's marketing over the last five years suggest a trend toward younger prospects. The photos in Planned Parenthood's annual reports have progressively used seemingly younger and younger models. Consider the pictures below from the 2004, 2006, 2008 and 2009 annual reports (respectively, from left to right):

Apparently, Planned Parenthood also solicits the Girl Scouts, a promising pool of future customers. News organisations have reported that Planned Parenthood has a long history [27] of presenting girl scouts with family planning and population control workshops, Planned Parenthood field trips, abortion-promoting materials and Planned Parenthood-sponsored counseling sessions. Recently, several Houston-area Girl Scouts protested [28] at their organisation's Planned Parenthood connections and promotion, and established a website [29] to track the Planned Parenthood-Girl Scout link.

The Girl Scout age group (11 to 17 years old) holds great potential for Planned Parenthood, particularly if individual Girl Scouts buy into the Planned Parenthood sexually active lifestyle. The company's interest in the age group was recently confirmed by Planned Parenthood President Cecile Richards' push to make Plan B contraception widely available to young teens.[30] This was a savvy long-term move, as any loss of Plan B sales to local pharmacies would have been more than offset by non-pharmacy bell ringers like abortions and infection testing/treatment.

Ms. Richards has been very clear about her child-focused strategy, disclosing that in 2009-2010, Planned Parenthood "reached more than 1.1 million adolescents and parents ... with information and education to help them make informed decisions and stay safe."[31]

Early and aggressive marketing of a sexually active lifestyle, free birth control and a four times per year purchasing pattern are the Planned Parenthood funnel, out of which comes a large and growing number of big-ticket sales - infection treatment and abortions - for which Planned Parenthood works very hard.

Conclusion

Planned Parenthood uses a very successful and clever business model, but one that is not unprecedented. Planned Parenthood's effective business model was pioneered by drug pushers - give away freebies in anticipation of bigger-ticket sales when the customer is desperate. Of course, Planned Parenthood is legal.

Understanding its ability to close the high-dollar sales requires only that one understand that contraception and sexual activity are highly correlated; meaning more contraception equals more sexual activity. To the company's benefit, government funding covers the cost of much of the contraception and supercharges the abortion business.

When this scenario of cheap contraception leading to increased sex occurs widely, the law of large numbers plays out and pregnancies increase. More abortions and more infections mean more revenues that can be reinvested in securing new and younger customers who repeat business frequently.

Planned Parenthood promises its customers a highly desired but improbable package - inexpensive freedom, safe sex and personal autonomy-which, upon failure, produces substantial revenue and abortions 90-plus percent of the time. From the point of view of both the desperate customer and Planned Parenthood, this is a "no choice" business model that consistently produces big ticket sales.

The business model can be summarised in four steps:

• Give away contraception, heavily subsidised by Medicaid, Title X grants and other federal and state programs.

Increased sexual activity, infections and contraceptive failures play out in large and predictable numbers - 3 million people and 11 million services in 2009-2010.

Welcome back the repeat customers - more sexual activity means more sexually transmitted diseases and pregnancies.

For the unexpectedly pregnant, hard sell abortion, the bell ringer - Planned Parenthood aborts 391 x more frequently than it refers for adoption.[32]

Planned Parenthood is truly different in so many ways - it is a business paid by the government to sell products that create a profitable backlog of higher ticket sales. Imagine if a vision care company received government grants to sell pills that caused vision loss, after which it then sold high dollar glasses, contacts and Lasik procedures.

This successful and effective business makes its money on abortions and infections, captures customers with government-funded contraception and the promise of safe sex, and benefits from a very reliable abortion backlog, adding to that pool by marketing to younger and younger customers. Planned Parenthood is truly unique.

Notes
[1] Planned Parenthood 2009-2010 Annual Report, found at: http://issuu.com/actionfund/docs/ppfa\_financials\_2010\_122711\_web\_vf?mode=window&viewMode=doublePage [2] Planned Parenthood received $487 million in government support for the year ended June 30, 2010. At this rate, Planned Parenthood would have received another $253 million by January 7, 2012.
[3] Schedule J to Planned Parenthood Action Fund, Inc.'s Form CHAR 500 2008-2009 filing with the New York State Dept. of Law, Charities Bureau.
[4] http://www.lifenews.com/2012/01/09/planned-parenthood-abortion-biz-ceos-average-158k-salary/?pr=1
[5] 332,278 Planned Parenthood abortions in 2008-2009 relative to 1,212,400 US abortions in 2008.
[6]Asomewhat dated estimate, per http://civilliberty.about.com/od/abortion/f/Average-Cost-of-an-Abortion.htm, current PP Hudson-Peconic abortion rates range from $500-$900.
[7] September 2011 Planned Parenthood Fact Sheet, page 3.
[8]Which products and services include the pill, barrier contraception, progestin injectables, the hormone ring, IUDs, hormone patches, prescription barrier contraception, emergency contraception, sterilisation, condoms, vasectomies, ST1 testing, HIV testing, pap tests, HPV vaccinations, colpospcopies, pregnancy tests, abortions and other services.
[9] See Faith website for Tables 5 & 6. This analysis should only be used as a guide to the relative contributions of the company's major products and services because (i) Hudson Peconic's pricing has been used, which may or may not be representative of the average pricing for all Planned Parenthood facilities, and (if) the results will not match health centre income because Planned Parenthood's method for allocating subsidised revenues between grant and health centre sources is neither clear nor disclosed. Thus, although Table 5 indicates a total revenue stream of $500-600 million based on Hudson Peconic pricing, without more information it is impossible to allocate this revenue stream between health centres, government grants and private contributions.
[10] Title X covers customers at or below 250\% of the poverty line. Planned Parenthood has indicated that 75\% of its customers are at or below 150\% of the poverty line, indicating that Planned Parenthood is receiving taxpayer money for the vast majority of its customers.
[11] Planned Parenthood fiscal years are presented, ie 2008 represents the 2007-2008 fiscal year. Planned Parenthood's "Government Grants and Contracts" revenue line item increased to $487.4 million in 2010, from $363.2 million in 2009. According to the company's footnote (b) to its Combined Statement of Revenue, Expenses and Changes in Net Assets, this increase occurred "mainly" as the result of an accounting change. In 2010, Planned Parenthood reflected all Medicaid reimbursements in the grants and contracts revenue line item, instead of in the "Health Centre Income" line item, as was the prior practice. The company did not restate prior years for the change, as would normally be required by generally accepted accounting principles. To maintain comparability with prior years, thisadjustment must be reversed in 2010 and added back to health centre income, however, the company did not provide the actual data to accurately do so. As a result, the table assumes two possible approaches consistent with Planned Parenthood's use of the word "mainly," which adjustments should span the range of possibilities. The two approaches are (a) that all of the increase in the government grants and contracts line item is due to the Medicaid reclassification, and thus removed from the government line item, and (b) that half of the increase in the government grants and contracts line item is due to the medicaid reclassification, and thus removed from the government line item. Correlations have been run on both methods and are shown above in the "thru 10" correlation results, at 99.4\%for the methodology described in (a) and 95.6\% for that in (b) herein.
[12] Derived using Microsoft Excel's @CORREL function, which function returns a correlation coefficient, based upon a sum of squares variation calculation used to assess a linear relationship.
[13] Rep. Gwen Moore (D-WI): "Title X Has Nothing to Do with Abortion." February 2011. Huffington Post: "Title X, the only federal grant program dedicated solely to family planning and reproductive health services for low-income and uninsured patients, has nothing to do with abortion." April 2011
[14] Although correlation does not necessarily imply causation, high correlation is an ever-present and necessary characteristic of causation.
[15] Data from ftp://ftp.cmdl.noaa.gov/ccg/co2/trends/co2\_annmean\_gl.txt using monte carlo technique & 100 global annual averages and http://cdiac.esd.ornl.gov/ftp/trends/co2/lawdome.combined.dat using 20 yr smoothed data; http://data.giss.nasa.gov/gistemp/tabledata\_v3/GLB.Ts.txt. Data thru 2008.
[16] In California, Planned Parenthood apparently charged full retail prices ($28/$38) to the state for drugs that cost $4.25-$4.50.
[17] Habit Persistence and Teen Sex: Could Increased Access to Contraception have Unintended Consequences for Teen Pregnancies? January 22, 2011. Duke/Yale/ CDC study, http://public.econ.duke.edu/~psarcidi/teensex.pdf
[18] http://www.law.gmu.edu/assets/files/publications/working\_papers/02-11.pdf
[19] http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3139861/
[20] Planned Parenthood 2009-2010 Annual Report. Fact Sheets, September 2011 and September 2010. 2009 and 2010 each include 140,648 male condom clients.
[21] Failure rates from WebMD, Wikipedia, Planned Parenthood and Global Library of Women's Medicine, all of which sources agree.
[22] See Tiger's book Decline of the Males, Golden Books Publishing Company, 2nd edition, April 1,1999; and Mary Eberstadt's article, "The Vindication of Humanae Vitae," First Things, August/September 2008, p. 37.
[23] In 2009: 340,276 services comprised 332,278 abortions (98\%), 7,021 prenatal customers (2\%) and 977 adoption referrals (0.3\%). In 2010, 361,384 services comprised 329,445 abortions (91\%), 31,098 prenatal services (9\%) and 841 adoption referrals (0.2\%). Note PP's change in basis for measurement between 2009 and 2010, with prenatal customers counted in 2009 and services counted in 2010.
[24] The Planned Parenthood 2009-2010 Annual Report states that 3 million people bought 11 million services, repeating business 3.7x per customer in 2010. 2009 showed a similar repeat ratio, at 3.8x.
[25] Planned Parenthood of Maryland offers HIV testing at $25-$62 for returning customers and $40-$104 for new customers. See http://www.plannedparenthood.org/maryland/cost-calculator-english-28743.asp for other available discounts.
[26] http://www.plannedparenthood.org/files/PPFA/PP\_AR\_011011\_vF.pdf
[27] http://www.honestgirlscouts.com/discover\_pp\_history.html
[28] http://www.khou.com/news/Woodlands-teenagers-quit-Girl-Scouts-over-alleged-ties-to-Planned-Parenthood-132663768.html
[29] http://Speaknowgirlscouts.com
[30] Cecile Richards' article, "The Right Plan for Plan B", in the Huffington Post, http://www.huffingtonpost.com/cecile-richards/the-right-plan-for-plan-b\_b\_1139184.html
[31]2009-2010 Annual Report, "A Message from Our Chair and President".
[32]From the 2009-2010 Annual Report which describes 329,445 abortions as compared to 841 adoption referrals.

Faith Magazine

March - April 2012