As a med spa owner, there are a lot of things that need to be done when you start your business. You have staff to hire, space to rent or buy, clients to find. The first step to creating a successful business is coming up with a novel, innovative idea or service for which there is a need. But, then what? Chances are, you probably need to form a business entity if you do not already have one. This might seem obvious for many, but the question that often follows is “what kind of entity?” One of the most popular choices over the past few decades has been a limited liability company, or “LLC”. An LLC is attractive to many business owners because it offers liability protection as well as ease in maintenance and broad flexibility in terms of taxation and structure.
The main advantage to an LLC is that it provides its owners (or members) with liability protection. In general, members of an LLC are not personally liable for the acts of the LLC. Meaning, if a lawsuit were filed against the LLC or any creditor issues arose, the members’ personal assets would be protected in most scenarios. However, this liability protection is not unlimited. A member can be held personally liable in certain situations or if the “corporate veil” were otherwise pierced. (See Bradford Adatto’s article here for more on this topic.)
Another advantage is an LLC’s taxation status – much flexibility exists in how this can be setup. The default tax status for most LLCs is that of “pass through” taxation (i.e., disregarded entity or partnership taxation), where the profits and losses “pass through” to those of the members and are reported on each member’s individual tax returns (as opposed to a corporation, which must pay its own taxes). However, this is only the default tax option. An LLC can actively opt for another tax status, such as C-Corporation or an S-Corporation. An S-Corporation also has pass-through taxation, but is attractive for a number of reasons, the main one being if members want to pay themselves wages as income reported on a W-2 (versus payments as profit distributions). There are some restrictions in selecting an S-Corporation, but overall it is important to note that an LLC can take on a variety of taxation statuses, all of which should be reviewed with a CPA or tax advisor and legal counsel.
Once these options are reviewed and selected, the next step is forming the LLC. There are two main formation documents for an LLC: the Certificate of Formation if in Texas (the Articles or Certificate of Organization in other states) and the Company Agreement if in Texas (the Operating Agreement in other states). The Certificate of Formation is filed with the state to officially form the entity while the Company Agreement is an internal document setting forth the agreement among the members regarding the management, control, operation, and other terms related to the LLC. As compared to a corporation, a Company Agreement combines the concepts of a corporation’s Bylaws and Shareholders’ Agreement into one document.
In sum, an LLC can protect your assets, business ideas, and offer tax flexibility, so it is a great option for many new and established business owners. If you have any entity-related questions or need help forming an LLC, consider reaching out to ByrdAdatto for a consultation.
Robert J. Fisher’s passion for healthcare traces back to his high school days of shadowing doctors. His passion evolved in college to study as a pre-med major. The last major evolution of Robert’s interest in health care was the transition to an interest in health care law. With this education, a business attorney for a father, and a renowned orthopedic surgeon for a father-in-law, Robert has the pedigree for success as a business and health care attorney at ByrdAdatto.
Posted By Administration,
Thursday, October 18, 2018
By David Shaffer, Insurance Office of America
If you own or operate a medical aesthetics practice, dealing with medical malpractice insurance is a part of your professional life. And if you don’t pay close attention to the specifics of your practice’s policy and/or the type of information shared with your insurer, you could certainly end up paying more for it than you should; or find yourself without coverage if—or when—a claim occurs.
It is important to note that multiple factors should be taken into consideration when a medical aesthetics practice is being underwritten. Additionally, underwriting rules, rates and guidelines vary between insurers. The following mistakes are those commonly observed when the entities of the medical aesthetics practice are shown as the policy’s named insured. When coverage to a medical aesthetics practice is extended through a physician policy, the underwriting review process does change, even though many of the same underwriting criteria are evaluated.
When underwriters underwrite medical aesthetics practices, they will often consider the number of treatments the practice administers when determining pricing. It stands to reason that if a facility administers a greater number of treatments, there is greater potential of being sued when compared to a facility that administers fewer treatments. But how do underwriters actually view treatment counts?
Most insurers’ underwriting guidelines are seeking treatment counts based upon a medical aesthetic practice’s patient visits. Some practices confuse this and report, for example, the number of units injected or the number of times a laser is fired. What exactly is meant by “patient visits?” Here’s a real-world example. Assume a client undergoes a Botox treatment. The facility should attribute one treatment count for the patient, regardless of how many times he or she is injected or the number of units that are injected. If the patient chooses to have another type of treatment during the same day’s visit (laser hair removal, for example), it would count as a separate treatment. This patient then accounted for one Botox treatment and one laser hair removal treatment.
In fact, I just had a client going through the renewal process, and they saw a 64% increase in price because they greatly overestimated the number of treatments expected to be perform in the coming policy year. Once we went back and looked at their renewal applications, we saw that their year-over-year projections had almost tripled, yet their anticipated gross receipts only reflected a marginal increase. With an updated and more accurate treatment count in hand, underwriting was able to adjust the facility’s pricing to a level comparable to the insured’s actual growth.
2. Revenue Overestimates
Another underwriting factor that is commonly used when determining malpractice pricing for a medical aesthetics practice is annual estimated gross revenues. It is not uncommon for new facilities to greatly overestimate their projected revenue. After all, there is really no way for them to know exactly how much revenue they are going to generate in their first year. Unfortunately, this could likely result in these practices paying more than they need to for insurance. When a business is just starting out, unnecessary additional expenses can be the difference between success and failure.
I usually tell prospects to be realistic and attainable with their first-year revenue projections. Underwriting knows that new medical aesthetic practices cannot accurately predict their revenues. However, the projections establish an initial exposure baseline for reviewing underwriters. Unlike workers compensation policies, the vast majority of the malpractice insurers offering malpractice to aesthetics practices do not audit policy revenues (or treatment counts) at the end of the policy term. Therefore, if a projection of $1 million is shared and only $250,000 in revenue is generated, the insurer will not return any premiums resulting from overestimation.
3. Improper Medical Director Coverage
Medical director coverage is another confusing area of the application process. Although the roles and responsibilities of a medical director may be clearly defined in an agreement/contract, the coverage afforded or needed may not. If a medical aesthetic practice’s medical director is working in a purely administrative capacity (no direct patient care or patient interaction), the facility’s policy customarily will extend adequate coverage without the need for adjustment. However, if the medical director wants or needs to become involved in patient care (i.e. patient consultations and/or good faith examinations), an adjustment to the practice’s policy or even separate coverage is usually required.
During the application process, an aesthetics practice needs to clearly explain the medical director’s role at the practice. Once clarified, there needs to be a determination of where coverage for the doctor will be provided. This could be through the practice’s malpractice policy, the doctor’s individual policy or perhaps a separate policy intended solely for medical directorship duties.
In my experience, nearly all medical aesthetic practice policies will automatically extend to a doctor’s administrative duties. By that I mean, those services such as creating and updating policies, procedures, consents, signing charts, etc. - all responsibilities that do not directly involve the patient. Assuming the medical director is involved to a greater extent, such as, performing good faith examinations, conducting patient consultations before or after a treatment and actually performing treatments, additional coverage would be required.
4. Failure to Identify Multiple Locations
It is important that a medical aesthetics practice with more than one location discloses each location when applying for medical malpractice insurance; otherwise, it could face enormous gaps in its coverage.
Most policies will include a location-specific endorsement restricting coverage to a scheduled insured location. Practices with more than one location need to make certain their underwriter is aware of all locations so they can either be added to the location endorsement, or have the location endorsement completely removed.
Along the same lines, if a medical aesthetics practice is performing treatments, such as Botox or fillers, at off-site locations—in traditional spas, for example, or even in patients’ homes—it must be declared on the application.
4a. Insurance and Botox Parties
A lot of underwriters will hesitate at offering coverage when a treatment provider wants to perform treatments off-site. This occurs most often when treatments are performed within a patient’s home: A Botox party is a perfect example.
Multiple underwriting concerns arise from such events such as:
Alcohol is being served, potentially resulting in impaired judgment;
The space is unsanitary;
There is less control over the space, resulting in potential slip and fall accidents;
Some insurance companies won’t have problems with off-site events, as long as the same policies, procedures and consents are used. Others don’t like the exposure and will elect not to provide coverage.
5. Failure to Maintain a Retroactive Date
It is important for an aesthetic medical practice to maintain its retroactive date—the first date for which an insurance company will provide coverage for claims occurring from treatments that have been provided—from one policy to the next. If a practice retains coverage with the same insurance company, this will likely not be an issue; however, if it moves from one insurance company to another, it must make sure that the retroactive date is carried forward. Should this not happen, claims made from treatments that occurred prior to the inception of the current policy will not be covered.
When an aesthetic medical practice retains its retroactive date upon switching insurers, the new insurance company will assume the defense and indemnification of a claim arising from services performed while a prior insurer provided insurance. This would be the case even though the new insurer didn’t provide insurance during the policy term in which the treatment was administered. When a practice elects to forego its retroactive date, they are choosing to self-insure against any claims that may still arise from treatments occurring prior to the establishment of their new retroactive date.”
6. Improper Named Insured
In many cases a medical aesthetics practice is operated by both a medical corporation and a management company, especially in those states where it is illegal for anyone other than a physician to own a medical aesthetics practice. And often, one or the other will be left off the application for medical malpractice insurance.
I always encourage people to show both medical corporations and management corporations as the applicant when completing their malpractice application. Including both entities on the policy will give the most flexibility to the practice if the relationship between the two corporations should experience turmoil and the relationship fails. In addition, including both entities ensures that each corporation is provided insurance if a claim does occur.
7. Failure to Accurately Depict a Physician’s Activity
Most policies that are written for medical aesthetics practices have the ability to incorporate physician coverage, but that coverage should be restricted to a physician’s activity at said practice. His or her activities outside the medical aesthetics practice, such as those at a private practice or at a different facility, should not be incorporated into their application when seeking coverage through the medical aesthetic practice’s policy.
While completing an application for inclusion in a medical aesthetics practice policy, it’s important for physicians to limit their exposure bases to what is actually being performed at, and on behalf of, the medical aesthetics practice. This includes items, such as the number of hours worked, the treatments administered or any supervision. Restricting the exposures will help to reduce the pricing applicable to the physician’s inclusion in the practice’s policy. Practices don’t want to pay for physicians’ full-time premiums when they are only working 10 hours a month.
8. Failure to Address Claims Remedies
Although it may not be terribly common for claims to occur within a given medical aesthetics practice, when they do arise, a practice needs to clearly demonstrate that it has taken steps to address the issues that caused the claim.
To help reduce their premiums, a practice needs to show that they have been proactive with risk management and have taken steps to become a better underwriting risk. This could be in the form of implementing additional staff training, amending policies and procedures, incorporating new safety measures, requiring direct supervision for a given treatment, terminating problematic staff or any other steps necessary to prevent the reoccurrence of a similar claim. Essentially, underwriting needs to see that the practice has taken positive steps forward with claim prevention.
9. New Procedure Additions
If a medical aesthetics practice is planning on incorporating a new procedure into its services menu shortly after securing a malpractice policy, it has a couple of options. It can seek underwriting approval and add coverage to its policy when the new treatment is actually added; or, alternatively, if the addition is imminent, the practice could consider a different course of action.
What I’ve found is that, if a new procedure is going to be added within a reasonable amount of time—usually one to three months of the policy’s effective date—I encourage my clients to incorporate it into their new business or renewal application. When the underwriters are conducting their initial valuation, they can usually add a treatment into coverage at a lower cost than doing so mid-term. A mid-term change may require an additional premium just because the adjustment needs processing.
For many, working through malpractice applications for the first time or at each renewal may seem like a dreaded but necessary evil. With any luck, by implementing these tips, your practice could potentially see lower annual premiums and, more importantly, prevent possible gaps in coverage.
David Shaffer has been working in the medical professional liability insurance field since 1996, where he uses his unique combination of underwriting expertise and broker knowledge to assist medical aesthetic facilities, medical spas, hospitals, healthcare facilities, physicians and physician groups with their insurance needs. In addition to medical professional liability, Shaffer also has the ability to assist clients with other insurance needs, such as employment practice liability, directors and officers, business office packages, workers compensation and various other lines of coverage customary to the healthcare industry.
Posted By Administration,
Wednesday, October 17, 2018
By Alex R. Thiersch, CEO of the American Med Spa Association
On July 31, 2018, U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb, MD, issued a statement that announced the agency was concerned laser manufacturers were marketing their products for use in vaginal rejuvenation, a treatment that has become a sensation in the medical aesthetics industry in recent years. The agency cites “numerous” adverse outcomes as a driving factor in bringing this issue to light.
“As part of our efforts to promote women’s health, the FDA has cleared or approved laser and energy-based devices for the treatment of serious conditions like the destruction of abnormal or pre-cancerous cervical or vaginal tissue, as well as condylomas (genital warts),” said Gottlieb in the statement. “But the safety and effectiveness of these devices hasn’t been evaluated or confirmed by the FDA for ‘vaginal rejuvenation.’ In addition to the deceptive health claims being made with respect to these uses, the ‘vaginal rejuvenation’ procedures have serious risks. In some cases, these devices are being marketed for this use to women who have completed treatment for breast cancer and are experiencing symptoms caused by early menopause. The deceptive marketing of a dangerous procedure with no proven benefit, including to women who’ve been treated for cancer, is egregious.”
Elsewhere in the statement, Gottlieb mentions seven laser manufacturers who have been contacted regarding this issue—Alma Lasers, BTL Industries, Cynosure, InMode, Sciton, Thermigen and Venus Concept—and suggests that they could face sanctions if the agency’s concerns are not addressed to its satisfaction.
The statement has been covered by numerous media outlets and has drawn a great deal of mainstream attention to the procedure and the issue. But what is the issue, exactly, and do medical spas have anything to fear from providing vaginal rejuvenation and other procedures that are not directly specified by a device’s FDA approval?
Off-label, Not Off Limits
In most cases, it is perfectly legal for a physician to use FDA-approved medications and equipment in ways that are different from what the label specifically mentions, which is referred to as “off-label use.” It typically is up to a doctor’s own medical judgment to determine if a medication or tool can be used for other treatments. According to Jay D. Reyero, JD, partner with ByrdAdatto, a national law firm that focuses on medical aesthetics, “The FDA does not control a physician’s ability to prescribe off-label, as it is subject to the oversight of the applicable medical board.” All the lasers in question have been approved for use in the United States, albeit not specifically for use in combating particular conditions.
“The lasers have been FDA-cleared for ablation and laser treatment of skin of various different parts of the body, including genitourinary tissue, as per the FDA clearance letter,” says Peter Castillo, MD, FACOG, director of the Women’s Pelvic Health Institute in Los Gatos, California. “But what they have not cleared it for is for other conditions as of yet. That takes time and various studies—well designed, randomized multi-center trials—to really accumulate enough data.”
Castillo sees Gottlieb’s statement as a reminder to manufacturers and doctors that lasers that are not approved specifically for vaginal rejuvenation treatments—and there are none at this point—should not be marketed as if they are, despite their actual efficacy.
“The letter’s primary purpose, the way I see it, was really just to remind physicians that they are not allowed to and should not promote the use of these lasers for the conditions that they are stating, though that does not really mean that they’re not effective treatments,” Castillo says.
Castillo cites the precedent of Botox, which originally was specified by the FDA for use in the treatment of incontinence caused by spinal cord injuries or multiple sclerosis, migraines, upper limb spasticity, pain caused by cervical dystonia, axillary hyperhidrosis (sweating), blepharospasm (eye spasms) in children with dystonia, and strabismus (crossed eyes) in children. The reduction of facial wrinkles is nowhere on this list, but it became by far the most common use of the drug and, subsequently, Botox has received three indications for cosmetic use.
“Botox had been used off-label for a decade before it got clearance,” Castillo explains. “The difference is that [Botox manufacturer] Allergan did not market it as an off-label use—they cannot. [Gottlieb’s statement], unfortunately, was needed, and it was necessary to put some of the manufacturers back on track and realizing that though that may be the case and perhaps this will be a viable treatment in the future, they’re not FDA-cleared for that and, as of yet, should not be marketed as such.”
Reining In the Rhetoric
This is not to say that Castillo agrees with everything in Gottlieb’s statement, however. Castillo is involved in clinical testing of laser equipment used for vaginal rejuvenation, and says that, in his experience and that of his colleagues conducting similar trials, the complications mentioned in the statement—including “numerous cases of vaginal burns, scarring, pain during sexual intercourse, and recurring or chronic pain”—are extremely uncommon.
“None of us have seen the level of complications that they alluded to in the statement, and no one that I have spoken to and none of us in our study groups have ever seen them outside of anticipated or expected effects of laser treatments,” he says.
“There is growing data. A variety of studies are going on, they are being carried out right now, and they have demonstrated very effective results and safety profiles for a variety of these lasers.”
According to Reyero, “Physicians who are performing vaginal rejuvenation or who are interested in providing vaginal rejuvenation should have a good understanding of available scientific and clinical data relating to the procedure in order to, in their professional judgment, determine it safe for patients.” Castillo feels that in the statement, Gottlieb exaggerates the potential risks of vaginal rejuvenation, and he is concerned that coverage by media outlets that picked up the story could scare people away from what he feels is a largely safe, very beneficial treatment.
“I think that statement from the FDA lost its purpose when they overstated the risks involved in using laser therapies that they’ve already cleared for use of skin ablation,” Castillo says. “Unfortunately, the purpose of it gets lost, and the message that resounds with these inflammatory statements by a variety of papers or other parties that are quick to jump on the potential risks that they stated and expanding on them to make it sound like people are getting harmed by these and that we shouldn’t be doing them.”
Reyero says, “I think physicians can combat any negative reaction to the FDA’s statement by equipping themselves and their staff members with information needed to ensure patients are fully informed and understand the risks about the procedure just like any other medical treatment.”
Despite the large amount of press coverage the statement has garnered, Castillo says that the hubbub has not had an adverse effect on his practice. Quite the opposite, in fact.
“The important thing here is that demand continues,” Castillo says. “The outcomes are real. They are palpable to the patient and to the provider, and it’s driven attention to a need and to a demand that’s being unmet. I have not had any decrease in my requests for therapy and I haven’t changed my practice, which has always been based on my clinical interpretation of their needs and patient selection. Those who practice medicine in the way they should are guided by clinical principles and clinical judgment. I see this as a continuing benefit to women and a service that we should continue to provide. And in time, the amount of data necessary to request clearance for those specific conditions and disease states will come, like everything else.”
According to Reyero, “I think the FDA letter will serve as a good push to those performing the procedure to reevaluate their practice and confirm that they are compliant with applicable rules. From advertising to patient education to the performance of the procedure itself, every facet should be carefully vetted so providers feel confident they have done all that is required to uphold the standard of care.”
Vaginal rejuvenation continues to grow in popularity, and patients are largely very satisfied—users of RealSelf.com currently express a 95% “worth it” rating for the procedure, which is impressive given its relatively high cost. However, laser equipment manufacturers should practice restraint when marketing products that are used for this treatment. Drawing unwanted attention from a governmental agency is never a good idea, and in this case it can easily be avoided by paying attention to what is and isn’t allowed. Gottlieb’s statement may overstate the problems associated with vaginal rejuvenation, but it should still be seen as a wake-up call for both equipment manufacturers and physicians.
Posted By Administration,
Tuesday, October 16, 2018
By Alex R. Thiersch, CEO of the American Med Spa Association
In 2017, AmSpa conducted a survey that asked medical spa owners to identify their top concerns in the industry. What we found was that, while compliance and larger business trends definitely weigh heavily on these people’s minds, finding and retaining talented, gifted employees is their primary concern. Following is a look at the top six areas of interest, according to the survey respondents.
1. Finding, training, and retaining quality staff.
People truly are the most important part of any medical spa. The medical aesthetic industry is an experience-based business, so it’s no surprise that finding, training, and retaining quality staff is the top concern of medical spa owners. They’re looking for people who are not only qualified to perform neurotoxin injections, for example, but are also gifted salespeople who have the ability to promote the medical spa’s brand, since the industry is a unique confluence of medicine and retail.
2. Staying compliant with regulations.
Obviously, compliance should be at or near the top of any list of medical spa concerns, since the rules and regulations that govern the industry are so ephemeral. Owners who want to remain compliant are good for the industry, since it suggests that, by and large, folks working in medical aesthetics want to do the right thing and run a tight ship, but may not know exactly how to do that.
A medical spa owner who is concerned with growth is likely to be making money already, so seeing this listed so high suggests that these people are already doing quite well and want to find out how to do even better.
4. Marketing and advertising
Because medical spas are medical facilities, marketing and advertising are quite a bit more complicated than they would be for a traditional medical practice or a retail outlet. Getting the word out about your medical spa can seem like a difficult balancing act and, again, the level of concern expressed by owners suggests that they want to do this the right way, but don’t quite know how.
5. Market saturation and competition
This is another sign of a healthy industry, although it certainly doesn’t seem like a good thing to people who have built successful businesses and then suddenly have to deal with newcomers who have seen how lucrative the industry can be. Learning how to provide the products and services your market wants is one of the keys to maintaining a successful medical spa.
6. Controlling costs and taking on debt
They say you have to spend money to make money, but how much is too much in the medical aesthetic industry? Keeping track of a medical spa’s finances, both in terms of everyday expenditures and big-picture financing, is vital for practice owners to understand, and its position on this list reflects that.
All of these concerns point toward the fact that this is an industry that is absolutely exploding. It’s difficult to find employees, because there aren’t enough qualified professionals; compliance is difficult because of quick expansion; competition is springing up all over the place—all these things point toward a robust industry, and these medical spa owners want to get their piece of the pie. We at AmSpa want to help you do just that, so stay tuned to learn more about all these factors in medical spa success.
Posted By Administration,
Monday, October 15, 2018
Updated: Monday, October 15, 2018
By Patrick O’Brien, Legal Coordinator for the American Med Spa Association
Med spas in their quest to provide the best beautifying services to their clients straddle the line between medical procedures and traditional cosmetic treatments. So it is no surprise that traditional salon cosmetic procedures are major part of a med spa’s business. In fact, according to the 2017 Medical Spa State of the Industry Report, aesthetic and cosmetic procedures are the 2nd most common procedure done in med spas and are the 2nd best revenue generators.
Traditional aesthetic procedures compliment the medical treatments offered by med spas, and since these are not medical procedures they don’t require physician supervision. Similarly they don’t require a medical or nursing license to perform. And most of the procedures don’t require the huge capital investments needed for machines such as laser or IPL devices. However, choosing to offer traditional aesthetic procedures does come with its own set of complications.
As you know med spas are medical practices and need to follow the regulations for medical practices. It follows then that med spas that offer salon treatments fall under spa and salon regulations, too. In some states a medical practice that offers aesthetic procedures through cosmetologists or aestheticians needs to also have their facility inspected and be licensed as a salon.
For instance, in California the Board of Barbering and Cosmetology requires that places offering cosmetology and aesthetician services must obtain an establishment license for the premises in addition to the practitioners holding their own cosmetology or aesthetician licenses. Similarly, in Texas aestheticians are only permitted to practice their art in licensed salon or cosmetology facilities. Typically, to obtain these licenses the facility must meet certain square footage, restroom, and sanitation requirements. This shouldn’t be an issue for most med spa locations but it is prudent to review the regulations for salons to avoid any future issues. You wouldn’t want to finish your build out only to find that one of your rooms is 5 square feet too small.
If you plan to offer permanent make up or micropigmentation services you will want to check with your state’s tattooing or body art board. Permanent makeup is generally considered a form of tattooing and requires a tattoo license for the artist and usually must be performed in a licensed tattoo parlor. A few states have specific permanent cosmetic or micropigmentation licenses separate from their tattoo license.
While in many states physicians are given an exemption from needing a tattoo license this is not always the case, and even if a physician is exempt that doesn’t necessarily mean the med spa or other employees are. For instance, in Mississippi the exemption is only for the physician and doesn’t extend to delegated health professionals and the facility still needs to be inspected and licensed as a tattoo parlor.
If you are thinking of hiring an aesthetician or want to expand the “Spa” side of your med spa be sure you get the needed licenses. If you have questions about what licenses your med spa might need please contact us. AmSpa members receive an annual compliance consultation call with the law firm of ByrdAdatto.
Has your spa started offering more salon services? What are your most popular procedures? We want to know; data collection for the 2019 State of the Industry Report will be opening soon and we hope to hear from you.
Posted By Administration,
Friday, October 12, 2018
By Michael S. Byrd, JD, Partner, ByrdAdatto
Is your med spa compliant with health care laws and regulations? Owners and operators of a clinical practice must navigate traditional business and employment laws similar to any other business. On top of this, clinical providers must operate in the heavily regulated and often confusing world of health care laws. The following is a list of the primary health care laws and regulations that affect providers:
Patient Protection & Affordable Care Act
Affordable Care Act Implementation
Medicare-Medicaid Anti-Fraud & Abuse Amendments
Management Service Organizations
Anti-Referral Regulations (Stark II)
The False Claims Act (FCA)
Increased Joint Venture Activity and Market Consolidation
Occupational Safety and Health Administration Regulations (OSHA)
Joint Commission on Accreditation of Healthcare Organizations (JCAHO)
Physician Payments Sunshine Act (Sunshine Act)
The essence of almost all health care law is patient protection. Because of this, many traditional business strategies are problematic or even prohibited in health care. We do not advise our clients to memorize each of these laws. At the same time, the “head in the sand” strategy to avoid health care compliance does not usually end well. Communicating business arrangements and strategies with your counsel are key to compliance. Most health care compliance problems stem from a lack of knowledge of the law and lack of communication with counsel regarding the activities of the clinical practice.
Compliance in healthcare requires a commitment. While ByrdAdatto can prepare a plan or structure an arrangement to navigate compliance obstacles, compliance does not end with the documentation. Rather, health care compliance starts with the documentation and continues with the day to day operation of the practice.
Michael S. Byrd , JD, is a partner with the law firm of ByrdAdatto. With his background as both a litigator and transactional attorney, Michael brings a comprehensive perspective to business and health care issues. He has been named to Texas Rising Stars and Texas Super Lawyers, published by Thompson Reuters, for multiple years (2009-2016) and recognized as a Best Lawyer in Dallas by D Magazine (2013, 2016).
Posted By Administration,
Thursday, October 11, 2018
By Alex R. Thiersch, Founder and Director of the American Med Spa Association
Med spa ownership, delegation requirements, HIPAA, and fee-splitting are common issues to consider when coming up with your medical spa’s compliance plan, however it is vital that you do not overlook Occupational Safety and Health Administration (OSHA) standards in your medical aesthetic practice. You may not even know what OSHA is, what it does and why it does it. It’s time to change that. In fact, it’s mandatory that medical spas follow OSHA standards—your business depends on it.
When Lori Marshall, a physician's assistant at the West Side Medical Spa, reported to management that she had been stuck by a contaminated needle during a procedure, nobody knew what to do. When she tried to convey to management the need for procedures, she was told to wash the puncture site and get back to work. Lori felt betrayed and angry. At her husband’s suggestion, Lori called the Occupational Safety and Health Administration (OSHA) and reported the incident. Within hours, Lori was contacted by an OSHA compliance safety and health officer (CSHO), who took a detailed statement from Lori, and advised her that they would schedule an immediate site visit.
Two days later, an OSHA CSHO walked in to the West Side Medical Spa and identified herself to management, and advised that they were there in response to a complaint. Throughout the next three days, all employees were interviewed, and all documents and records were reviewed. Within a matter of weeks, West Side Medical Spa received a letter containing the following citations and penalties.
•No written bloodborne pathogens/exposure control plan $4,500
•Failure to train employees in BBP within 10 days of hire $2,500
•Failure to provide medical follow-up after an exposure $2,500
•Failure to maintain required needle stick logs $1,500
•Failure to include employees in selection of safe medical devices $2,500 Total penalties $13,500
This scenario is based on an actual event, and all names have been change to avoid actual identification of the employee or the employer.
What is OSHA?
The Occupational Safety and Health Administration (OSHA) is part of the United States Department of Labor. It was created by the Occupational Safety and Health Act of 1970, and its mission, according to the act itself, is “to assure safe and healthful working conditions for working men and women.” OSHA protects most private-sector workers in the United States, though its standards are typically associated in the public consciousness with industries such as construction and agriculture—fields in which physical labor is a major part of jobs, and workers may easily suffer injuries—or worse—if improperly trained.
However, medical spas and medical aesthetic facilities also must follow a number of OSHA standards, which may come as a surprise to their owners and operators. Often, unless these are followed, a business can be fined tremendously and ultimately, it can be shut down.
“Sadly, many medical spas may not even be aware that OSHA standards apply to them,” says Steve Wilder, president of Sorensen, Wilder & Associates, a safety and security risk management consulting group specializing in health care. “Medical spas are considered health care entities; therefore, they are subject to the health care requirements of OSHA.”
OSHA standards for medical spas
According to Wilder, medical spa owners and operators must comply with seven particular OSHA standards.
• Bloodborne pathogens—exposure control plan;
• Hazard communication;
• Slips, trips and falls;
• Workplace violence; and
• Laser safety.
The specific requirements for each standard can be found on OSHA’s website (www.osha.gov). In general, compliance for each standard requires commitment from management and employees; workplace analysis; detailed hazard prevention and control procedures; the completion of training programs; and detailed recordkeeping utilizing OSHA’s Form 300 log and Form 300A summary.
“If you’ve got the proper programs in place in those seven areas, including the written programs, the training programs and everything that’s required, you’re going to be in pretty good shape,” says Wilder. “It can be expensive, but there are a lot of alternate ways around it. You can find different ways to be creative—such as online training—and still meet the intent of the requirement.”
What Happens If I Do Not Comply?
If OSHA conducts an audit on your medical spa and finds that it is in violation of workplace standards, you will be fined a considerable amount.
“OSHA has enforcement authority under the federal government,” says Wilder. “The standards that they develop can be enforced under penalty of law. What that means is that if they come in and audit a health-care provider—whether it’s a spa, hospital, nursing home, an ambulance or whatever—and they identify places in which the health-care provider is not compliant with the standards, they then have the authority to issue monetary fines.”
And those fines can be severe. OSHA can issue a fine of up to $7,500 for a first offense, though it is more likely that such a fine will be in the range of $1,500 to $5,000, depending on the severity of the deficiency. It is also important to keep in mind that each additional violation will result in an additional fine, and these fines can quickly add up. What’s more, you cannot be insured against such fines, so they will come directly off of your bottom line.
“I looked at [a case] for a nursing home client a couple of months ago and, when OSHA got done with them, their total penalties were more than $45,000,” explains Wilder. “And with no insurance to cover it, that’s a heck of a bite.”
And if a violation for which you have already been cited is found during a subsequent visit, or if said violation is found at a different location that is owned by the same person or company, OSHA has the authority to fine you up to $75,000 for that violation.
“You need to take it seriously,” cautions Wilder. “OSHA is not getting any gentler; they’re not getting any more workplace-friendly. Expect them to be really aggressive in infection control in all areas of medical care. Their focus is protecting employees, so anywhere that employees can get exposed to an injury risk or to an illness risk, they’re aggressive about it.”
Knowledge is Power
Bringing your medical practice up to OSHA code is not an option. It’s a necessity and OSHA does not accept ignorance as an excuse. Now that you know what is expected of your business, you must take the necessary steps and move forward in order to avoid major financial penalties that very easily could result in the closing of your business. Click here to read more articles about med spa law topics and how they could affect your business.
Posted By Administration,
Wednesday, October 10, 2018
By Alex Thiersch, JD, Founder and Director of the American Med Spa Association
AmSpa has been watching the medical aesthetics industry grow for five years, and I’ve personally been involved in compliance issues involving the industry for more than 10 years. In that time, I’ve continually observed a total inconsistency across states and practices regarding who is doing what procedure and the risk that is incurred with that, and it both amazes and disappoints me.
There needs to be some minimum standard that all medical spas follow. The reason I’ve become concerned about this is because, recently, I was interviewed for a story that will be published in the coming weeks, and the author asked a lot of pointed questions about the industry—she wanted to know about people getting injured, unsafe practices, lawsuits, regulations, and so forth; this is the third or fourth time in the past year that these issues have come up. However, I continue to see medical spas that are doing things that they just should not be doing, and it harms the entire industry.
Self-regulation is the only way for the industry to stop this, and AmSpa wants to help lead the way by creating some minimum standards that everyone can buy into. However, the only way this is going to work is if the entire industry buys into it.
One of the reasons I’m bringing this up relates to injectables. We have had an ongoing discussion with aestheticians, medical assistants, and practical nurses—basically everyone who is not an RN or above—about whether or not they should be performing injectable treatments. Most states basically allow doctors to delegate these treatments to whomever they want, but that doesn’t necessarily mean that aestheticians should be injecting.
In fact, my law firm, ByrdAdatto, and AmSpa have been steadfast in the opinion that only nurses and above should be performing these procedures, and we think that needs to become a rule. If patients get injured because non-licensed professionals are performing erroneous procedures, the industry is going to be legislated out of existence.
It is my strong belief that if the industry regulates and sets minimum rules, the industry will become bigger, because it will create standards and safety, and end the particularly egregious accidents that are happening.
To that end, I am happy to announce that AmSpa is embarking on a project to create minimum standards, including, but not limited to items such as:
•Who can perform certain treatments;
•Ownership standards; and
However, it is only going to go so far unless practices get on board with regulation. There can’t continue to be stories of people getting injured and medical spas being shut down because they are not following proper medical protocols. All this has got to stop. Until it does, this industry is only going to go so far, and possibly could even go in the opposite direction.
If you think this can’t happen, look at the National Football League, which is going through a major shift because people are finally beginning to realize how dangerous the game is due to emerging stories about the effects of chronic traumatic encephalopathy. More and more parents are not allowing their children to play football, and who knows what will happen to the game in 20 years.
We’re asking for everyone’s help with this initiative. It’s not only important—it’s crucial. I sense there is blood in the water when it comes to media coverage of the medical aesthetics industry, because we’re getting contacted more and more often by reporters and authors who are working on negative stories, and industry professionals have got to do whatever they can to protect themselves.
Stay tuned for information in the coming months regarding standards in the medical spa industry.
Posted By Administration,
Tuesday, October 9, 2018
By Patrick O’Brien, Legal Coordinator for the American Med Spa Association
The question of who can inject Botox and fillers in a medical spa is one of the most common in the industry, and for Florida it seems that the answer may be more strict than in many other states. Botulinum toxins (i.e. Botox, Dysport, or Xeomin) and injectable fillers are year after year one of the top procedures performed in med spas and they are consistently among the top procedures sought by patients. This popularity is the case in Florida as well. But who can perform Botox and dermal filler procedures in Florida?
Can Physicians? Yes, physicians are licensed to diagnose, treat and prescribe for any human disease or injury. Physician assistants can as well if their supervising physician delegates the practices in a written protocol. Nurse practitioners may also perform botulinum toxin injections if authorized by their supervisory protocols. What about registered nurses (RNs)? Well... let’s look at the law.
Florida Board of Medicine
According to the Florida Board of Medicine there are no laws or rules that directly address who may or may not inject. RNs must practice within the scope of practice of their license as described in the Nurse Practice Act. Registered Nurses are licensed to practice “professional nursing” which is defined as, among other things,
“the administration of medications and treatments as prescribed or authorized by a duly licensed practitioner authorized by the laws of this state to prescribe such medications and treatments.”
Based on that it would seem that RNs should be able to perform these treatments. After all, physicians definitely can prescribe and inject toxins and filler and these are certainly either a medication or treatment (or both). But the answer is not so clear from the Florida Board of Nursing.
A Challenged Rule
According to a 2015 administrative hearing which you can read here, the Nursing Board had an answer to a frequently asked question on their website. It read
“Can a practical or registered nurse inject Botox? The injection of Botox is not within the scope of practice for practical or registered nurses and does not constitute the administration of medication”.
The hearing in question was challenging the validity of the statement on the grounds that it constituted a “rule” that was adopted in violation of Florida’s rulemaking procedure statute. The final order found that rule had indeed been adopted in violation of the statute and prohibited the Board from relying on the statement (or similar statements) as a basis for disciplinary actions. That was in March of 2015, and the “Botox FAQ” no longer appears on the Board’s website, and it doesn’t appear that an administrative rule was passed since then.
The Supervision Question
In February of 2017 we have a disciplinary action made against an RN for injecting Botox without a physician’s order, which you can read here. This makes sense as an RN is permitted to administer treatments and medications when authorized by the prescribing practitioner.
Based on that ruling, hypothetically, if this RN had a valid physician’s order she would not have been subject to discipline, so we have a better idea of the Board’s stance as to what an RN needs to do to inject Botox versus the 2015 blanket statement.
But not so fast!
We have an order issued later that same year from a request for a declaratory statement in October of 2017. You can read it in full here.. In it, the RN stated they had training in injecting Botox and dermal fillers and provided two certificates from training courses. The RN intended to provide Botox and dermal filler treatments under the supervision of a physician. On the face of it this seems promising: we have an RN with training in a procedure getting physician’s orders to do the procedures. It should meet all of the tests to fit within the RN’s statutory scope of practice.
However the Board decided that, no, the RN was not permitted to do this. In the order they draw a distinction that “aesthetic injections” are not part of the scope of practice for RNs. It should be noted that declaratory statements are the Board’s opinion regarding the requesting nurse’s specific situation and may not be applicable to other sets of facts.
So Where Does That Leave Us?
It seems the Board of Nursing has an unwritten policy that RNs cannot inject Botox or dermal fillers even when under the supervision of a physician and with specific training and education. It is true that “injections for aesthetic purposes” are not specifically authorized in an RN’s scope of practice, but likewise there is nothing specifically forbidding the practice or declaring toxins, fillers, or “aesthetic injections” not a medicine or treatment. So Florida registered nurses are left in limbo as to what they are actually permitted to do with their license.
Plainly reading the statutes points to a different answer than the Nursing Board has been giving. AmSpa and partner law firm ByrdAdatto are reaching out to the Board for clarification and will post the information as soon as it is available.
By Patrick O’Brien, Legal Coordinator for the American Med Spa Association
Medical spa medical records are a piece of your compliance plan that cannot be overlooked. It’s easy to look past them when considering other parts of building your business, but they are vital to your practice. According to our 2017 State of the IndustryReport med spas indicated that 70% of their clients are repeat customers. This is a wonderful statistic to read because loyal customers are happy/satisfied customers and they can and will generate great recommendations and buzz for new customers. But these loyal clients and customers are much more than that; they are also patients. Because most of the procedures offered in med spas are medical procedures the practice must retain appropriate records just as any other clinic or doctor’s office would.
The content and retention requirements for medical records are set by each state and their respective medical boards. In general the records should include, among other things, medical histories, exam notes, details of procedures and treatments. Typically these should be kept for several years after seeing the patient with the two years that New Mexico requires being the shorter side and 10 years as in Tennessee and South Carolina being on the longer side. Physicians may be subject to Board discipline for failing to properly maintain and keep patient records, so you will want to review your own state statutes and advice of your medical board to determine what information should be kept in the medical records and how long you should keep them.
The 2017 industry survey also uncovered this interesting stat: half of med spas we heard from see more than 50 patients a week. This is great from a business perspective, but daunting from a record keeping perspective. Every one of those visits will need an entry made in that patient’s records, and the med spa’s records system, in addition to being able to keep up with the volume of updates, will also need to comply with Federal and State privacy laws.
The big one is the federal Health Insurance Portability and Accountability Act (HIPAA). I’m sure you’ve heard more about HIPAA than you ever cared to so I won’t bore you with too much detail other than to say patient medical information needs to be securely stored and accessible only to authorized individuals. Most states also have a version of a patient information privacy law with similar concepts.
While the general gist of the laws are “protect patient information” you’ll need to check your jurisdiction for specific implementation requirements. For instance California has the Confidentiality of Medical Information Act which has stricter requirements on when and who you can disclose confidential health information. AmSpa members can check their state’s medical aesthetic legal summary, or utilize their annual 15-20 minute complimentary compliance call with ByrdAdatto for more specific information.
It takes a lot to build a successful med spa and the more successful it becomes the more important it is to have a streamlined and secure medical record system and policy. Don’t let paperwork be a limitation on your Spa’s success. If you want to learn more about record retention policies and systems consider attending one of AmSpa’s Medical Spa & Aesthetic Boot Camps to learn medical spa legal and business best-practices.
If you liked reading through our 2017 State of the Industry Report we will be gathering data for 2019 survey soon. Did your spa see more customers this year? Did you add new service lines? Or bring on more staff? We hope to hear from you so together we can define data in the medical spa industry.