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Important Insurance Policies Medical Spa Owners are Overlooking

Posted By Alex R. Thiersch, JD, Tuesday, May 29, 2018
overlooked medical spa insurance policies

Medical spa owners and operators must maintain an array of insurance coverage to help protect their practices from everything from medical malpractice penalties to flooding. However, there are some types of coverage that medical spa owners may not realize they need until it is too late. Here is a quick look at a few of them.

(Note: Check out additional information about the American Med Spa Association’s Medical Malpractice Insurance Program, available to AmSpa members only through the Insurance Office of America.)

Cyber Liability

Businesses didn’t used to have to worry about people hacking into their networks and stealing customer data. Unfortunately, in 2018, cyber security is a major concern for all companies—even medical spas. Cyber liability insurance helps policyholders endure a cyber attack by paying their recovery expenses.

“Its purpose is to help with the notification process, because every individual who could have been impacted by that breach has to be notified,” explains David Shaffer, vice president of Professional Medical, the health care division of Insurance Office of America and AmSpa Medical Malpractice Insurance Program representative. “You have to offer them credit monitoring, and there are going to be legal fees and various other expenses associated with making the situation whole again.”

Cyber liability insurance also provides crisis management and public relations services that can help a policyholder rebuild its name after a cyber security event.

“A lot of my medical spa accounts often wonder, ‘Why is anyone going to be interested in what I have to offer? Why am I going to end up being a target?’” Shaffer says. “Small businesses are the primary target these days for a few reasons. I think the biggest reason is that small business owners are less likely to have a strong defense against someone trying to hack into their systems, as opposed to a larger organization that’s actually going to spend money on building this infrastructure.”

According to PricewaterhouseCoopers, a cyber attack typically costs a small business between $84,000 and $148,000.1 What’s more, 60% of small businesses that suffer cyber attacks close within six months, according to a Champlain College study.2

Cyber liability insurance is available from most business office package insurers, and some malpractice insurers also offer a token amount of cyber liability coverage. And, of course, it can be purchased as a standalone policy.

Employment Practices Liability

If you run a small business, such as a medical spa, it is somewhat likely that at some point, you will be confronted with an employment-related tort—that is to say, a lawsuit filed by an employee who feels that he or she has been mistreated in some way. Employment practices liability insurance covers claims such as wrongful termination, harassment, failure to hire, failure to promote, wrongful disciplinary actions, libel, slander, and any other type of grievance brought by an employee against an employer.

(For more employment-related issues see AmSpa's webinar on employee handbooks in a medical spa.)


Many medical spa owners and operators overlook coverage for spoilage, but those who have experienced the problems created by a loss of electricity can attest to the fact that this can save a practice a lot of money.

“Most of these facilities are performing some form of an injection, and a lot of those medications need to be kept refrigerated,” Shaffer explains. “If there’s fire or water damage that shorts out the refrigerator and they can’t get into their medications to try and prevent them from spoiling, they need coverage for those medications that have been lost due to the temperature change.”

This coverage can be obtained as part of a business office package policy, but it is not an automatic coverage—it has to either be acquired through a loan endorsement that can be added to coverage or as part of blanket endorsements that are incorporated into a policy.

If you determine that your practice needs spoilage coverage, it’s probably best to purchase a bit more than you think you need, provided you can afford it.

“I had a couple of clients during hurricanes that, while they had some spoilage coverage, they were inadequately insured—instead of needing $10,000 worth of coverage, they needed $20,000, because they did a lot of injection-based services,” Shaffer says. “I would probably say that’s one that needs to be focused on—at least ask to see if the appropriate amount of coverage is there, if it’s there at all. If it’s not, get that taken care of.”

Off-label Use

Kybella is an injectable designed to combat “double chins,” and it is becoming extremely popular in the medical aesthetic industry. It is approved by the U.S. Food and Drug Administration (FDA) for treatment of subcutaneous fat under the jaw line and, as long as it is being used in this manner, it should be covered by most insurers. However, some practices are using Kybella to treat fat deposits elsewhere on the body, and that is where coverage problems can arise.

“Because [practices] have notified their insurers that they’re performing Kybella, they believe that it’s a blanket-type coverage that’s being offered to them,” Shaffer says. “All malpractice policies have wording in them that say non-approved drugs and devices are specifically excluded from coverage, so unless they get written verification from their underwriter that off-label services have been approved, the likelihood of them actually having coverage is probably not as strong as they believe.”

Practices that are using Kybella (and any other drugs, for that matter) for treatments beyond those for which they have been approved should consult with their insurers to make sure that they are covered for this sort of use. If not, they should either amend their policy to cover these treatments, which may be possible, or stop offering them.

Making the Right Decision for Your Practice

For most medical aesthetic practices, the amount of insurance coverage they have is dictated by what they can afford. Generally speaking, most of the issues a medical spa will encounter can be covered by malpractice, general liability, property, and worker’s compensation insurance. Policies such as the ones described above sometimes take a back seat to more common insurance types because they aren’t as obviously valuable on a daily basis. However, if your practice can afford it, you may want to consider investing in the more overlooked coverage covered here. After all, you can’t be too safe.



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Statement on the Doctor Oz Segment, “Rogue Medical Spas”

Posted By Administration, Wednesday, May 23, 2018
doctor oz rogue medical spas

Negative outcomes from medical spa treatments do exist, as highlighted recently by the Doctor Oz Show, though they are few and far between. While there are bad actors in the industry, it is the American Med Spa Association’s belief that the majority of med spa professionals and practitioners are operating in good faith, and with their patients’ best interests at heart.

The Doctor Oz segment, titled “Rogue Medical Spas”, featured some severe adverse outcomes that were a result of some of these bad actors and negligent practitioners. The show reached out to AmSpa for feedback on the topic, and we were happy to provide the following statement highlighting the industry’s commitment to legal compliance and patient safety.

The fact is that the overwhelming number of med spas in existence are extremely safe and provide quality medical care by qualified practitioners. Most med spas are run by physicians and have qualified nurse practitioners, physician assistants, and RNs on staff providing excellent care in accordance with applicable law. The public should be assured that med spas that are run in a compliant fashion are extremely safe, and most med spa treatments have extraordinarily rare incidents of side effects or bad outcomes.

Unfortunately, because the demand for med spa services has grown dramatically over the past five years, the medical spa industry has grown just as fast. As a consequence, there have been some unqualified practitioners entering the industry looking to make money without following the applicable rules. When those bad actors make mistakes and harm people, news coverage of these events invariably follows, and the entire industry suffers as a result. These incidents do not represent the industry as a whole, which as mentioned is comprised overwhelmingly of safe, professional, competent medical professionals.

AmSpa has been at the forefront of dealing with this issue by implementing two strategies – educational articles and videos, and enforcement. For the past five years, AmSpa has been publishing, speaking, and educating both the industry and consumers on what constitutes a safe, compliant med spa. AmSpa is an organization founded on compliance, and its core purpose is to disseminate the applicable rules and regulations so that the industry – and the public – is safe. AmSpa’s website is the only resource where professionals and consumers can obtain information about the rules governing a safe med spa, as unfortunately, the state agencies charged with oversight don’t have the resources to publish, educate or often enforce existing rules. AmSpa’s entire mission is to both publish and educate about this hard-to-obtain information.

In addition, AmSpa has launched an initiative, with the help of medical spa owners, physicians, and regulators, to draft a core set of rules that the industry can universally adopt. This is a complicated process and, although the process has begun, it will take time for these rules to be developed and approved. In the meantime, there are certain things that the public can and should watch out for when choosing a med spa.

The first is that the public must recognize that medical spas are providing mostly medical treatment. Although some treatments at med spas are non-medical (facials, light chemical peels, light dermabrasions), most of the treatments are medical in nature and should be treated as such. Patients should always be seen by a doctor, a nurse practitioner, or physician assistant, depending on their state. If a med spa offers to treat a patient without being seen by one of those three license-holders, red flags should go up and the patient should seek treatment elsewhere.

Second, patients must do their homework to ensure that the practitioners performing treatments are licensed and trained to perform those treatments. Infrequently, there have been unlicensed, unqualified practitioners who have entered the industry. This is a minute fraction of the industry, but it is also the side that gets the most publicity (and rightfully so, given some of the recent results). The physicians and underlying practitioners must be trained in the procedures they are performing and the only way the public can find this out is by doing some homework. Research the doctor online. Ask for their relevant licensure. Call the medical board and nursing board and look up their license. Get referrals. Because the state agencies tasked with enforcing med spas are overwhelmed with many tasks (the opioid crisis, to name a big one), there isn’t as much enforcement in this area as is needed. So the burden falls upon the consumer – and the med spa owners – to regulate themselves. AmSpa is doing its part, but it’s a big industry and is growing daily.

Third, many of the med spas who perform poor treatments (or offer treatments by unqualified individuals) tend to offer treatments for steep discounts. Aesthetic treatments need to be done carefully and artfully and, as with many things, you get what you pay for. If a med spa is offering highly discounted costs or offering mega deals through discount programs, head the other way.

Finally, most states do not necessarily require a physician to be on site at the med spa while the treatment is being administered, provided that (i) the physician (or nurse practitioner or physician assistant) has examined the patient first, (ii) the physician is immediately available by telephone or other electronic means to respond to questions or emergencies, and, most importantly, (iii) the practitioner who is performing the treatment is trained, experienced, and qualified. But regardless of who’s performing the treatment, there should always be an RN on site, at a minimum, to oversee the procedures. Each state has its own set of regulations about on-site supervision.

I would reiterate that the vast majority of med spa owners and personnel are qualified medical professionals dedicated to helping patients feel better about themselves. This is a great industry and it’s unfortunate that a few bad apples have caused bad publicity. AmSpa is committed to educating the industry and public to ensure all med spas are safe moving forward.

Click here for more information on Doctor Oz segment.

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Can LPNs Perform Injections? AmSpa Advises Against It

Posted By Administration, Tuesday, May 22, 2018
Updated: Thursday, May 24, 2018

Injectable treatments like toxins and fillers are central in the medical aesthetic industry, and licensed practical nurses (LPNs) can be valuable pieces of the medical spa puzzle. They typically provide excellent care to patients and can be relied upon to perform a number of non-medical tasks throughout the practice. In many medical aesthetic practices, LPNs even perform injections of fillers and Botox.

Unfortunately for those practices, though, this may create more problems than it solves, since in most states injecting patients falls outside an LPN’s scope of practice. (AmSpa members: check your state’s medical aesthetic legal summary to see who can inject in your practice.)

Before going any further, it’s helpful to understand what an LPN’s qualifications are. An LPN typically has undergone two years of training at a nursing school, and he or she has passed the National Council Licensure Examination-Practical Nurse (NCLEX-PN), which is administered by the National Council of State Boards of Nursing. In terms of the hierarchy of nursing, an LPN comes in below registered nurses (RNs) and nurse practitioners (NPs). An RN has earned a degree in nursing and passed the more rigorous NCLEX-Registered Nurse exam, while a nurse practitioner has done all this, earned an advanced degree in nursing, and passed a national board certification exam.

Of these levels of nursing, only a nurse practitioner is allowed to perform medical procedures in most states and, unfortunately for those who use LPNs to administer injections, most states recognize injections to be medical procedures. Therefore, LPNs should not be performing injections. AmSpa recommends that if your medical aesthetic practice is using LPNs to administer injections, it should stop doing so immediately. If a patient happens to suffer a bad outcome and raises a case with a state medical board, the practice, the supervising physician, and the LPN could be cited for practicing medicine without a license. This could result in severe financial penalties and possibly even create issues with the physician’s medical license.

There is a bit of a grey area here, however. If a physician can prove that an LPN has developed expertise in administering injections, a medical board may see fit to permit the LPN to continue performing these procedures. However, it is nearly impossible for a physician to prove that an LPN demonstrates unusually advanced injection skills, and there is no widely recognized certification specifically designed for injections, so physicians probably should not plan to use this defense if they are caught using an LPN to administer injectables. Physicians and practices should also be wary of LPNs who profess to have an expertise in this area.

It may seem like a good idea to use LPNs to perform injections of fillers and Botox, since doing so conceivably frees up more highly paid nurse practitioners and physicians to perform more lucrative procedures. However, doing so may very well place your practice in peril. Consult an experienced health care attorney to learn about the minutiae of the matter in your state, and stay tuned to AmSpa for any further developments in the matter. LPNs are valuable members of medical aesthetic teams; however, as with all medical spa employees, they must stay within their scope of practice in order for businesses to remain compliant.

(Author’s note: The American Med Spa Association (AmSpa) works with the national law firm of ByrdAdatto that focuses on medical aesthetic legalities and AmSpa members receive an annual complimentary legal consultation. Become an AmSpa member today!)

Tags:  legalities  Med Spa Law 

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Five Good Reasons to Develop a Med Spa Business Plan

Posted By Eric Atienza, Tuesday, May 8, 2018
Updated: Tuesday, May 8, 2018
If practice ownership is your objective, then your first step in reaching that goal is to develop a well-thought-out business plan that establishes the viability of your proposed venture. A business plan details the financial structure and day-to-day operations of your practice. It demonstrates that you have a realistic roadmap for success based on carefully considered ideas about how to develop and manage your business.

Here are five good reasons why developing a business plan is critical:

1) Helps you achieve your goals
Experience has shown that people who document their plans are generally more likely to achieve their goals as non-planners. Actually taking the steps to create a written plan - to think, dream, and research and document your objectives potentially increases the likelihood of ultimately reaching your destination and controlling your business career. In addition, developing a business plan helps you better understand your business. It informs you of your practice's place in the market, so you know the actions that need to be taken to improve and grow your business.
2) Allows you to be proactive
A business plan helps you see potential risks in the market and develop strategies for responding to them. Rather than simply reacting to whatever changes come your way - whether they emanate internally or from outside influences - you have a roadmap that defines precisely where you want to go. You therefore know how to respond to inevitable fluctuations in the business environment. Without a documented plan, your practice is essentially rudderless, with no destination in sight and no guideline for responding to unforeseen circumstances, such as a significant drop in the market, or new technology opportunities.
3) Functions as a communications tool
As a business owner, you may need to borrow funds or hire service providers at some point in your career. Your business plan is an indispensable tool for communicating your business objectives to lenders, contractors, equipment vendors, and others who need to understand your practice vision. The business plan serves as an introduction to you and your practice. It tells your lender that you have the personal know-how and professional means to help ensure practice success. It demonstrates that your future practice is based on a solid grasp of both the local market and outside influences. And it provides the financial rationale for lending funds for your practice purchase or start-up based on historical or projected performance.
4) Provides a competitive edge
With a documented vision of your future in hand, you will be better prepared to take on existing competition as your business plan describes the marketing activities you will use to announce your opening, attract patients, and grow your practice. You will also have a jump-start on new competition - namely, all those graduates who have not yet formulated their career plans.
5) Forms the basis for an exit strategy
A business plan is not only a roadmap for you, but also for your potential buyers. It helps them understand how your practice evolved, whether it met or perhaps exceeded expectations, and whether your vision for future growth was realized. If you sell your practice before your business plan is fully implemented, it can serve as a useful guideline for future owners to further develop the practice. There are many more excellent reasons for creating a business plan - for example, to share your vision with family members and employees, build a framework to help attract new associates or investors, and provide a foundation for practice valuation. In summary, careful formulation of a business plan will help you focus your vision for the future and ultimately enhance your success. If you don't already have one, get started working on your business plan today.

Visit the Wells Fargo Works for Small Business® and the Business Plan Center page for more information:

About the Author
Greg Owens is the Regional Manager East for Wells Fargo Practice Finance. As an experienced consultant and finance expert, he speaks nationally to healthcare professionals advising in practice planning strategies for emerging and established practitioners. His industry background offers practitioners a unique perspective as they approach some of the most important decisions in their professional lives. With more than 25 years of healthcare experience, Wells Fargo Practice Finance specializes in helping healthcare professionals acquire, start and expand their practices with various financing options and a signature Practice Success Program.

Jeremiah Johnson
Healthcare Specialist

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Member Spotlight with Managing Partner of Lasky Aesthetics, Terri Ross

Posted By Administration, Saturday, May 5, 2018
Updated: Friday, May 4, 2018

By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)

Alex: Congratulations Terri Ross on being selected AmSpa’s Member Feature of the Month! Tell us about your med spa, Lasky Aesthetics & Laser Center. What’s been going on?

Terri: Growth. Exponential growth. I’m really proud that we’ve hit the 3 million dollar mark in just 3 years. We’ve brought on new providers, new treatments and services, and really just learned how to perfect the infrastructure.

Alex: Lasky Aesthetics seems like a fairly laser-heavy practice. What’s the biggest money-maker treatment in your med spa right now?

Terri: Definitely Laser Skin Resurfacing, Alma Fractional, Skin-Tightening, and CoolSculpting.

Alex: Were these treatments a conscious choice of you based upon numbers. or was this just kind of the way that it happened?

Terri: Lasky is a little unique. Four Doctors own it and when they developed the business back in 2010, they all had their own practice off-site. They did their own injectables, so by default the practice became laser heavy. They kept their own patients. It was a grass-roots business at the time.

Well that failed. When they brought me in on 2014, the med spa was doing about a half million dollars. Realizing that we had to make a shift in the business infrastructure, I came in and really treated it like a start-up. I re-evaluated the overhead, the cost of goods, figured out what treatments were yielding the most money, learned what the patient market demand wanted, and decided what was best to do different.

Alex: Do you still offer injectables? Or, is it mostly laser treatments?

Terri: We do. It’s just a smaller percent of the business. But we’re finding that it’s allowed us to become a niche. We really are known for treating very difficult skin conditions. As a provider, if you don’t have that kind of a background or have years of experience as an extender, then you don’t have the skillset to diagnose. It’s blended well for us.

Alex: Okay, you can’t name yourself in this next question, but what do you attribute to being the number one factor of success for Lasky? #LLC

Terri: It’s honestly the hiring of impeccable staff and investing in them. We’ve heard this throughout the last couple of days here at the AmSpa Boot Camp, it’s about good staff. Having them trained properly, adequately understand what treatments you offer, customer service, and just business acumen. Whether it’s me or anyone else. This is not an easy business to be in. It’s highly competitive, especially in Beverly Hills. Utilize the resources that are available, especially with AmSpa.

Alex: That’s what we do here at AmSpa! Thank you Terri for your continued support and we wish you the best of luck in the future success at Lasky. 

Lasky Aesthetic & Laser Center is located in the heart of Beverly Hills, CA. Get the live tour here or schedule an appointment today!

Terri Ross will be speaking at the next AmSpa Boot Camp in Denver, CO May 19-20, on trending treatments and the expert consultation. Visit the event page here for more information and to register. 

Tags:  Member Spotlight 

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Coming to Terms with Sales in Med Spas

Posted By Administration, Wednesday, May 2, 2018

If you were to create a Venn diagram displaying the relationship between retail sales and medicine, the overlap would represent the medical aesthetic industry. It’s a unique business model that requires the combined efforts of physicians who are experts at treating people and salespeople who excel at getting people in the door.

However, many physicians find the sales side of the equation difficult to engage with. Typically, doctors are taught that medical treatment is not a commodity to be sold—it’s something that is provided when needed. Therefore, when sales enters the equation, as it must in the medical aesthetic business, physicians tend to feel a bit skittish about it.

But sales, at its core, is about building trust and providing education, which in and of itself is not as pernicious as many medical professionals perceive. These people should not be afraid of selling, because all they’re really doing is providing information and building trust so that a patient can make his or her own decision regarding their care. They don’t have to engage in the sort of oily salesmanship they fear if they don’t want to.

For the purposes of medical aesthetic practices, sales are vital. Successful medical spas have established ways to attract and retain patients, and they involve everyone in the practice, from the physician to the receptionist. That requires sales, and it needs processes to work as efficiently as possible.

However, doctors and nurses may be hesitant to engage in sales, because they feel that by doing so, they are in essence forcing treatments upon patients. I’ve heard physicians say that they never sell to anybody, because they don’t believe selling medical treatments is appropriate and never want to feel as though they are using their expertise to profit from a patient who doesn’t know any better.

I can see why they would feel this way, but if properly practiced, selling is not exploitation. Effective sales and marketing is not about forcing anything on anybody. In fact, it’s the opposite—it’s building trust between the provider and the patient, and providing the patient with information so that the patient can make his or her own decision. When doctors are selling most effectively, they are giving their opinions and developing trusting relationships with their patients.

The most effective sales tool at medical spas is a very sincere belief in the services being provided, and that belief must also be shared by everyone working there. Everyone must provide all the information that patients need, so that the patients develop trust and feel comfortable. In time, they’ll make the decisions that are best for them. There’s nothing underhanded about this. Sales equals trust plus education.

Physicians who are skittish about sales should consider that if you’re doing it right, you’re not really “selling” anything—you’re simply giving the clients the tools to make their own choices. It’s absolutely vital that aesthetics practices have this in their toolbox and have a structure for it, because if they don’t, another medical spa absolutely will. Successful practices understand that sales in this space is about education, and they have ways to track what is resonating with clientele and what is not.

Doctors and nurses need to get over their fear of sales by recalibrating their perception of what it means to sell. Simply suggesting a course of treatment and providing supporting information is not nefarious if the doctor doing this genuinely believes in what he or she is saying. You don’t need to get down in the muck if you don’t want to. A physician who shoots straight and tells the truth is likely going to find more success than one who always says what the patient wants to hear in order to make a buck.

AmSpa’s Medical Spa & Aesthetic Boot Camps can teach you how you and your staff can look at your services differently, and can use sales techniques to ensure your patients achieve the best possible treatment results. AmSpa’s next Boot Camp is in Denver on May 19–20.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps 

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The Forgotten Generation - Med Spas and Generation X

Posted By Administration, Wednesday, April 25, 2018

By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)

These days, it is not at all unusual to hear experts talk about how certain generations of people are affecting business. You’ll hear about how the wealth of Baby Boomers impacts the economy as they enter their retirement years. You’ll hear about how Millennials are driving markets and marketing with their somewhat inscrutable spending habits. And you’ll hear about how Generation Z is getting things done using social media and moxie; we featured a look at Generation Z a few weeks ago, in fact.

However, you don’t hear a lot about Generation X—the post-Boomers who came of age in the late ‘80s, ‘90s, and early ‘00s. The youngest Xers are currently staring down middle age and, as boomers continue to retire, they are the ones who are going to be in charge, if they aren’t already. recently published this piece by Stephanie Neal and Richard Wellins, which describes how and why members of Gen X are quietly beginning to dominate leadership positions in businesses.

One of the key takeaways of this article is that while Millennials are typically considered to be the most tech-savvy generation to date, Generation X is, if anything, even more plugged in. On Facebook, Instagram, and YouTube, many of the “stars” are Millennials, but Gen Xers are just as connected—they always have a phone in their hand, and they’re always on the Internet. They don’t produce as much content as Millennials, but they’re just as adept at viewing and manipulating it. Many of them came of age just as the Internet did, and they played significant roles in its evolution. But because many of them began their careers when the internet played a much smaller role in business, they inherited many of the same character traits as the Boomers—they are industrious, hard-working, and entrepreneurial. They feature useful traits of the generations directly before and after them—a combination of the analog and digital, if you will.

As a result, and as a consequence of their age, Gen Xers are going to have an enormous impact on business—including the medical aesthetics industry—for the foreseeable future. They’re going to be running medical spas, device manufacturers, and marketing firms for many, many years to come, so their influence is underestimated at one’s peril. Consumers drive business, and since Millennials are such an enormous population, they’re very important in this regard. But many of the people running businesses and pushing them in exciting new directions are Gen Xers.

At AmSpa’s Boot Camps (join us in Denver on May 19 and 20) and The Medical Spa Show (save the date—February 8 - 10, 2019), the overwhelming majority of the medical spa owners I meet are Gen Xers. They’re in their upper 30s and 40s, and they’re getting things done. Understanding how these people think is going to be a key to finding success, especially in terms of establishing business-to-business relationships. So don’t sleep on Generation X—understanding them is going to be very important for a long time.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps 

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How Do I Pay My Med Spa Providers and Staff Legally

Posted By Administration, Thursday, April 19, 2018

By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)

Proper medical spa payment and compensation structure is one of the lesser known legal issues that successful medical spa owners MUST be familiar with. From a business standpoint tying employee pay to performance assures that a medical aesthetic practice can remain profitable while also allowing providers to maximize their earning potential. In retail, salespeople are often incentivized with commission—they receive a percentage of the sales they make that meet certain conditions set by their employers. The rationale is that when salespeople are given the opportunity to earn more money, they will work harder.

However, a medical spa is not a retail outlet. 

Despite its superficial resemblance to a salon or traditional spa, a medical spa has to play by a different set of rules and answer to different authorities, because its employees administer medical treatments. And in most states, if medical spa owners are paying employees commission, they are engaging in an illegal practice known as fee-splitting. It is important for medical spa owners and operators to understand this issue and its consequences in order to avoid big trouble.

The controversy

In most states, a patient who receives a medical treatment—such as many of the services provided at medical spas—is required to provide payment to a physician or a physician-owned corporation. (This doctrine is known as the “corporate practice of medicine.”) If these physicians or corporations give a percentage of that payment to a non-physician who was responsible for securing the patient’s business, they have engaged in fee-splitting.

AmSpa members can check their state legal summary to see if their state observes the corporate practice of medicine.

This practice is somewhat common at medical spas, and it typically doesn’t represent any sort of shady attempt to practice unlicensed medicine. The physicians who operate these establishments simply wish to reward the people who bring business to the practice. However, the fact remains that in many states it is illegal to engage in this practice, and doing so places both parties to the transaction at risk.

The consequences

If physicians are found to be engaging in fee-splitting in a state in which it is illegal, they could face the suspension or revocation of their license, as well as a significant fine. What’s more, the staff members who receive the commission payment are also subject to a fine. So if you are an aesthetician, registered nurse, nurse practitioner, physician assistant, or laser technician who is being paid commission, it is certainly in your best interest to find out if fee-splitting is illegal in your state; if it is, stop receiving these payments. If you are a physician who is giving commissions in a state in which fee-splitting is illegal, you should cease doing so immediately. 

This does not mean that medical spa employees cannot be awarded extra compensation, however. Physicians can establish structured bonus plans–such as the medical spa compensation plan in the AmSpa store–that can provide employees incentives and are perfectly legal in the eyes of authorities. These types of programs can be very lucrative for employees, and they will prevent all involved from incurring crippling penalties that can alter lives and end careers.

Also, if your medical spa engages in the practice of giving gift cards to clients, be advised that this can also be viewed as a form of fee-splitting, because these cards represent payment that is not made directly to a physician or physician-owned corporation. 

An exception
Viewed through an impartial lens, it would seem that using a deal site such as Groupon or LivingSocial to drum up business would represent a form of fee-splitting. This is because medical spa vouchers sold through these services—from which the service receives a percentage of the sale, a lot like a commission—can be used by customers to purchase medical treatments. However, several states have enacted laws that permit this, provided the medical outlet maintains a high level of transparency during the process. Again, check with your local health care attorney to find out the specifics of the regulations regarding deal sites in your state.

It is worth noting, however, that even if using deal sites in the manner described above is legal where your business operates, some in the industry consider such arrangements to be unethical. As such, you may be better off negotiating a flat fee with Groupon or LivingSocial instead of paying it a percentage. It is always better for a business to try to stay away from morally questionable practices, even if you are forgoing some money by doing so.

To learn more about medical spa business and legal best-practices attend an AmSpa Medical Spa & Aesthetic Boot Camp near you.

Sign up for AmSpa’s email newsletter to get medical spa industry and legal news directly in your inbox.

Tags:  Med Spa Law 

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Med Spa Marketing: Testimonials & Reviews Are the Only Way to Market Your Practice

Posted By Administration, Saturday, April 14, 2018

By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)

When finding and attracting patients to a medical spa practice, the best med spa marketing tools you can ask for are reviews and testimonials from existing patients. Positive reviews don’t just grow on trees, though. You have to actively cultivate them in your everyday processes throughout every part of your business.

I love the above cartoon because it’s so true. People are most vocal when they are angry and unsatisfied, not when they are happy. Think about it: If you have a positive experience somewhere, chances are you’ll leave happy, maybe tell your spouse or a friend, and then you move on. Even if you think you’ll circle back and leave a review complimenting the good service, let’s be honest—chances are you won’t. It just doesn’t work that way psychologically. Even though we know we should do the right thing and post a positive comment, most of the time it doesn’t happen. You blink and a week has gone by, and next thing you know—out of sight out of mind.
But if you have a bad experience? That’s a different story. After some truly bad experiences, I’ve actually sat down and written letters to management. Not just an email or a post on a site, but an actual letter. On paper and stuff. People are much more likely to be vocal, motivated and industrious when they’ve had a bad experience than when they’ve had a good one. Again, it’s psychology. And in the med spa business this is even more important because we’re dealing with peoples’ appearance, and let’s be honest—there are some craaaaaazy people in this industry.
This is why it is so crucial that medical spas make collecting positive testimonials and reviews a part of their processes and systems. The best medical spas are not just diligent about this, they’re downright militant. Every person on the staff is part of this process, from the providers to the front desk staff. If a patient mentions that he or she is a happy and satisfied, it is the duty of the entire medical spa to ensure that a testimonial is taken and the patient knows exactly how to access the practice’s Yelp, Google+, Facebook, and RealSelf pages.
And you absolutely must get both testimonials for your website and positive reviews on all the applicable review sites. Testimonials on your website are a must because everyone—even if he or she is given a glowing verbal referral from a friend—will go to your website before they book. That’s just a fact. Positive reviews increase the likelihood that you’ll book a patient, because patients also always check out your reviews; perhaps more importantly, the more positive reviews you have, the less likely a negative review will stand out. And if you’re in business long enough, you’ll get a bad review. That’s also a fact.

Keep in mind that, while reviews and testimonials are very important, med spas are subject to strict advertising requirements and you need to be careful with what you post. Also, HIPAA/patient privacy is a potential issue with respect to reviews. Both should be dealt with carefully and med spas should always have a healthcare attorney take a look at their website to make sure they are being fully compliant. As a reminder, AmSpa members receive a complimentary 20-minute legal consultation with our partner law firm ByrdAdatto.

So to my medical spa friends, it’s vital that you create a specific process for getting testimonials and reviews. Don’t just tell your team it needs to be done—establish a protocol and hold them accountable. It’s part of their job, after all, and if you don’t do it, the entire practice will suffer. Use the front desk staff as the gatekeepers—no happy patient leaves without providing a referral. Track the number of referrals each team member gets, and reward each month’s top performer with a spa treatment, dinner, or night out.

Need more ideas? Come to an AmSpa Medical Spa & Aesthetic Boot Camp! Faculty experts Bryan Durocher and Dori Soukup share a ton of ideas on incentivizing your team. Click here to learn more about and register for AmSpa’s forthcoming Boot Camps. Make your plans today to join us in Denver in May, Dallas in July, Boston in September, Nashville in October, or Orlando in November.

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Closing the Loop: Valuing and Selling Your Medical Spa

Posted By Administration, Wednesday, April 4, 2018

By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)

When a medical spa opens, its owners are probably not immediately thinking about selling it. However, medical spa owners and operators should always consider the value of their practices, so that when the time comes that they do want to sell, they can get more out of it than they put into it.

“When you’re looking at anywhere between a $250,000 and a $1 million investment to start up a med spa, I think it’s important before you go into that type of investment—whether you’re borrowing the money or financing the money or taking it out of savings or whatever—you really need to look at a return on investment and you really need to look at what your exit strategy is going to be,” says Louis Frisina, a medical spa industry pioneer who currently works as an investor, entrepreneur and business advisor, and who will be presenting “Closing the Loop: Valuing and Selling Your Medical Spa” at AmSpa’s Hawaii Next! Level Leadership event in Maui, Hawaii, on June 13 - 15, 2018. (Editor’s note: See the whole agenda and register here: “The whole concept behind [the presentation] can be summed up in one line: What am I doing today to position my company for sale tomorrow?”

Frisina has worked in the world of business finance for more than 30 years, and has been on the cutting-edge of aesthetics industry entrepreneurship for almost as long as the industry has existed. “Closing the Loop” will help medical aesthetics industry professionals consider how what they do with their practices make them more or less attractive to prospective buyers.

“I’ve visited close to 2,000 aesthetic medical practices around the world in the past 20 years, and I have been—and continue to be—involved with what I call the best practices out there; the top one or two percent in the country in terms of medical spas and also aesthetic medical practices, which could be a med spa that’s bolted onto a plastic surgeon or a dermatologist,” Frisina says. “With all of the experience that I’ve had, I’ve been able to figure out what best practices do to earn top dollar some years later when they’re ready to sell.”

The first part of the presentation will cover the characteristics of attractive medical spas.

“If you want to position your practice today to optimize the most that you can get in the future, you’ve got to be looking at what best practices did,” Frisina says. “Those marketing, operational, and human resource activities and things that they’ve done in their med spas that have led them to get the best price they possibly can.”

The second section of “Closing the Loop” will help medical aesthetics professionals determine what their businesses are worth. If a medical spa invests in the things discussed in part of the presentation, they can command a higher sale price than those that do not.

“They’re running it like a business and they’re optimizing their business for success today,” Frisina says. “When they’ve done those things, they’ve basically created a scenario where they will get the best price when and if they’re ready to sell.”

The third and final section of the presentation looks at a medical spa’s value from a prospective buyer’s point of view. What you see as your practice’s value might be very different from what a buyer sees.

“Because I’m on the side of both buying and selling companies, from the point of view of a buyer like me, acquiring on behalf of a client, what am I looking at?” Frisina explains. “This involves a bunch of financial information that I require—I look at three years of historical tax returns, I look at a number of financially related issues relative to their income statement, relative to their balance sheet. Because, ultimately, if I’m going to pay them a price for their practice, I have to get that money back at some point, hopefully over a five-year period of time.”

AmSpa’s Next! Level Leadership event will take place at the The Grand Wailea, a Waldorf Astoria Resort in Maui from June 13 to 15, 2018. Click here to learn more and register today. 

Tags:  AmSpa’s Hawaii Next! Level Leadership event 

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