By Courtney P. Cowan, JD, associate attorney, ByrdAdatto
As many in the med spa industry are aware, Texas Senate Bill 2366 (SB 2366) was introduced earlier this month in the current legislative session. Almost instantaneously, it sent shockwaves through the medical community when it was filed by Senator Brian Hughes of District 1 on March 8th.
For context, the 86th Texas legislative session began on January 8, 2019, with almost 9,000 bills being introduced this session. March 8 was the last day to file a bill for the current session, which is notable since that was also the same day SB 2366 was filed. The regular session ends on May 27, 2019.
As the second step in a long legislative process, SB 2366 has been assigned to the Senate Business & Commerce Committee. This Committee will look over SB 2366, deliberate it, recommend it for amendment, and hold public hearing on it. At the end of its review of the bill, the Committee will give a report back to the Senate at large, which will then decide whether SB 2366 should be approved or disapproved. If it is approved, then SB 2366 will go to the Texas House of Representatives for review, repeating the entire process described above again before going to the Governor to be approved as law.
ByrdAdatto and American Med Spa Association (AmSpa) have been in contact with Senator Hughes’s office to gather more insight into the introduction of SB 2366. After speaking with a representative for Senator Hughes, his office commented that SB 2366 as it was introduced was not the intended language of the Senator. Moreover, the representative also stated that the response from the industry and stakeholders had been significantly more than they anticipated.
With all of that being said, it would take a lot of moving pieces, proposing and passing of more bills, as well as various legislative amendments for this bill to ever really take effect against delegated providers in the industry. Another point worth highlighting is that the first iteration of a bill, such as this one, will typically go through many revisions and amendments before ever getting passed (if ever). So even if SB 2366 goes into effect, it likely will look vastly different than the current proposed language.
Due to SB 2366 being such a hot topic within the industry, Patrick O’Brien of AmSpa and Samuel Pondrom of ByrdAdatto gave an in-depth webinar presentation for AmSpa regarding SB 2366. You can listen to Patrick and Sam’s discussion here.
ByrdAdatto understands that SB 2366 could impact Texas and its med spa industry in a big way, and we will continue to monitor the bill as it makes its way through the legislature. While it is uncertain whether SB 2366 will become law, it should be recognized that as the med spa industry continues to expand and grow, there will continue to be legislation implemented to regulate it.
As the daughter of a periodontist, Courtney P. Cowan has been fascinated by the health care field since childhood. Courtney often accompanied her father to his office where she developed an appreciation for physicians and their respective practices. Having absolutely no dexterity that is required to be a surgeon, however, Courtney instead decided to pursue a degree in business while attending Baylor University. It wasn’t until she was required to take a business law course that Courtney discovered her passion for the law. After graduating from SMU Dedman School of Law, Courtney serendipitously connected with ByrdAdatto and now assists our clients by combining her business background with her enthusiasm for health care and the law.
Posted By Mike Meyer,
Monday, April 1, 2019
Updated: Tuesday, April 2, 2019
By Alex R. Thiersch, JD, CEO of the American Med Spa Association (AmSpa)
Opening any business involves numerous complications that are difficult to predict and prepare for, but opening a medical spa is significantly more complicated than creating most other types of businesses. After all, a medical spa requires high-level business acumen, a thorough understanding of local medical rules and regulations, and dedicated, properly trained employees in order to succeed.
That’s a tall order when you’re just starting out, but help is available. If you find yourself overwhelmed by the obstacles in your way, you may want to attend one of AmSpa’s Medical Aesthetic Boot Camps. Early-bird registration for the Chicago Boot Camp—which takes place at the Chicago Marriott Southwest at Burr Ridge on May 4 – 5—ends at 11:59 p.m. EST on April 4, so if you’re near the Windy City and want to learn more about how to make your medical spa a success from day one, you can do so at a discounted rate until then.
Develop a Business Plan
Creating a detailed business plan is a vital step for any prospective business, and a medical aesthetics practice needs to address an unusual number of issues. Where will the business be located? How will it be designed? What will set it apart from its competition? How will you go about recruiting talented employees? What will you do to attract patients? What types of patients do you wish to attract? All these questions and many more will need to be addressed at the earliest stages of your business’ development.
Learn About Compliance
New medical spa owners might not know much about the rules and regulations they’ll be expected to follow when they enter the medical aesthetic industry, but it is important that they learn as quickly as possible. The “medical” part of the equation makes operating a medical spa much more complex than it would be if it was simply offering aesthetic services such as facials and manicures. The practice’s ownership structure must be developed in accordance with state laws, and that’s just the start—all medical treatments must be performed with proper supervision, and all marketing must be conducted with special attention paid to patient privacy and other factors. Regulations vary from state to state, so there is no one way to approach this, but it is extremely important that you develop an understanding of what is expected of a compliant practice.
Plan for the Future
The medical aesthetic industry is constantly changing, and understanding the metrics that provide the best insight into medical spa success can help keep you ahead of the curve. It is also important to learn how to efficiently operate and maintain the value of your practice. Your practice is about to become your life, so you need to know what you can do to make it as healthy as possible for as long as possible. And while you probably won’t want to think too much about your exit strategy while you’re opening your practice, it’s probably worth having that conversation with your partners, financial consultants and attorneys, as well.
These topics and many more are addressed at AmSpa’s Medical Aesthetics Boot Camps. If you are preparing to open a practice, it’s certainly worth your while to attend one near you. Early-bird pricing for the Chicago Boot Camp can be secured until 11:59 p.m. on April 4, so if you want to attend, click here to register. If you can’t attend the Chicago Boot Camp, keep in mind that subsequent 2019 Boot Camp events are scheduled for Atlanta, Seattle, Dallas, New York and Orlando; early-bird pricing is available for all of these events right now, so sign up today.
By Alex R. Thiersch, JD, CEO of the American Med Spa Association (AmSpa), & Patrick O’Brien, JD, legal coordinator for the American Med Spa Association
The U.S. Department of Justice (DOJ) issued a press release that may have a profound impact on the aesthetics industry as we know it. In settling an anti-kickback and False Claims Act claim against medical device manufacturer Covidien, the feds stated that device manufacturers who provide complimentary marketing support, product marketing plans and advertising support as incentives to purchase their products are engaging in an illegal kickback scheme. Even providing complimentary “lunch and learns” to customers may violate anti-kickback laws.
The DOJ enforcing the Anti-Kickback Statute and the False Claims Act is not unusual, and those of you familiar with AmSpa know we often warn practices of federal and state anti-kickback laws. What is unusual about this case, however, is the form the alleged kickbacks took—instead of money, the company offered free or reduced-cost marketing and advertising support, something that occurs all the time in the aesthetics industry.
Let me know if this sounds familiar: As part of its sales strategy, Covidien—which produces and sells a radiofrequency ablation catheter device called “ClosureFast”—would provide free marketing and practice support to physicians who purchased the devices to help them establish and grow their ClosureFast practices. This included providing the physicians with customized marketing plans and hosting “lunch and learn” meetings to educate area physicians about the purchaser’s ClosureFast vein practice in the hope of generating referrals.
Well, guess what? This non-monetary support constitutes an illegal kickback, alleges the DOJ, and can expose offenders to fines and even criminal liability.
The DOJ makes clear in its press release that these types of remuneration are treated the same as monetary kickbacks and will be actively pursued. Although the DOJ’s press release describes the marketing and sales support as being very tailored and specific to the individual practices, it does not indicate that this was a deciding factor in its pursuit of this case. Based on the press release’s rationale, many other types of non-monetary support also could be seen as kickbacks; this may include common industry practices such as providing advertising and marketing materials or services to new device purchasers. As is often the case with high-profile enforcement actions, this may mark the beginning of additional enforcement—not only at the federal level, but also for states acting under their own anti-kickback statutes.
While most medical spas are not directly affected by this new enforcement angle because they don’t bill to Medicare or Medicaid, it is conceivable that state enforcement agencies may take a closer look at these practices in light of the broad language contained in state anti-referral and anti-patient solicitation statutes. These state rules often apply to medical practices regardless of whether they bill to insurance.
This is potentially huge news for manufacturers in the industry. Stay tuned—AmSpa’s lawyers are dissecting the decision to determine its impact on the industry.
Posted By Administration,
Thursday, March 28, 2019
By Alex R. Thiersch, JD, CEO of the American Med Spa Association (AmSpa)
Shortly before The Medical Spa Show 2019, I posted in this space about the value and utility of mastermind groups—groups of like-minded business leaders who congregate occasionally to share ideas and encourage each other to address their issues with an entrepreneurial mindset. At The Medical Spa Show, AmSpa announced the Aesthetic Mastermind groups, which provide the benefits of a mastermind experience while addressing the specific issues facing medical spa owners and operators.
The Aesthetic Mastermind is not a standard mastermind group—it is custom-designed for medical aesthetic practice owners. Instead of having one large group, the Aesthetic Mastermind will be split into smaller groups of up to five people; the membership is based on factors such as revenue, location and business stage. (Direct competitors will be added to separate groups.) Each group will challenge owners to not only maintain sensible, realistic business plans based on reliable metrics, but also expand their visions in order to become an even more effective entrepreneur.
Each group begins with a three-day, two-night “Vision Quest” retreat. This gathering will feature an experienced business coach and is designed to help group members step back from their day-to-day businesses and create a rapport with their fellow owners, share their business experiences and learn about the industry from a number of different perspectives. After the Vision Quest, the group will meet once a month, 11 times per year, via teleconference; each meeting will include the business coach to keep the group on track and “hot seat” sessions for each member. Before the actual meeting, a guest from the industry will speak about his or her experience and field questions from group members.
Watch business coach Wendy Collier discuss the Aesthetic Mastermind in this brief video.
This package costs $7,995 for the entire year, though AmSpa Members will receive an additional $500 off. Importantly, the Vision Quest’s lodging, meals and program materials are included in this cost; airfare is not included, but AmSpa can provide booking assistance for your flights.
May 1 is the deadline for registration for the first session of the Aesthetic Mastermind, so fill out your application today and become a part of this exciting project. You won’t find a better opportunity to learn about the medical aesthetic industry from your peers in a format that encourages entrepreneurship, so act now.
Posted By Administration,
Wednesday, March 27, 2019
By Alex R. Thiersch, JD, CEO of the American Med Spa Association (AmSpa)
Microneedling is a popular procedure in med spas, but many owners and practitioners do not know if aestheticians can legally perform the treatment. As is the case with many regulatory issues in the medical spa industry, the answer can vary depending on what state you practice in. In much of the United States, however, the answer likely is no.
Also known as collagen induction therapy, microneedling is a minimally invasive treatment that is designed to rejuvenate the skin. A device with fine needles creates tiny punctures in the top layer of the skin, which triggers the body to create new collagen and elastin.
Is It Medicine?
An aesthetician’s license does not permit him or her to perform medical treatments; rather, aestheticians may only perform procedures for the purpose of beautification. Many med spas look at these standards and assume that aestheticians can perform microneedling; however, many state regulatory boards specifically are classifying microneedling as medical treatment, no matter whether the needles actually penetrate the outer layer of the skin.
Illinois and California, for example, specifically listed microneedling as medical treatment in 2016 because they classified the device as medical equipment. At an American Med Spa Association Medical Spa Boot Camp in San Jose, Calif., Kristy Underwood, executive director of the California Board of Barbering and Cosmetology, gave additional details as part of a 30-minute Q&A session.
“This isn’t new—aestheticians cannot penetrate the skin,” Underwood said. “They also can’t use any metal needles, period. [California] aestheticians are prohibited from using metal needles.” She added that they cannot use anything that might be disapproved by the FDA.
In some states, however, people holding aesthetician licenses can perform certain medical procedures. These states differentiate between an aesthetician and a person who is performing medical procedures under the supervision and delegation of a physician.
This means that if the patient is first examined by a physician or a mid-level practitioner—a nurse practitioner or a physician assistant—an individual working in a medical spa may perform microneedling. However, it is very important to note that if aestheticians are going to perform this procedure under this caveat, they cannot represent themselves as aestheticians while doing so. This means aestheticians must flip over their aesthetician name tags and take down any certification they might have hanging on the wall.
The state may allow an aesthetician as a person to perform this procedure under proper medical supervision; however, the regulatory board does not cover this under an aesthetician license.
This sounds onerous, and it is certainly involves more effort than a facial or another aesthetician service, but this does not have to be a deal-breaker for offering microneedling services in your medical spa. The supervising physician does not need to be in the room watching the aesthetician perform the procedure and, in many states, does not need to see the patient before each treatment—just the first one.
The More You Know
Regulations can vary greatly depending on where a business operates, so it is very important to know the laws that govern medical aesthetic businesses in your state. When in doubt, consult an attorney in your state who is familiar with aesthetics.
Medical aesthetic practices spend a lot of their money and resources on marketing to attract patients to their practice, as well as on a savvy website to sell patients on why to choose them over their competition. All this results in a patient scheduling a consult. What happens next is where most practices “strike out looking.”
I've been in more than 400 cosmetic practices spanning more than 40 states across the country, and the problem is always the same: Patients—your captive audience—are either on their smartphones or reading magazines in both the waiting and consultation rooms. They are literally waiting to be sold on whatever product, procedure and/or service that attracted them to your office in the first place. Wouldn't their time be better spent learning about that product, procedure or service? This surely would prepare them to ask better questions and participate in a more efficient and effective consult. Sure, most patients are already sold on Botox, but why wouldn't you give them the opportunity to engage with and learn about the new laser you just purchased or any specials or events that are coming up?
Brag books and brochures were sufficient back in the early 2000s, but it's time to retire them both and invest in technology that will enhance the patient experience and showcase the products, procedures and services that your practice offers. You can start by adding a waiting room solution consisting of either a patient-friendly app for patients to download and watch videos and look at before-and-after pictures, a waiting room loop system to stream educational and promotional content, and/or a tablet with which patients can interact. The same concept applies to your consult room—take advantage of any downtime the patient might have while he or she is waiting.
Here are a few ways to implement captive audience experiences:
In-house marketing: Utilize promotional videos and images to educate patients about services you offer.
Visual consultation: Everyone is a visual learner—combine videos, images, before-and-after galleries, and educational content into a patient education platform.
Patient education: Allow the patients the opportunity to relive the consultation at home using software. Your patients can review drawings, signed consents, operational instructions and custom educational videos.
The captive audience experience is too often forgotten or left out of the equation. It's an easy fix with the right technology.
TouchMD is a visual consultation, marketing and imaging software utilizing touch-screen technology that enhances the patient experience with proven revenue generation. To learn more about TouchMD or request a demo, please email firstname.lastname@example.org.
By Alex R. Thiersch, JD, CEO of the American Med Spa Association (AmSpa)
For a medical aesthetics practice to best serve its patients and maintain a viable business, it needs to understand the ways in which it may be compromising patient safety or otherwise violating the law. Therefore, if your practice has not undergone a thorough risk assessment recently, it should do so as soon as possible.
“A risk assessment establishes the baseline of where a practice is from a compliance perspective and helps identify risk areas that need to be fixed,” said Michael Byrd, partner at ByrdAdatto, a Dallas-based law firm that specializes in business and health care law. “Let’s get a baseline of where you are so we can figure out what needs to happen.”
A properly conducted risk assessment will cover both business and medical concerns, and it will identify areas where the practice is compliant, areas where the practice needs to be mindful to remain in compliance, and areas where the practice is not compliant that need to be corrected.
“A risk assessment is essentially a blend of legal and clinical evaluation of compliance,” Byrd said. “From a legal perspective, we’re making sure that the ownership is set up in a compliant way, and then that the policies and procedures are set up in a compliant manner. Clinically, do they have appropriate policies and procedures as it relates to treatment, delegation and supervision, OSHA, telemedicine, HIPAA, etc.? A lot of times when we’re doing a risk assessment, we have a lawyer look at it, plus a clinical person, and sometimes even an IT person helping to evaluate if there’s a cyber-security risk from a HIPAA perspective.”
To begin the process of conducting a risk assessment, a practice should engage with a health care law firm that has a great deal of experience conducting such investigations. Additionally, stakeholders need to be prepared to be as open as possible so evaluators can get a clear idea of what is going on at the practice.
“We’ll identify the ownership documents to send us, and then if it’s a full risk assessment, we’ll involve a clinical consultant who’ll look at it from a clinical perspective, and then we’ll work together to make sure that the policies and procedures navigate that particular state’s laws,” Byrd said. “There’s a big element of knowing who’s doing the initial exams and who can be delegated to provide the treatment, and even by procedure, there are certain procedures that are only appropriate for certain providers. That’s a lot of the back and forth we’ll have with the consultant.”
If this sounds like a major undertaking, well… it is. However, it is assuredly better to know the areas in which your practice falls short of compliance and what can be done to correct that rather than remain ignorant and be surprised when an investigation uncovers violations.
“It can be overwhelming, but if it can be integrated as part of the culture of the business, our clients are very successful,” Byrd said. “A risk assessment is really just a starting point, but then you have a culture of following these procedures and evaluating as laws change, technology and procedures change, and your personnel changes, evolving your compliance plan with that. The clients that adopt that as part of the culture of their business have been really successful in minimizing that risk.”
Byrd says that after his firm conducts a risk assessment, it typically will check in with clients every three months to make sure that everything is on track. If a firm does not offer periodic check-ins, he recommends repeating the risk assessment process annually.
By Patrick O’Brien, J.D., Legal Coordinator for the American Med Spa Association
Finding customers is the biggest challenge for any business. You can offer the finest product or the best service, but none of it will matter unless you can find people willing to walk in the door and buy from you. Therefore, marketing and advertising are critical to a business’s success. This is especially true for medical spas and others in the aesthetic health industry. There are many effective marketing strategies to use, each with its own legal issues. We’ve previously written about issues with email marketing and text message marketing.
The referral is one of the most effective marketing tools. Satisfied customers can be your best advocates and salespeople by simply going out into the world and telling their friends about how great you are. A recommendation from a friend or trusted acquaintance can be hugely credible, so incentivizing people to make more of these referrals for you might seem like a great idea. However, since medical spas offer medical procedures, they are subject to a slew of laws that make rewarding referrals very difficult to do. Many states prohibit physicians or licensed healthcare providers from paying or accepting money or other types of value for referring a patient.
Consider the ongoing saga of Forest Park Medical Center in Dallas, where doctors (allegedly) enacted an elaborate plan of paying other physicians for referrals to the center for elective surgeries and ran afoul of anti-bribery laws. Forest Park apparently was paying hundreds of thousands dollars per month to physicians for referrals and calling it “marketing.” Obviously, most medical spas are not able to pay millions a month in “marketing,” and very few seek reimbursement from insurance. So what do they have to worry about? Texas’ patient solicitation law prohibits paying “any remuneration in cash or in kind” for “securing or soliciting” a patient. (Confusingly, this particular law is not the one at play in the Forest Park case, but it does apply to other Texas medical practices). So while it might seem nice to give a gift card to someone for bringing a patient to you, it very likely is an offense under this section.
Texas isn’t the only state to look unkindly at paying for patient referrals. Many other states have similar “anti-kickback” laws or general prohibitions on physicians “fee-splitting” with others. New York, for example, clearly prohibits a licensee from offering, giving or receiving any fee or consideration to a third party for the referral of a patient. If you think this seems broadly written, you would be correct—and New York and Texas are far from the only states that have laws such as these on the books; most traditionally have viewed paying for referrals as subverting a patient’s interests. After all, the patient is relying on the person to provide a recommendation that is in his or her best interest, and the introduction of a financial motive may influence that recommendation.
You also may notice that payments for more traditional advertising could fall into this broad definition if the fee is based on results. Depending on the specific facts of the case and the state in which it occurs, this could be the case. California has accounted for this possibility by providing an exemption for certain advertising relationships in its anti-kickback statute. The California Business and Professions Code § 650 prohibits a licensee from offering or accepting any payment as compensation or to induce the referral of patients. However, it does allow for the payment of services (but not payment for referrals) based on gross revenue or a similar arrangement if it is consistent with the fair market value of those services. But even in states like California that explicitly carve out advertising from the anti-kickback rules, not all advertising relationships are permitted. Paying for advertising based on results or consumer response always will appear to be a paid referral and is certainly a risky arrangement. Before implementing any marketing strategy, it is always a good idea to review your state’s fee-splitting and anti-kickback laws, as well as your licensing board’s guidance on professional conduct.
If you would like to learn more about marketing that won’t land you in the same hot water as the physicians at Forest Park Medical Center, consider attending one of our Boot Camps this year. We also have a number of webinars that cover various issues and aspects of marketing that you may find helpful.
By: Alex R. Thiersch, JD, CEO of the American Med Spa Association (AmSpa)
From now until March 28, AmSpa is conducting the 2019 Medical Spa State of the Industry survey, and if you’re the owner or managing business director of a medial aesthetics practice, your participation is vital to helping us gain a better understanding of what’s going on throughout the industry. The survey takes approximately 15 minutes to complete, and once you finish, you’ll be entered in a drawing for valuable prizes. Click here to take the survey now.
This survey is extremely important to AmSpa and its members, and the information you provide can help us determine emerging trends and topics of concern that affect everyone in the industry. The more data we can gather, the better—it allows us to determine what is happening with a greater degree of certainty, and it helps bring to light perspectives that might not have been considered before. In other words, your opinion is incredibly valuable to us and to everyone else in the industry.
If you complete the survey, you’ll receive a free executive summary of the results when the survey is completed, as well as a promo code for $100 off a ticket to any 2019 AmSpa Medical Spa & Aesthetic Boot Camp, so if you’re a qualified respondent and you’re considering attending any of these events, it’s certainly worth your while to participate. Additionally, you will be entered in a drawing to win one of two $500 Visa gift cards.
Participation in the survey is limited to owners and managing business directors of medical aesthetics practices, and we ask that only one person per practice respond; however, if you don’t personally have access to the information you need to answer a particular question, we encourage you to solicit that information from others in your organization.
The more information you have, the better decisions you’ll make. By participating in AmSpa’s 2019 Medical Spa State of the Industry survey, you’ll help yourself and others to become better informed about the trends and topics that are currently driving the medical aesthetics industry, which can, in turn, help the industry can become even healthier as a whole.
Posted By Administration,
Thursday, March 14, 2019
By James M. Stanford, JD, Partner, ByrdAdatto
Over the last several years, private equity activity progressively made its entrance into the market of dental support and management service organizations. Now, the trend has made its way into the practice of dermatology, and the field is divided over the rise of private equity—not only in dermatology, but in other areas of medicine as well, including plastic surgery, aesthetics, and the medical spa space. The competing schools of thought on private equity in medicine are highlighted in an article recently published by The New York Times entitled, “Why Private Equity is Furious Over a Paper in a Dermatology Journal.”
The article details the backlash a medical research paper received after its data supported a conclusion that private equity firms tend to acquire practices “that perform an unusually high number of well-reimbursed procedures and bill high amounts to Medicare.” The article also highlights the criticisms over the paper’s factual accuracy, its sudden removal from the medical journal’s website, and the questions raised about private equity firms’ growing presence and influence in the practice of dermatology at the expense of patient care.
While the corporatization of healthcare is not a new debate, the research paper’s conclusion is the most recent example to illustrate the challenges that arise in maximizing profits without diminishing patient care. This is because the ability of a practice to effectively align its healthcare and business issues can be the differentiating factor between the success and failure of the practice. On one side of the equation, you have the traditional healthcare practice structure where business innovation and creativity is extremely limited, and the primary focuses are patient care, efficiency in billing and operations, and payer reimbursements. On the other side, you have the retail business structure where there is a limited understanding with healthcare laws and regulations and the correlated risks of excessive monetary penalties and lawsuits, but its experts are skilled in innovative marketing and branding.
Like it or not, private equity has made its way into the dermatology market and other health care spaces. If you have a management service organization and need help navigating the challenges of raising private funds, or if you are currently operating with private equity backers and need guidance, consider attending one of AmSpa's upcoming Boot Camps, where industry leaders can answer your questions and show you how to move your business forward.
James M. Stanford is an attorney and partner at the ByrdAdatto law firm. From transitions, mergers, and acquisitions to structuring complex ownership arrangements, James enjoys the personal reward that comes from bringing parties together and making deals happen. James practices primarily in the areas of health care and corporate law with a focus on intellectual property. A proud father, Jim served in the U.S. Army and is fluent in Russian. In his spare time, he enjoys hunting, fishing, and spending time outdoors.