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Trademarks: How to Make Your Mark With Your Med Spa's Name

Posted By Administration, Friday, October 26, 2018

By James M. Stanford, JD, Partner, ByrdAdatto

What’s the first thing most people will know about your med spa? The name! The strategy in naming and branding your business can have a major impact on building goodwill and a contributing factor in the success of your business. You will want to differentiate yourself from your competitors and standout, especially if you’re facing a saturated market place.

Clients frequently seek legal counsel to protect their business’s name and to further understand if their business name may also serve as the basis for a trademark. While a business or trade name is somewhat of a different animal than a trademark from a legal perspective, there are parallels between the two concepts in terms of what strengthens or weakens a business or trade name and a trademark.

Entrepreneurs routinely select very descriptive names for their businesses and trademarks. From a legal protection perspective, however, this can be problematic, as the applicable laws are not designed to protect descriptive or generic names or terms. Stated differently, the names or marks in these instances tend to exactly describe the services or products being provided. For example, you have developed an amazing line of unique and organic cupcakes so you name your business Laura’s Organic Cupcakes or Organic Cupcakes of Texas. If you want protect the name and keep others from using the same or a similar name or mark, these are probably the worst choices for a business name or trademark.

Marks that identify or describe a product or service, are in common use, or are used as geographical indications generally cannot be registered as trademarks and will remain in the public domain for use by anyone. Descriptive trademarks can only be registered if they have acquired distinctiveness after years of continued use and recognition by consumers. Generic terms used to refer to the product or service itself, however, cannot be registered or protected as trademarks.

An entrepreneur should resist the compulsion to describe the goods or services they are offering when selecting a name or trademark. Instead, create a name or mark that is novel and unique. An excellent real-life example of a strong mark consistent with our hypothetical above would be Sprinkles®–a well-known and successful bakery that focuses on cupcakes.

Before you spend a lot of time and money selecting a name or mark for your new business or paying a graphic designer to develop a logo to go with the name, you should speak with experienced legal counsel. Otherwise, you may experience the same frustration many others have faced when they are told their business name or mark can’t be registered or otherwise will be afforded little to no protection.

For more ideas on how to build a profitable and legally compliant medical spa attend an AmSpa Medical Spa & Aesthetic Boot Camp and be the next med spa success story.

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. 

Tags:  Business and Financials  Med Spa Law  Med Spa Ownership 

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Patient Privacy in Your Medical Spa Marketing

Posted By Administration, Thursday, October 25, 2018

By Alex Thiersch, CEO of the American Med Spa Association

Medical spas must use marketing best-practices to succeed, but must also be aware of common patient privacy issues that could leave the practice in hot water. All of a medical spa’s operations must be overseen by both an innovative business eye and a careful, meticulous medical eye. When it comes to marketing, these two perspectives can clash and, if this clash breaches patient privacy, the business can be hit with severe penalties.

Fines for violating the Health Insurance Portability and Accountability Act of 1996 (HIPAA) can be huge, and most states have patient privacy laws that are even stricter than the federal standard. Patient information can include—but is not limited to—email addresses, birth dates, social security numbers, and treatment information. Even the fact that a patient is being treated at your facility can be considered private information.

This is not to say that you shouldn’t engage in marketing; you absolutely should. Digital marketing and social media in particular are cost-effective ways to increase the reach of your business. Problems arise when the drive to grow your client base mixes with the unfamiliarity of or neglect of laws and regulations. 

Common Patient Privacy Mistakes
  1. Publicly reaching out to a patient. Engaging with clients is a central tenet of social media marketing. You want to create a sense of connection and community. You must remember, however, that in a medical spa your customers are also patients. Commenting publicly to a client on social media in order to thank them for coming in, or reminding them of a future appointment, or discussing their treatment in any way are all potential breaches of that patient’s privacy.
  2. Responding to comments whether positive or negative. This is risky for the same reasons as listed previously. If patients comment about an experience they had at your business, responding to them can be seen as breaching their privacy, and responding to negative reviews can be especially risky. If, in your response, you inadvertently reveal any private information, then not only do you have a customer who is angry with you, but you also have a customer that can report you for a privacy breach in an industry where investigations from regulators are largely driven by customer complaints. The Washington Post looked into this issue earlier in 2016 and made note of several situations where responses landed businesses in regulatory hot water.  “The consumer complained to the Office for Civil Rights within the U.S. Department of Health and Human Services, which enforces HIPAA. The office warned the dentist about posting personal information in response to Yelp reviews.” The Post further notes that the Office for Civil Rights, “is currently investigating a New York dentist for divulging personal information about a patient who complained about her care, according to a letter reviewed by ProPublica.” Do yourself a favor and don’t respond to negative reviews.
  3. Publishing photos without proper consent. Before-and-after photos are a powerful method of attracting new patients. Without the proper signed consent forms, however, you cannot publish patient photos to your website, blog, social media, or any other platform. Additionally, if you post photos of your facility or an event at which you’re offering treatments, you should be very careful to ensure you are not publishing a photo showing any patient in the background who has not signed a consent form.
What Can You Do?

The No. 1 rule when mixing marketing with medicine is you must be informed. The defense, “I didn’t know what the law was,” never works. Medical spas are governed by several different licensing boards and a slew of individual laws that vary from state to state, so be sure to consult a health care attorney (preferably with experience with aesthetics) that is familiar with the laws in your state. Know the regulations that apply to your business, and err on the side of caution.

As far as concrete things you can do, keep the following in mind. 

  1. For treatment reminders and thank-yous, a personal email or phone call should be used in place of reaching out via social media. 
  2. Consent forms are a necessity when displaying any photography of patients or of medical procedures on any platform, and be sure to note that traditional consent forms for before-and-after photos are not necessarily sufficient for using photos on your social media channels.
  3. The best ways to fight bad reviews are providing superior patient care and encouraging your happy customers to post positive reviews.

Also, keep in mind that once you understand what you need to do to protect your patients’ privacy in your marketing, you must train your staff to do the same. Your staff must know the regulations as well as you do, since you will be on the hook for any breach. Establish marketing procedures and guidelines, have them in writing, and make sure your staff knows them backward and forward.

For more ideas on how to build a profitable and legally compliant medical spa attend an AmSpa Medical Spa & Aesthetic Boot Camp and be the next med spa success story.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps  Med Spa Law 

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Medical Spa VIP Programs Increase Loyalty and Retention

Posted By Administration, Wednesday, October 24, 2018

By Bryan Durocher, Founder and President of Durocher Enterprises

Retaining patients is one of the keys to medical spa success, and VIP programs can be a huge driver for repeat visits. Loyalty rewards programs are used by some of the most successful businesses including GNC, American Airlines, and most of the credit cards we carry these days. We do not have to reinvent the wheel when it comes to these programs. Offer clients acknowledgement and value added incentives for being your best clients and they are more likely to keep doing business with you on a more consistent basis.

At your med spa everyone’s a VIP (Very Important Partisan, that is). That’s why it’s important to have a Very Important Partisan (VIP) program to create loyalty among your most frequent patients. According to the 2017 Medical Spa State of the Industry Report, only 39% of medical spa practices have VIP programs in place to retain their most loyal clients. 

 

Data collection will begin soon for the 2019 Report and we want to hear from you, so keep an eye out and help us define data in the medical spa industry!

With the Internet and competition it’s more important than ever to keep your hard-won clients shopping with you, since it can cost three to five times MORE to win new patients than to retain your existing ones.

Have them earn points for each service they enjoy and each product they purchase. For every 50,000 points they earn, clients receive a “store” credit worth $50 to spend on services, products, or gift cards.

Be careful, however, of offering rewards for referrals for med spa procedures because of laws regarding fee splitting.

Earning VIP Points – Omni-Channel Earning Clients who interact with you on more than one channel such as receive your newsletter, come to the practice, and follow you on social media typically will spend 18-36% more than clients who just visit for services.

Here’s how your clients can earn points:

Activity Points Earned

Spend $1 at the med spa on gift cards, in store or online – 10 points earned

Spend $1 at the med spa on services, products, series, and memberships, in store or online – 100 points earned

Like and or follow on each of your social media pages Facebook, Instagram, Twitter, Pinterest – 500 points earned for each page.

Sign up for the newsletter – 1,000 points earned

Pre-book their next appointment at time of checkout – 2,500 points earned.

Your system needs to automatically track the points they’ve earned. They can check their balance by asking your concierge, looking at the top of their receipt at checkout, or logging in to their online account (if available).

Redeeming VIP Points

Once they’ve earned 50,000 VIP Points, you automatically send them an email alerting that they have earned a points reward. This requires that they have a valid email address in your system and that they have not opted out to email communication. When they check out of their appointment at the clinic, just alert the concierge to offer if they would like to spend their points and then credit the transaction $50.

Enrolling in the VIP Program

Your clients are automatically enrolled in your VIP program from the first time they make a purchase at the Med/Spa.

The Fine Print

There has to be a catch, right? Not really, but here are a couple of details about how the VIP Program works:

VIP points expire two years from the day that they were issued. So, if they haven’t reached the 50,000-point threshold within those two years, the points may expire.

Points will be awarded at the time of check out. For example, if they refer a friend they will get their points when he/she checks out at the clinic. If they pre-book an appointment, they will earn those points when they check out of that appointment, not when they schedule it, etc.

VIP points may not be redeemed for cash.

No double dipping! Some purchases may not earn points. For example, they won’t earn double points if they buy themselves a gift card and use it on their own purchase. If the spa suspects abuse or other behavior, it can reserve the right to terminate the enrollment in the program.

VIP points are non-transferrable, but they may purchase a gift card with their VIP points to give to a friend.

Consider these other restrictions in your program terms:

  • May not be valid with some special offers, sale items or special purchases.
  • The med/spa reserves the right to terminate or modify the program at any time.
  • Clients may not earn points on purchases or services made using third party gift cards or tender.
  • Card is only valid for cardholder.
  • Card must be present to accumulate points.
  • Points cannot be earned from previous purchases.
  • Only the cardholder’s purchases are valid towards point accumulation.
  • Points are not awarded on shipping charges or sales tax. Product returns and other financial adjustments will be deducted from their total points.

Because there is a savings don’t offer VIP points for gift cards purchases that result in earning a bonus gift.

Enjoying treatments at the med spa may be habit forming, resulting in lower levels of stress, increased wellness, and moments of extreme contentment.

VIP Program Example

The Med/Spa has created valuable benefits to reward our most loyal guests and thank you for your patronage, support and trust.

The Med/Spa VIP program provides you with additional opportunities to make your experiences at our Med/Spa more valuable. View your additional opportunities for saving below.

  • 10% off retail purchases
  • Full Privilege points on product purchases when you spend $300 on product enjoy a $15 product credit in the retail store
  • Insider savings on new services
  • ABC Med/Spa gifts for special occasions
  • 5% discount on series purchases all year (VIP use only)
  • Complimentary Delivery of Gift Cards and Gift Boxes
  • 10% discount on gift card purchases during the months of Jan., Apr., Jul. and Oct.
  • Ask a concierge or your service provider about additional discounts

ABC Med/Spa VIP program cost for annual membership:

$500 for an individual (saving) or $50 per month

Membership can be paid up front or automatically deducted from your account each month.

The ABC Med/Spa VIP program provides savings based on anticipated use. Memberships will expire 1 year after the date of purchase. There are no refunds, credits, or cash given for “unused memberships.”

The VIP program renews annually upon each client’s enrollment date.

You will need to create signage and information about your program to create awareness among your team and client base.

Marketing

Signage can involve large posters throughout the business, station and treatment room signage, POP displays, and flyers for the retail bags when purchases are made. A banner across your website promoting the program is a good idea!

Other marketing tools to promote the program are business newsletters and e-mail marketing to your data base.

Additionally, you can offer your team member incentives for each VIP membership they sell. For the Front desk, you can offer an override to the team based on total sales.

For more ideas on how to build a profitable and legally compliant medical spa attend an AmSpa Medical Spa & Aesthetic Boot Camp and be the next med spa success story.

Bryan Durocher is the author of Wakeup Live the Life You Love in Beauty, and is the founder of Essentials Spa Consulting and Durocher Enterprises. Durocher was named one of the “Top 20 People to Know in the Beauty Industry” by Global Cosmetic Industry magazine, and provides coaching, consulting, global industry trends, and marketing solutions for medical spa, spa and industry professionals internationally. He has published many articles and has provided business education internationally at a variety of national and international industry events including AmSpa’s Medical Spa & Aesthetic Boot Camps and The Medical Spa Show.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps  Business and Financials  Med Spa Ownership 

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Why Is It So Hard to Find Legal Answers in This Industry?

Posted By Administration, Tuesday, October 23, 2018

By Alex R. Thiersch, CEO of the American Med Spa Association

We at AmSpa and ByrdAdatto are constantly asked for information regarding the legalities of the medical aesthetics industry. Every day, we hear from professionals wondering, for example, why a registered nurse can perform one procedure but not another, or why a licensed vocational nurse can inject one substance but not another. 

Providing information such as this to industry professionals is the reason why AmSpa was started in the first place, but we often get pushback from people who question our conclusions or wonder why, if the law is what we say it is, no one is following it. The truth of the matter is that finding legal answers in the medical aesthetics industry is not easy, and there are numerous reasons why.

Certain conversations regarding the legalities of the industry happen over and over again. For example, I will explain to someone about the requirement that a physician, physician assistant, or nurse practitioner perform a face-to-face exam of a patient before a laser treatment or filler injection, and the person with whom I’m speaking will say that can’t be true—nobody does that. If that were the rule, they say, you could shut down every medical spa in the state. But it is true, it is the rule, and yes, you probably could shut down most medical spas in any given state if you had a mind to. 

The medical aesthetics industry is unique for a few reasons. First of all, everything is elective, so you’re marketing to people who choose to undergo a particular procedure rather than require it. Also, medical spas do not deal with insurance—it is a cash-based industry. Because of these factors, medical spas have to engage in marketing in ways that more traditional medical outlets don’t typically have to consider.

As a result of this emphasis on marketing, non-physicians play a key role in the health of these businesses. For example, a registered nurse who is a phenomenal injector can be the person patients come to see, as opposed to the physician. This is a much different dynamic than you are going to find anywhere else in the world of medicine.

Additionally, medical aesthetic practices have to deal with multiple practice groups, including medical boards, nursing boards, and boards of cosmetology. And because the medical aesthetics industry is so new, many of these agencies are dealing with the issues raised by its practice for the first time. Essentially, the industry is being governed by laws that are not designed to govern it and people who are largely concerned with more pressing issues.

For example, representatives of a nursing board probably don’t have many thoughts about CoolSculpting, since much of their time is spent dealing with pressing matters such as opioids. They have so much going on that they can’t reasonably be expected to understand the nuances of the medical aesthetics industry.

When AmSpa researches the laws that apply to medical aesthetics practices in a particular state, we start by looking up what we can in the state’s legislation, but nine times out of 10, these laws’ application to medical aesthetics situations is tangential. They’re typically written to deal with other areas of medicine and nursing. Therefore, the boards’ interpretation of these laws with regard to medical aesthetics is of the utmost importance. If a board has no published opinion on a matter, that doesn’t necessarily mean that it doesn’t have an opinion—it just means that they have not yet presided over an incident that has caused them to issue an opinion. When you’re dealing with multiple boards with multiple opinions, it complicates things further.

All this makes AmSpa’s job very difficult. Much of the time, we have to take what we know about the laws and the boards and try to pinpoint what a ruling would be. When we say, “This is what we believe the rule is in this particular state,” it’s probably not taken directly from legislation, because that legislation likely doesn’t exist. We can, however, combine precedents with our legal knowledge to give you the best read on the situation possible.

Our attorneys have been researching these decisions for years. They have gone before nursing boards and medical boards to argue cases, and they have talked to officials about these issues. This is how we find out this information. It’s very difficult, but we’re confident that our attorneys offer our members the best possible information. 

For more information about med spa laws, become an  AmSpa Member to schedule a complimentary initial consult with our partners at ByrdAdatto.

Tags:  Business and Financials  Med Spa Law 

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Running the Numbers on Med Spa Compensation

Posted By Administration, Monday, October 22, 2018
Updated: Monday, October 22, 2018

By Alex R. Thiersch, CEO of the American Med Spa Association

A medical spa’s most valuable asset is not its location, its marketing, or even the multi-thousand dollar laser equipment. According to our 2017 Medical Spa State of the Industry Report payroll and benefits are the single largest category of medical spa expense. Also from our Industry Report receptionists (69%), aestheticians (78%), and nurses (50%) are among the most commonly employed positions at a medical spa. So even a very modest sized medical spa is going to employ a team of people. This team in addition to being the biggest expense is also the Spa’s biggest asset. A medical spa is all about offering services and procedures in a comfortable and inviting way and the people chosen to perform those services are critical to that goal. 

The success of a medical spa is directly tied to its ability to attract and retain excellent nurses, aestheticians, and staff. A competitive compensation structure is going to be a major part of attracting and retaining these stars. Commissions seem like a great solution to this: the medical spa incentivizes the employees to generate more business and the employee gets flexibility in their pay structure. In fact our State of the Industry Report uncovered that roughly a third of our respondents pay some sort of commission to their employee. 

However there are multiple reasons you should think twice before offering commissions.

Fee Splitting/Kickbacks

To understand why paying commissions may not be a good solution we need to answer the question “who earns the fee for a Botox injection or laser hair removal session?” Because most treatments and procedures in a medical spa are medical procedures it is the physician supervising the practice who earns the fee. It is the physician (or the midlevel practitioner they delegate the task to) who performs the initial exam and prescribes the course of treatment. They then delegate the administration of that treatment to the other licensed healthcare professionals. The physician in turn pays the overhead costs, payroll, and other expenses of their office. 

State legislatures have historically been concerned with protecting the public from financial arrangements which may corrupt the independent medical judgement of physicians. As such many states have passed laws that prohibit a physician from splitting their fee or paying a kickback in exchange for a referral of business. For instance California prohibits a licensed health practitioner from paying or receiving a commission or consideration to compensate or induce the referral of patients. The penalty for violating this section can include imprisonment up to a year and/or a fine up $50,000. Other states may not have as stiff of penalty but may still discipline the license holder for unprofessional conduct when engaging in this sort of activity. 

In offering to pay a commission to the nurse or staff for every procedure performed or sold the physician is giving a kickback or splitting their fee with someone in exchange for business.  Even in states that do not have an explicit prohibition on splitting fees or kickbacks paying commissions can raise issues of corporate practice and unlicensed practice of medicine. All states prohibit unlicensed persons from practicing medicine and many extend this to lay business entities (i.e. corporations). By paying a commission or sharing the fee for a procedure this can raise issues that a portion of the fee for professional services is being shared with people who are ineligible to have an ownership interest in a medical practice or not licensed to practice medicine. 

So What Can You Do? 

Of course many of these issues will be specific to your state’s law and medical board (AmSpa members can check their medical aesthetic state legal summary) but in general you can pay your employees a salary for the work they do and under certain circumstances bonuses tied to other performance metrics may be acceptable. 

See the compensation packages, and other business-building tools, available in the AmSpa store.

For instance bonuses tied to retail sales don’t involve medical fees and so don’t draw in the fee splitting issues. According to our 2017 State of the Industry Report, medical spas draw 18% of their revenue from retail items. Retail products are obviously not medical procedures so if your practice carries a line of beauty products you could get the double benefit of increased sales and increased employee retention by offering commissions on these products. 

What employees does your spa have? Have you had success with certain compensation structures? Let us know: We’ll be conducting our next State of the Industry survey soon and really hope to hear from you. Help us define data in the medical spa industry.

Tags:  AmSpa's 2017 Med Spa Statistical Survey  Business and Financials  Med Spa Ownership 

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LLCs and Your Med Spa: Are You Protected?

Posted By Administration, Friday, October 19, 2018

By Robert J. Fisher, Attorney, ByrdAdatto

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.

For more information on your state’s laws and regulations, attend an AmSpa Medical Spa & Aesthetic Boot Camp and be the next med spa success story.

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.

Tags:  Business and Financials  Med Spa Ownership 

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9 Common Mistakes Made on Medical Aesthetic Malpractice Insurance Applications

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.

Click here for more information on medical spa insurance. AmSpa members are eligible for a customized insurance package through the Insurance Office of America.

1. Inflated Treatment Counts

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:

  1. Alcohol is being served, potentially resulting in impaired judgment;
  2. The space is unsanitary;
  3. There is less control over the space, resulting in potential slip and fall accidents;
  4. Theft;
  5. …and more.

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. 

Tags:  Business and Financials  Med Spa Ownership 

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What the FDA Warning on Vaginal Rejuvenation Devices Means to You

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.

To hear more from Mr. Reyero on the subject listen to him elaborate on the topic on the Medical Spa Insider podcast.

“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.”

Results

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.

For more information see the joint statement on this topic issued by the American Med Spa Association and the law firm of ByrdAdatto.

Tags:  Med Spa Law 

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Finding and Training Quality Staff the Top Concern of Medical Spa Owners

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. 

3. Growth
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.

Tags:  Business and Financials  Med Spa Ownership 

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Do You Need a License?

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. 

Tags:  AmSpa's 2017 Med Spa Statistical Survey  Med Spa Law 

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