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What You Need to Know About Parallel Importation

Posted By Administration, Wednesday, May 22, 2019

package delivery

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

In June 2018, Oregon-based physician Brenda Roberts had her medical license revoked for obtaining and using prescription medication from foreign countries. Roberts was a family practice doctor who was administering Botox treatments at her home on the side. She wasn’t necessarily doing anything inappropriate in terms of patient care, and she kept detailed records on her patients, but she was buying Botox from United Pharmacies—a “rogue pharmacy” that operates outside of U.S. Food and Drug Administration (FDA) governance—because Allergan noticed it was sending Botox to her home and cut off her account. FDA agents went through her trash and found that the Botox she used was intended for sale in Europe.

Roberts was participating in a practice called parallel importation, and while it is extremely enticing for medical spa owners looking after their bottom lines, it should be avoided at all costs, as Roberts’ case demonstrates.

A Controversial Practice

In countries such as the United Kingdom, Germany, France, Sweden and Canada, governments regulate the cost of pharmaceuticals. These measures are ostensibly designed to prevent drug manufacturers from charging excessive prices for essential medicine, but they also apply to pharmaceuticals used for elective procedures, including Botox.

In the U.S., however, FDA does not regulate drug prices, so drug manufacturers essentially can charge whatever they feel the market will bear for their products; that price is invariably much higher than what is charged in countries that have cost controls.

Because of this, it has become somewhat common for U.S.-based providers to buy drugs from licensed dealers in countries where cost controls are enforced. The prices are up to 50% lower than what the buyers would have to pay if they were purchasing the drugs directly from the manufacturer.

Both parties benefit from this arrangement. The buyers get legitimate pharmaceuticals for much less than they would pay if they bought directly from the manufacturers, and the dealers can make their money simply by marking the product up slightly. These are not counterfeit pharmaceuticals like the ones that are typically manufactured in China that have flooded the market in recent years—these are almost invariably the same drugs that are approved by the FDA and sold in the U.S.

Understanding the Rules

While parallel importation of consumer goods is broadly legal in the U.S.—the Supreme Court ruled that to be the case in a 2013 case involving textbooks—Roberts’ case demonstrates that the distribution of drugs that are not explicitly intended for use in the U.S. is absolutely illegal, and that FDA and the U.S. Drug Enforcement Agency (which also participated in the investigation) are taking cases such as this extremely seriously. There hasn’t been much enforcement yet, but this demonstrates that the issue is definitely on the agencies’ radars.

Despite the relatively low risk of being caught, ByrdAdatto and AmSpa steadfastly believe that medical aesthetics practices should not participate in parallel importation. The potential consequences definitely outweigh the cost savings. If your practice’s profitability depends on buying cheap drugs, you need to re-evaluate the way you do business. Practices should remain compliant with FDA and other regulatory agencies, regardless of whether they think a drug is overpriced. It is absolutely possible to run a medical aesthetic practice that is both very profitable and compliant with all laws and regulations.

If you need more information about parallel importation, consult with your healthcare attorney. AmSpa members can take advantage of their annual compliance consultation with ByrdAdatto. You can also learn the keys to running a medical spa practice profitably and compliantly at an AmSpa Medical Spa & Aesthetic Boot Camp.

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

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What Is Required of a Medical Spa’s Good Faith Exams?

Posted By Administration, Tuesday, May 21, 2019

doctor consultation

By Sam Pondrom, JD, Associate at ByrdAdatto

There are two points that we can never reiterate enough regarding med spas: They are medical practices, and many of the services they render are considered the practice of medicine.

Accordingly, it is a crucial first step for med spas to establish the physician-patient relationship and ensure that a med spa patient is a good candidate for the procedures he or she is seeking. This is the purpose of the good faith exam. Good faith exams go by many names, and, in fact, the term “good faith examination” has been replaced in many states’ laws. It is common to hear the good faith exam referred to as the “initial exam,” “physical exam” or “initial consult.” Regardless of the nomenclature, it is important to remember that the good faith exam is an encounter that must happen before a patient receives a treatment to assess their current condition, note their medical history and ensure they are fit for the procedure. The goal of the good faith exam is to make a diagnosis and determine an appropriate treatment plan for the patient.

Here’s what you need to know about the good faith exam:

  • Who can do it? The good faith exam must be performed by a physician, physician assistant (PA) or advanced practice nurse (APN). Typically, the PA or APN must be delegated the ability to perform good faith exams by their supervising or collaborating physician. Registered nurses (RN) may aid the physician, PA or APN in administering the good faith exam, but they cannot generate orders for treatment based on the exam. A physician, PA or APN would need to review the RN’s findings and generate the treatment plan and order.
  • What constitutes a good faith exam? The good faith exam proceeds in two parts: obtaining a patient’s medical history and performing an appropriate physical examination of the patient. The medical history is a brief account of the patient’s general lifestyle, medical events and on-going treatments that may contain relevant information regarding the patient’s health. The appropriate physical examination is an assessment of the patient’s physical condition, generally and specifically, of the areas where the patient will receive treatment.
  • When does the good faith exam need to be performed? The good faith exam should be performed prior to a patient receiving a treatment for the first time, but it does not have to be performed every time you see the patient. Especially in the med spa context, a treatment plan will likely encompass multiple treatments over a period of time. If a patient seeks additional treatments not covered in the initial treatment plan, the patient’s health substantially changes or enough time has elapsed since the initial good faith exam, a new good faith exam should be performed. It is a good rule of thumb that a good faith exam should be performed at least annually on a patient.

To learn about legal and business best-practices to keep your med spa compliant and profitable, attend one of AmSpa’s Medical Spa & Aesthetic Boot Camps and be the next med spa success story.

For more medical spa legal and business tips sign up for AmSpa’s email newsletter to receive business strategies, news and med spa law directly in your inbox.

As the youngest of three brothers, Sam Pondrom learned early on how to work effectively as part of a team. After graduating from Oklahoma State, an intrinsic sense of curiosity and a keen eye for details led Sam to work as an accountant for two Engineering-News Record top 40 construction firms. It was here where he honed his ability to analyze complex issues and craft clear, concise answers. Sam utilizes these skills to work in partnership with our clients to resolve their complex business and regulatory concerns in the most simple, straightforward way.

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

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Understanding the Legalities of Off-Label Use

Posted By Administration, Monday, May 20, 2019

drugs

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

The use of pharmaceuticals for treatments that are not specified by the U.S. Food and Drug Administration (FDA) is known as off-label use. This is a somewhat controversial practice, and many in the medical aesthetic industry may not fully understand why this is the case. However, if physicians use common sense and the medical information that is available, they can avoid legal entanglements. Here are a few things to keep in mind when considering off-label use in a medical spa setting.

Considering Use

In most cases, it is legal for a doctor to use FDA-approved medications in ways that are different from what the label specifically mentions. For example, Botox 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 not on that list, but it became by far the most prevalent use of the drug, and over the past 15 years, Botox has received three indications for cosmetic use. It is typically up a doctor’s own medical judgment to determine if a medication can be used for other treatments.

Also, it’s worth keeping in mind that the FDA does not govern the practice of medicine; it governs drugs. State medical boards govern the practice of medicine. Therefore, a board-certified doctor can determine how to use a particular drug.

“To be very, very clear, the FDA has no ability—zero ability—to have any control over how a physician practices,” said Bradford Adatto, partner for ByrdAdatto, a Dallas-based healthcare and business law firm. “They are not in the business of regulating physicians. If you as a physician want to do something that’s off-label, it doesn’t affect you at all.”

In fact, off-label use has led to medical breakthroughs in the past. Aspirin, for example, was originally specified only to treat headaches—after it was introduced, doctors discovered that it thins the blood, and they began using it to treat heart congestion. (It has since been specified by the FDA for use in heart patients.) In the medical aesthetic industry, doctors have been known to try to use fillers and Botox in innovative ways to try to solve unusual problems presented to them by patients.

Regulatory Issues

Should patients and medical spa staff members worry about their doctor conducting off-label treatment? Generally, the answer is no, as it is up to the doctor’s judgment, and one can reasonably assume that judgment is informed by thoughtful research and years of experience.

“The physician has the ability to treat the patients based on their own medical knowledge, what other peers are doing, what is documented in medical journals that are out there or experiments they’ve done,” Adatto said.

However, doctors also have been known to use drugs on patients for more experimental purposes, and when that happens, state medical boards can intervene.

“If I, as a physician, am doing something that no one else is doing, and my medical board wouldn’t approve of it—there’s no medical journals on it, and I’m way off the skis of where everybody else is going, and I am just sailing in a direction where I’m all by myself—I could then be in trouble with my medical board for experimental use that’s outside the community of care of that particular specialty,” Adatto said. “You don’t want to be going in a situation where a medical board does not approve of that or believes it is too experimental or is not within the typical standard of care for a patient.”

If a physician is found to be using pharmaceuticals irresponsibly, he or she could be censured by the medical board and lose his or her medical license. In addition, he or she will need to explain his or her actions to the board.

Reckless Endangerment

In addition to facing sanctions from his or her state’s medical board, a physician who engages in reckless off-label drug use may be subject to legal liability issues. If a physician is found to have harmed a patient with his or her off-label pharmaceutical treatments, he or she could be sued for malpractice. If the off-label use resulted in serious injury death, a doctor can even be subject to criminal prosecution.

You may remember the case of Dr. Conrad Murray, the personal physician for music legend Michael Jackson. Murray was found complicit in the Jackson’s death because he improperly administered propofol—a drug specified for use as an anesthetic—in order to help the “King of Pop” sleep. He was found guilty of involuntary manslaughter and sentenced to four years in prison.

“Those drugs are usually only used for surgery, but there are other physicians who have used it to help calm individuals,” Adatto said. “It just then goes back to, not that many doctors were using it—it was a very small community that was using it—hence the malpractice, and then the liability of jeopardizing your license for being so far off-label.”

A doctor who is administering pharmaceuticals off-label also must be completely forthcoming with the patients being treated and obtain their express consent prior to providing these treatments. Misleading patients as to the specified use of the drugs being administered is another excellent way for a doctor to attract the attention of a state medical board.

“If you’re saying that this drug has been approved for this, and the medical board considers that what you’re providing is false or misleading information, that’s another potential issue,” Adatto said. “When you’re treating a patient on the front end, you must get that consent in order and make sure that the patient understands that the drug has not been approved for this type of use.”

In order to prove he or she has properly acquired consent for these treatments, the physician should be sure to get it in writing.

“We would always recommend to physicians that if you are going to be using a drug often for off-label, make sure you have a written consent that then describes that, so that a patient can also sign off on it, knowing that they received it both orally and in writing,” Adatto said. “That’s going to protect the physician, showing that they did tell this particular patient that they were using this drug for an off-label use, and the patient understood that and assumed some of those risks.”

Sensible Solutions

Off-label use can be a particularly tricky issue in medical spas, since non-doctors are sometimes the ones administering these treatments. Everyone in a medical aesthetic practice must understand that off-label use is a medical decision that is to be made only by a doctor. For example, a nurse administering an off-label pharmaceutical must be following a doctor’s order, and the decision needs to be established following proper delegation protocols.

If a doctor uses good judgment backed by research and is forthcoming with patients about why he or she wants to administer that drug in a manner that is not directly approved by the FDA, off-label use should result in no legal issues. However, obtaining patient consent is vitally important in cases such as these, so doctors should consult with their healthcare attorneys to verify that the consent they obtain will shield them from potential action.

In many cases, doctors who provide off-label treatments are simply attempting to help their patients. Providing them the leeway to do so has led to important medical breakthroughs and changed countless lives for the better. As long as doctors take the proper precautions, off-label use is perfectly acceptable from a legal standpoint.

Tags:  Med Spa Law  Med Spa Trends 

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Differentiating Your Practice: Choosing the Right Aesthetic Treatments to Set Your Practice Apart and Meet Client Needs

Posted By Administration, Thursday, May 16, 2019

cynosure

More than ever before, consumers are seeking out aesthetic treatments to help them feel and look their best—even if it means paying out of pocket. This means profit and growth opportunities for medical spas and medical aesthetic practices, but also comes with the pressure of keeping up with high demand, evolving industry trends and the latest technology.

With hundreds of treatment options available to address a myriad of patient concerns, it can be a challenge to determine what investments will bring the greatest returns to a practice and enhance its competitive edge.

This process of selecting and investing in new technology involves careful evaluation across many factors, including the practice’s current and prospective client base, the versatility of the technology on the table, and the technology provider’s capabilities to serve as a true partner to the practice.

Evaluating Current and Prospective Clients

It’s no secret that the demographics of those seeking out medical aesthetic treatments have changed and continue to evolve. Gone are the days when older women looking to slow the effects of aging were the only target market for medical spas and medical aesthetic practices.

Instead, today’s Millennials and men represent strong and growing populations of those receiving aesthetic treatments. Yet, each group approaches aesthetic treatments differently and are looking to address diverse present—and even future—concerns. This means medical spas and aesthetic practices could miss out on key growth potential if they do not look beyond the needs of their traditional client base to target new customers, with proven technology designed to address those specific concerns.

Radiofrequency (RF). Millennials are becoming increasingly interested in non-invasive skin treatments and are turning to radiofrequency (RF) technology in numbers never-before-seen. Although there are many RF devices on the market, those that offer differentiators in the realm of anti-aging and preventive maintenance are in highest demand. Dr. Dianne Quibell of MD TLC in Wellesley, MA, says, “My Millennial patients are requesting treatments using RF technology, including Cynosure’s TempSure Envi treatment, to tighten skin through soft tissue coagulation, minimizing facial fine lines and wrinkles, and temporarily improving the appearance of cellulite. Millennial patients love that they can incorporate these treatments into their beauty routines without downtime to address current concerns and future signs of aging.”

In addition to addressing active skin problems, RF technology is becoming increasingly popular for preventive skin maintenance, with Millennials thwarting the signs of aging before they even appear. With an increase in active—instead of reactive—beauty maintenance, practices could expect to see RF technology increase in popularity, particularly with this age group.

Non-invasive body contouring. Although women have historically been more accepting of—and forthcoming with—their cosmetic procedures, more men than ever are receiving cosmetic procedures. In particular, advancements in non-invasive body contouring procedures have helped men become more comfortable with receiving treatments, because they can now return to work immediately following the procedure with no downtime required.

Dr. Quibell continues, “Although many of the men I treat lead healthy, active lifestyles, most people have stubborn pockets of fat that seem impossible to lose, even with diet and exercise. The ability to undergo a 25-minute procedure, like SculpSure treatments in my office, that reduces up to 24% of treated fat cells without surgery, has captured the attention of men nationwide.”

As the audience for medical aesthetic treatments grows and diversifies, practices must target new prospective clients by identifying the technology best suited to address their concerns. Millennials and men continue to invest in treatments, meaning that both RF technology and non-invasive body contouring procedures are here to stay, because they provide real results with no surgery or downtime required.

Selecting Versatile Technology Options

When selecting new technology, practices can maximize their return and make major impact on their treatment offering by investing in technology with versatile functionality.

New technology innovations can perform multiple treatments or applications with one piece of equipment. This means that practices can benefit from multiple revenue streams from just one investment.

For example, the Icon platform is a flexible and versatile system that leverages IPL  and laser technologies. Through one piece of technology, Icon addresses several client concerns, ranging from hair removal to procedures for pigmentation, vessels, wrinkles, scars, and stretch marks, while offering a cost-effective, impactful way for practices to expand their offerings.

With other dynamic, multi-application systems hitting the market, practices can maximize their spend while also enhancing their portfolio of treatment options—all with a single investment.

Choosing a Partner, Not Just a Provider

Selecting new technology for your practice is an important decision that impacts your business’s bottom line and growth potential, as well as client satisfaction. It’s important that the company you purchase from will serve as a partner with your business, and not just a provider.

Providers become partners when they value a customer’s practice as an extension of their own business and offer turnkey solutions and dedicated support to ensure success. The value of a company’s overall commitment to improvement through innovation and client service, as well as their longevity in the space, are key factors when comparing their promises and evaluating their impact on a practice.

Practices should carefully select manufacturers based not only on the equipment they sell, but on the on-going support they provide by asking key questions, including: “Will this company support my facility through service and technology upgrades that will help serve our needs and the needs of our clients?”

With constant advancements in treatment technologies, it can sometimes be difficult to hone in on the options that will offer the most to both the practice and its clients, while also differentiating the practice in a competitive market. When investing in new aesthetic technology, balancing the needs of clients with the goals of the practice will ultimately result in sustainable success and satisfaction.

Cynosure, A Hologic Company (Westford, Mass.) is a global leader in advancing and innovating medical devices for aesthetic procedures and precise surgical applications. Its non-invasive and minimally invasive technologies enable plastic surgeons, dermatologists and other medical professionals to address skin revitalization, body contouring, fat removal, cellulite, scarring, tattoo removal, gynecologic health, unwanted hair, excessive sweating, and vascular and pigmented lesions. Cynosure also markets radiofrequency technologies for facial plastic and general surgery, gynecology; ear, nose and throat procedures; ophthalmology; oral and maxillofacial surgery; podiatry; and proctology. Established in 1991, Cynosure sells its products globally under the Cynosure, Palomar, ConBio and Ellman brand names.

Tags:  Guest Post  Med Spa Trends 

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How Core Doctors Can Cash In on Medical Spas

Posted By Administration, Wednesday, May 15, 2019

core doctors

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

The medical aesthetic industry continues to boom, and core doctors—plastic surgeons, facial plastic surgeons, oculoplastic surgeons, and cosmetic dermatologists—would seem to be set to profit in this space. As physicians, they are allowed to own medical spas, and they can ideally not only profit from the medical spas themselves, but also use them to direct business to their surgical practices. After all, medical spas tend to offer non-invasive procedures that are similar to some things core doctors do, and it does stand to reason that if patients go to a medical spa looking for a Botox injection, they might eventually want a nose job or a face-lift. That being the case, the core doctor who owns the medical spa should be uniquely positioned to offer his or her services.

However, that’s not necessarily the case. I chat with core doctors all the time, and those who open medical spas intending to use them primarily as feeders for their practices tend to view them as poor investments. Their medical spas tend to fail, and the amount of business they drive to their surgical practices is insignificant.

In truth, medical spas that are designed primarily to act as feeders for surgical practices are set up to fail, and most core doctors tend to be very bad medical spa owners. They typically don’t understand the medical spa business, how much work it takes, the profit margins, the necessary volume, and numerous other factors vital to maintaining a successful medical spa. But that doesn’t mean that a medical spa can’t still be a successful business for a core doctor or help to generate surgical business—it simply means that a core doctor needs to understand the realities of the medical spa industry before he or she decides to dive headlong into it.

A Singular Paradigm

The business model core doctors typically understand is very different from the one under which medical spas operate. Surgical practices offer big-ticket procedures, such as breast augmentations and face-lifts; they do not need to deal with a large volume of patients, and they do not need to market themselves like a retail outlet—by the nature of their business, they tend to generate sufficient revenue to get by.

While medical spas must follow the same rules and regulations to which more traditional medical facilities adhere, they are unique in that their services are entirely elective and entirely cash-based. People who use medical spas do so because they want to, and treatments at medical spas are much less expensive than those available from core doctors’ surgical practices. Therefore, for a medical spa to succeed, it must have a lot of patients, its employees must master the art of selling, and it must entice patients to return. In other words, it must operate like a retail center rather than a medical office.

For this reason, medical spas need to be run with a totally different mind-set than core doctors are typically used to. Medical spas owned by core doctors who do not adapt to a more retail-oriented emphasis often end up failing. When I tell core doctors that I have medical spa clients who generate up to $6 million annually, many of them cannot wrap their minds around how that is possible.

A New Perspective

In order for a medical spa to create business for a surgical practice, it must first succeed on its own terms. To facilitate that, core doctors typically need to let others run their medical spas. Core doctors need to understand that the medical spa business is much, much different than the ones they are used to, and they need to partner with people who are experienced with marketing and sales in a retail environment.

A core doctor’s time is better spent performing highly profitable surgical procedures, which medical spas cannot do. If a core doctor can get an experienced businessperson to operate the med spa, they will have a much better chance to succeed. Giving up this control can be difficult for core doctors, since a lifetime of academic and financial success tends to make them think they can achieve anything. However, most doctors don’t go to business school—they don’t know retail and they don’t understand sales. These qualities—rather than medical knowledge or surgical skill—tend to lead to medical spa success.

In addition, medical spa team members must be provided the tools and processes to sell. A medical spa receptionist, for example, should not be someone being paid $12 an hour with no experience; he or she should be one of the highest-paid people on an administrative staff, because he or she needs to be able to sell.

A medical spa also should provide talk tracks for nurses and aestheticians so they understand that their jobs are about selling themselves and the doctor. Employees at medical spas also need to understand that selling retail products is extremely important to maintaining a healthy business. These characteristics of successful medical spas may seem distasteful to doctors, who are used to professional environments that are less aggressive, but this is the reality of the medical spa industry, and every day more and more physicians discover this to be true.

The businesspeople who enter the medical spa industry are willing to do whatever it takes to be successful. A core doctor might believe he or she doesn’t need the help, but chances are the opposite is true.

There are several resources in the AmSpa store to help you build your business and train your team to put your medical spa practice in an excellent position to succeed.

The Practice of Medicine

A medical aesthetic practice must be focused on sales, but it also is required to follow the medical rules and regulations of the state in which it is located. These laws can vary significantly depending on the state, so a med spa operator should consult an attorney familiar with the industry when setting up the practice and procedures. AmSpa members can check their state’s medical aesthetic legal summary to learn about the rules and regulations governing their practice.

Most states observe a doctrine known as the corporate practice of medicine, which decrees that a medical practice must be owned by a physician or a physician-owned corporation. As previously established, medical spas are retail outlets, but they also are unquestionably medical practices, so medical spas must be entirely owned by a doctor or his or her corporation in states where the corporate practice of medicine is observed.

This can present problems for a core doctor who wishes to partner with a businessperson to run a medical spa, because the businessperson likely is going to want some equity in the practice. However, giving any ownership stake to a non-physician is illegal if the state where the medical spa is located observes the corporate practice of medicine.

Opportunities for Ownership

There are solutions, however. If a core doctor wishes to partner with an entrepreneur to open a medical spa in a corporate-practice-of-medicine state, he or she can set up a management services organization (MSO). An MSO provides practice management services, while the doctor, for whom a separate company is created, exclusively provides medical services.

This arrangement, known as a management service agreement (MSA), allows the non-physician who owns and/or operates the MSO to supervise almost every aspect of a medical aesthetic business, including branding, marketing, owning the real estate, payroll, human resources, accounting and billing—everything except the administration of medical services.

This is akin to a lessor/lessee situation. Generally, the MSO owns and maintains the facility, while the doctor inhabits the space. The doctor pays the MSO for the right to occupy the space, and the MSO acts as a landlord, maintaining the facility and keeping the doctor as comfortable as possible.

However, unlike a rental agreement that is managed by a lease that dictates the occupant pay a set amount of money for a certain term, the amount paid to the MSO fluctuates according to the amount of money the physician is paid by patients. If the medical organization treats more patients in a term than it did the previous term, the MSO will also make more money. This represents a sort of equity—in function, if not form. Read more about MSOs here.

The corporate practice of medicine also dictates the ways medical spa employees can be incentivized. In retail, salespeople are often offered commission—a percentage of the sales they make that meet certain conditions set by their employers. However, under the corporate practice of medicine, all payments for medical services must be made in full to a physician or physician-owned corporation. In these states, if a medical spa owner pays employees commission, he or she is engaging in fee-splitting, which is illegal.

This is somewhat common at medical spas. The people who own and operate these establishments generally only wish to reward the people who bring business to the practice, but if a medical spa is found to have engaged in fee-splitting in a state where it is illegal, the doctor who owns the practice could face the suspension or revocation of his or her license, as well as a significant fine. Additionally, the provider who receives the commission payment is subject to a fine. A performance-based bonus structure should be offered instead of commission. Read more about med spa compensation here.

Medical spa owners and operators who need to learn about the ownership requirements in their states should contact an experienced health care attorney to find out what is legal in their state.

Becoming a medical director for an existing medical spa, rather than opening a new practice, is another option for a core doctor. Several core doctors I have represented are doing this very successfully. They don’t need to deal with actual day-to-day operation of a retail store—they can simply lend their name to a medical spa, perform some consultations, oversee the practice’s other medical professionals, and then head back to their own practice rather than worrying about the intricacies of the business. This offers a core doctor a look at the industry without requiring him or her to make an enormous ownership commitment. It’s important, however, to understand the risks and responsibilities of med spa medical directors before committing to this course of action.

A Path to Success

The core doctors who oversee a compliant, well-run medical spa stand to gain a great deal from the arrangement. A successful medical aesthetic practice can earn a lot of money by itself, and if a med spa has a lot of patients, it makes sense that the number of referrals to an affiliated surgical practice will be higher than if it is struggling.

If a core doctor wants to enter the medical aesthetic industry, he or she cannot do it halfway. A medical spa that is created to function primarily as a compliment to a surgical practice is unlikely to find a great deal of success; one that is designed to succeed on its own terms, however, offers numerous benefits to its owners, including the possibility of increased surgical business.

Attend an AmSpa Medical Spa & Aesthetic Boot Camp to learn the legal and business best-practices you can employ to build and run a successful medical spa practice.

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

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Forest Park Verdicts Reshape Health Care Compliance in Texas

Posted By Administration, Tuesday, May 14, 2019

gavel

By Jay Reyero, JD, Partner, ByrdAdatto

After years of anticipation, seven guilty verdicts in the Forest Park Medical Center criminal trial—in addition to the 10 pre-trial guilty pleas—have reshaped the health care landscape in Texas, and the nation is watching. While the exact fallout from the stunning conclusion will take some time to play out (appeals will be filed), there are two immediate takeaways of how health care compliance has permanently been impacted.

The federal government’s use of the Travel Act, a federal law criminalizing business activities that are illegal on the state level, was one of the most closely watched elements of the Forest Park case. While originally geared towards organized crime, prosecutors in the Forest Park case used the Travel Act in the health care context to target a physician kickback scheme where federal programs were not involved. The most interesting but unresolved issue is exactly how successful, if at all, the Travel Act can be in health care enforcement efforts in Texas. Unlike the federal government’s success in New Jersey, the verdicts in Forest Park reveal the Travel Act was not expressly relied upon by the jury to convict the physicians involved.

Nevertheless, Forest Park demonstrates that the Travel Act is a very real and controversial enforcement tool the federal government believes can be successful and is willing to use to combat fraud and abuse. Based on this new federal strategy, health care arrangements in Texas must include a risk assessment of the application of the Travel Act. We would recommend this risk assessment even when no funds from federal programs are involved. The possibility of the federal government’s involvement naturally increases risk and the specter of scrutiny. Anyone involved in a health care arrangement should take immediate steps to reevaluate the arrangement, taking into account this heightened level of risk.

The importance placed on the intent of the parties involved is another aspect of the Forest Park case that was illuminating. At the center of the case were marketing agreements developed with the assistance of qualified health care counsel, which on their face appeared to be bona fide arrangements. More importantly, the agreements were developed and appeared to be structured in compliance with applicable kickback regulations. However, throughout trial, the federal government pressed that the parties intended to induce referrals, despite what the terms of the marketing agreement indicated. The Forest Park case reinforces a critical understanding in health care compliance that form must equal substance. Even when parties attempt to structure arrangements within the requirements of applicable rules and regulations, the underlying intent must be aligned, as any deviation can give rise to significant issues regardless of the form. As evidenced by the Forest Park case and the testimony supplied by many of those involved in the scheme who had already pled guilty, the greatest risk of exposing the truth behind the intent of the parties of any arrangement is those individuals involved in the arrangement. Therefore, anyone involved in a health care arrangement should examine the circumstances beyond the document and ensure the intent and actions of all involved are consistent with compliance expectations.

The Forest Park case is a signal that a bigger and brighter spotlight is now shining on the health care industry in Texas from a fraud and abuse perspective. Gone are the days when one could be comfortable with the historical inaction of the Texas government in kickback enforcement efforts, as now the federal government has a powerful new tool that allows it to step in to enforce state laws. Even if the Travel Act is not successful on the technical merits, the Forest Park case is a clear signal the federal government can still use it to get in the door to obtain criminal indictments and potentially lead to convictions. With the use—and possible success—of the Travel Act, all health care arrangements in Texas, regardless of which payors are involved, are facing a heightened level of scrutiny. Every provider in the state should be reevaluating their arrangements from a regulatory compliance risk perspective.

Jay Reyero, JD, is a partner at the business, healthcare, and aesthetic law firm of ByrdAdatto. He has a background as both a litigator and transactional attorney, bringing a unique and balanced perspective to the firm’s clients. His health care and regulatory expertise involves the counseling and advising of physicians, physician groups, other medical service providers and non-professionals. Specific areas of expertise include federal and state health care regulations and how they impact investments, transactions and various contractual arrangements, particularly in the areas of federal and state anti-referral, anti-kickback and HIPAA compliance.

Tags:  ByrdAdatto  Med Spa Law 

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MSOs Help Non-Physicians Own Medical Spas

Posted By Administration, Monday, May 13, 2019

contract

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

For many of the people who work in the medical aesthetics industry, the goal of owning a med spa is difficult to realize. After all, most states observe a doctrine known as the corporate practice of medicine, which dictates that only a physician or physician-owned corporation can receive payment for medical services. Since many of the treatments offered at med spas are medical in nature, this means that the ownership of such facilities is governed by this doctrine.

However, there is a path to med spa ownership that doesn’t involve you attending medical school for four years and then working as a resident for several more. It is called a management services organization (MSO), and while it still requires the participation of a physician, it allows non-physicians to play a very significant role in the day-to-day operations of a medical aesthetics business.

As its name suggests, an MSO provides management services. It partners with a physician, for whom a separate company that only provides medical services is created. This arrangement, known as a management service agreement (MSA), essentially allows a non-physician to supervise most aspects of a medical aesthetics business, including branding, marketing, owning the real estate, payroll, human resources, accounting, and billing—everything except the administration of medical services.

This can be thought of as a lessor/lessee situation. The MSO typically owns and maintains the facility, and the physician occupies the space. The physician pays the MSO for the right to occupy the space, and the MSO functions in much the same way as a landlord, maintaining the facility and keeping the physician as comfortable as possible. However, unlike an apartment rental that is governed by a lease that dictates the occupant pay a set amount of money for a certain term, the amount paid to the MSO is determined by the amount of business conducted by the physician. If the medical organization treats more patients in a period of time than it did the previous period, the MSO will also make more money. This helps to create a bond between the physician and the MSO—if one side of the business succeeds, they both succeed.

The contractual separation of the two entities also provides benefits to both parties. For example, the physician incurs very little risk when it comes to setting up the business. If the practice fails, he or she is not on the hook for the facility, its contents, and the land on which it is located—that is on the MSO. Additionally, the creation of a separate company for the physician helps to prevent any liability issue incurred at the medical spa from affecting any of the physician’s other medical pursuits. The MSO also typically covers the physician’s liability insurance. This arrangement might seem to favor the physician, but that’s why he or she pays the MSO. And should the physician incur any sort of liability claim, the MSO is in the clear. 

It is important to note that while it may seem that a properly set up MSO is in charge of its medical spa, in order for the practice to be compliant, the doctor must be in charge of medical and clinical decisions. The easiest way for an MSO to get in trouble is for it to not actually treat the practice as a medical company. The doctor must manage the medical aspects of the med spa; if he or she does not do this, they are subject to severe punishments, including license forfeiture and large fines. Furthermore, the MSO is subject to repercussions for practicing medicine without a license. As such, it is vital that all parties must understand their roles and obligations.

MSOs have been used by entrepreneurs to form management companies for medical organizations as large as hospitals and managed care facilities, so it stands to reason that creating an MSO for a medical spa would be comparatively simple. However, this is not the sort of thing that can be properly executed using forms you can download off the internet, so you should consult an attorney who has experience successfully setting up MSOs if you are considering entering into this sort of arrangement. This is especially important if a business wants to sell to a large entrepreneur or expand across state lines.

If you want to learn more about MSOs, they are covered in depth at AmSpa’s Boot Camps. Click here to find out when we will be coming to a city near you and register to take part in the course.

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

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Florida Office Surgery Reforms Pass House and Senate

Posted By Administration, Thursday, May 9, 2019

laws

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

A recent news article features shocking reports of patient injury and death at dishonest Florida plastic surgery clinics. These stories are heartbreaking to read. They include young children losing their mother, mothers losing their daughters, and people forced to live with pain and disfigurement because of complications from improperly performed procedures. The article calls out several clinics as being repeat offenders. To be sure, the vast majority of surgery clinics are run safely and ethically, but the clinics mentioned in the article are egregious examples of a malfunctioning oversight system.

Over the past two decades, Florida has become a mecca for plastic surgery, and many procedures there are performed in office settings outside of licensed hospitals or ambulatory surgery centers. To monitor and regulate these offices, Florida requires that all physicians register the offices where they perform complex procedures.

The current Florida office surgery registration rules divide procedures into three levels, based on their invasiveness and the type of anesthesia used. Level I procedures have a low risk of complication and require only local or topical anesthesia; these are procedures such as minor excisions of skin tissues or liposuction of less than 4,000 ccs of supernatant fat. Level II procedures use medication that can require conscious sedation and can include deeper tissue biopsies and hernia repair. Level III procedures require general anesthesia or greater sedation than Level II procedures.

Florida requires that all physicians register the offices where they perform Level II procedures that last longer than five minutes or any Level III procedure. Registered offices must undergo an annual scheduled inspection, meet certain standards, and report adverse incidents to the Department of Health within 15 days.

While current rules provide for some oversight of these offices, the enforcement mechanisms can be slow to implement and take effect, as evidenced by the linked article. In response to these gaps, lawmakers have introduced legislation that is designed to strengthen the process. The bills, known as House Bill 933 (HB 933) and Senate Bill 732 (SB 732), would expand the registration requirement to more offices and provide stiffer penalties and stronger enforcement for violations. In their current forms, both bills would require offices to register if they perform any Level II or III procedures, or if they perform liposuction of more than 1,000 ccs of supernatant fat, which is broader than the current rules. Additionally, the bills would allow the board to suspend or revoke an office’s registration or a licensee’s ability to operate, as well as impose penalties if they are discovered to not be in compliance with regulations. Legislators hope that this will give the board the tools to crack down on the types of unsafe operations described in the article and to prevent unsafe owners or physicians from switching offices to avoid detection.

Past efforts to increase regulation and enforcement for these types of clinics have failed to gain passage, typically getting stuck in committee. However, this year’s efforts appear to have been successful. SB 732 has received favorable votes from each committee and just last week passed the full vote of the Senate, from there it headed to the House. On May 1st, SB 732 unanimously passed the House vote. Now SB 732 heads to the governor’s desk for signature. Once signed, the provisions of SB 732 become effective January 1, 2020.

As is often the case with legislation like this, the burden and costs of compliance will fall most heavily on offices that already are safe and well run—they will need to update their policies and procedures and come into compliance with the new rules. If you believe your practice may be affected by these new rules or have questions about staying in compliance, contact AmSpa or ByrdAdatto.

Tags:  Med Spa Law 

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Botox Parties: What You Need to Know

Posted By Administration, Wednesday, May 8, 2019

botox

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

One thing I love about the med spa industry is that med spa owners and providers continue to innovate. The ideas that come from AmSpa members on marketing, branding and business are always impressive. This is one reason why it is difficult to keep track of what’s legal in the medical aesthetic industry—many of the ideas we are asked about are brand new. They’ve never been tested before, and therefore it’s difficult, to determine where the legal constraints are.

Botox parties are examples of this. These events are hosted by a med spa or a provider—either at the med spa or another location—and at them, people get together to socialize, learn about treatments and try new treatments. Often, the med spa provides discounts on product to get new patients in the door. These are highly social events, often featuring alcohol, that mix pleasure with aesthetics, which makes the idea of getting injected with a needle a bit more palatable.

I’m often asked whether these events are legal, particularly when they are held outside of the med spa—at someone’s house or a salon, for example. What’s more, are they worth it?

The answer to both of these questions is yes—they are absolutely legal in most states (Nevada recently passed a law restricting the injection of Botox and fillers to a doctor’s office, essentially banning offsite Botox parties), and they are absolutely worth it. But like most things in this industry, these answers are contingent upon you adhering strictly to the law. No amount of money is worth losing your license, and yes, nurses have lost their licenses because of improperly hosted Botox parties. AmSpa members can check their medical aesthetic legal summaries to find laws pertaining to Botox parties in their particular state.

Primarily, you need to remember that when you provide any offsite medical treatment, all the same rules apply. New patients must be examined by a doctor, nurse practitioner (NP) or physician assistant (PA) prior to being treated. Proper records must be kept. Consent forms must be signed. Before and after photos should be taken. Everything you are legally required to do at your med spa should be done at a Botox party.

Additionally, check with your insurance carrier before the party to ensure that you have coverage for offsite treatments, and double-check local ordinances regarding serving alcohol—you may need to obtain a permit for this.

Exam

A patient being treated by an RN without first seeing the doctor (or NP or PA) is the biggest legal risk at Botox parties, or any other social event involving med spa treatments. All patients must first be examined so that a plan can be set. This can only be performed by a doctor, or by an NP or PA operating under proper authority. Even if the patient consents to being treated by the RN without first seeing a doctor, the RN is not allowed to inject the patient without the exam.

At Botox parties, this can be difficult because new patients are socializing, alcohol is sometimes being consumed, and everyone is more relaxed. However, this is a step that must be followed, because an RN cannot practice medicine, so he or she cannot legally perform the initial assessment, establish the physician/patient relationship and set a treatment plan.

Consent

Obtaining patient consents—including privacy waivers, since treatments are usually performed out in the open—is also important. Providers also should be mindful of patients consuming alcohol. While obtaining consent from people who have been drinking is not strictly illegal, alcohol makes people less inhibited and often clouds judgment, which is not good when it comes to patient consent. All prospective patients should offer consent before they begin drinking, and you should try to keep the drinking to a minimum. This is not always easy, but trust me—if there’s an adverse outcome, you’ll wish that alcohol was not involved.

Privacy

You should also be mindful of photos and social media. These events are ideal for marketing purposes—people are having fun, everyone is happy, and you remove many of the clinical aspects of aesthetic medicine. However, you need to be careful when photos or videos are posted—every patient is entitled to privacy, and if any of them fail to sign a privacy release and an authorization to use their photos, you risk breaching their privacy.

Conclusion

So since these events are broadly legal, we need to ask—are these events are worth it? The answer is emphatically yes, provided you strictly adhere to legal guidelines. Botox parties and social events are great ways to introduce new clients to your practice, pre-book treatments and bring in some cash.

Offer discounts on treatments and pre-bookings—both for injectables and laser packages—is standard operating procedure, provided they are purchased that night. Patients are encouraged to bring friends and colleagues to meet the providers and learn more about aesthetics. It is not uncommon for a practice to earn six figures in treatments and bookings in just one day. Even that kind of money isn’t worth losing your license, however, so be vigilant with your compliance efforts.

I urge you to move cautiously when planning and hosting one of these events. Do your homework and ensure you are completely compliant. Go easy on the alcohol. Make sure you’ve got proper insurance. If you have any questions whatsoever, consult with a qualified lawyer ahead of time so that all the proper documentation is in place, the required personnel are available, and all rules are observed.

For more information on running your med spa legally and profitably, attend one of AmSpa’s Medical Spa & Aesthetic Boot Camps, and you could become the next med spa success story.

Tags:  AmSpa's Med Spa & Aesthetic Boot Camps  Business and Financials  Compliance is Cool  Med Spa Law 

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How to Legally Offer Anti-Aging Treatments at Your Medical Spa

Posted By Administration, Tuesday, May 7, 2019

legalities medical

By Brad Adatto, JD, Partner, ByrdAdatto

“Alternative medicine,” “wellness treatments” and “anti-aging procedures” all have one element in common: Each has treatments and procedures that fall within the practice of medicine. Most states’ statutory definition of “the practice of medicine” includes any diagnosis, treatment or offer to treat a physical disease, disorder, deformity or injury by any system or method. Further, anytime the outermost layer of the epidermis is penetrated—whether by injection, abrasion or incision—the procedure is considered a medical treatment.

As such, treatments or therapy that include hormone replacement, stem cell and ozone administration are considered the practice of medicine. This limits who can actually perform these procedures and where these procedures can be performed. Over the years, we have had many individuals that choose to either ignore this advice or push back on this explanation, asking, “How is everyone else doing it?” As more individuals open “alternative medicine facilities,” “wellness clinics” and “anti-aging centers,” we have seen an increase in enforcement from state agencies, medical boards and law enforcement. Therefore, businesses must be extremely careful when navigating state laws regulating the practice of medicine, including anti-aging therapies. Here’s what you need to know.

  • The practice of medicine. Every state’s statutory definition of the practice of medicine includes diagnosis and treatment of a medical condition. Specifically, Texas’s definition of the practice of medicine includes diagnosing or treating any physical disease or disorder. Florida’s definition includes the diagnosis, treatment, operation or prescription for any human disease, pain, deformity or other physical or mental condition. As an example, diagnosing a person as an appropriate candidate for hormone therapy and giving orders for such treatment is the practice of medicine. Furthermore, facilities that offer ozone therapy as a medical treatment may be outside the scope of what is consistent with the standard of care for that state. At this time, the FDA has not approved of ozone therapy as a drug or device. Additionally, ozone therapy is not recognized nor approved as part of the practice of allopathic medicine by federal law or any state medical board. As such, providers offering this as a treatment must check with their state medical boards to confirm restrictions apply on “who” can provide complementary and alternative medicine.
  • Ownership. Essentially, the corporate practice of medicine doctrine prohibits non-physician-owned business entities from engaging in the practice of medicine. States adopting the doctrine are attempting to ensure a medical provider is responsible for the control and direction of a medical facility. You should develop your business and ownership model according to the laws of the state(s) in which you plan to practice. Because these laws vary from state to state, you need to know how to legally structure your business and the type of liability that may be associated with the structure you choose. For example, in New York, the state limits the ownership of businesses that provide medical treatments to licensed physicians; other non-physician health care providers are prohibited from ownership of the medical facility.
  • Staffing. Medical professional scopes of practice not only vary from state to state, but also vary depending on the training, experience and skill of a medical professional. Therefore, you need to know who can legally perform anti-aging treatments in your facility. For example, let’s assume you meet the state requirements to provide stem cell therapy, and you recommend the injection of mesenchymal stem cells into a patient’s skin to improve skin tone. This is the practice of medicine. Who has the authority to recommend the treatment—physician, NP or PA? Who can actually inject the patient—RN or MA? It is critical to understand the diagnoses, delegation and supervision regulations before performing these procedures.

Brad Adatto, JD, is a partner at ByrdAdatto, a business, healthcare, and aesthetic law firm that practices across the country. He has worked with physicians, physician groups, and other medical service providers in developing ambulatory surgical centers, in-office and freestanding ancillary service facilities, and other medical joint ventures. He regularly counsels clients with respect to federal and state health care regulations that impact investments, transactions, and contract terms, including Medicare fraud and abuse, anti-trust, anti-kickback, anti-referral, and private securities laws.

Tags:  ByrdAdatto  Med Spa Law  Med Spa Trends 

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