Posted By Administration,
Wednesday, July 25, 2018
Updated: Wednesday, July 25, 2018
By: Bryan Durocher, Founder and President of Durocher Enterprises
A detailed business plan is a must-have for a successful, profitable, and sustainable medical spa practice. “Business is a numbers game”. We have all heard that saying before and it is very true. Having a positive bottom line in this industry means really keeping an eye on operating expenses and understanding what the numbers mean and what to do to keep them in proper alignment.
Having a handle on your numbers means understanding what the overall financial picture needs to look like and breaking it down into manageable bite size action steps that need to happen every day. It starts with you and your vision and then educating your team members as to their role in the financial process.
Many med spas or cosmetic practices are not profitable. This is mainly due to the lack of understanding and education on the part of the ownership. With most payroll expenses take a significant amount of the gross service sales revenues. Our profit margins in this industry are very tight and there is little room for error. Keeping an eye on your numbers allows you control over knowing where you are, and planning for where you want to go. An owner who knows their numbers is not waiting for the financial advisor to tell them if they are successful or not. Keeping your finger on your business’ financial pulse allows you to dance, shift and change with your business’ needs quickly and intelligently.
For additional help building your medical spa business plan, see the Business Plan Templatein the AmSpa store.
Every business plan must include pro forma financial statements. These are financial statements that are used for you to predict the future profitability of your business. Your projections will be based on realistic research and reasonable assumptions, trying not to overstate your revenues or understate your expenses. If you are going to seek a lender or investor, they will use these financial statements to highly scrutinize your med spa. The bottom line, the lender or investor wants to know when and if your spa will be profitable.
The pro forma statements that are required are listed as follows:
These are a tool to review your gross sales vs. the expenses you incur while operating your business. The model we will use allows for totaling gross service and retail sales, then deducting the costs of doing business and allotting them to the appropriate categories to show our net profit before taxes. These statements should be done at the end of each month to identify what is working and where our opportunities for improvement are. The most important result is the timely completion of the statement. You need to understand the process and do not physically have to do it. If you are not a “numbers” person, a bookkeeper, accountant, and tools such as med spa/spa software, Quick-books® or you may use a computer spreadsheet program such as Excel® can support you in getting the job done.
Format and Sources of Information
Information for a three-year projection can be developed from your pro forma cash flow statement and your business and marketing analysis. You can also pull together a first year forecast by combining information on sales from business owners and trade associations. The first year’s figures can be transferred from the totals of income and expense items. The second and third year figures are derived by combining these totals with projected trends in the industry.
Cash Flow Statement
Definition and Use
The cash flow statement (or budget) projects what your business needs in terms of dollars for a specific period of time. A cash flow projection tells (1) whether or not you can pay bills, and (2) when you’ll need cash infusions to keep going. This statement deals only with actual cash transactions and not with depreciation or other non-cash expense items.
A balance sheet shows what items of value are held by the company (Assets), and what its debts are (Liabilities). Professional lenders look at your balance sheet to analyze the state of your finances at a given point in time. They are looking at things like liquidity (how easily your assets can be converted into cash) and capital structure (what sources of financing have been used, how much was borrowed, and so on). Professional lenders use such factors to evaluate your ability to manage your business.
The following is explanation and instructions of how the ‘Strategic Assumptions’ data will apply to a business plan.
# of treatment rooms
How many hours a day and days per week the med/spa will be open
Estimate of the price points for services offered
How long each of the spa services will take
The above assumptions will then be used to answer the following questions
Hours open per day divided by length of treatment = # of treatments per day per room
# of treatments per day multiplied by price of service = Revenue per room per day
Revenue per room per day multiplied by # of treatment rooms = Total Service Revenue per day
Total Service Revenue per day multiplied by days per month = Total Service Revenue per month
Total Service Revenue multiplied by retail percentage% = Approximation of Retail Sales
Retail Sales plus Total Service Revenue = Total Spa Revenue operating at 100% capacity
Total Spa Revenue operating at 100% capacity multiplied by % selected by identifying which of the below works for your model = the Actual Capacity Assumption.
Actual Capacity of your spa when it first opens will depend on many factors. For example, if you are an existing practice expanding into an ancillary spa, your Actual Capacity ratio would be higher than that of a spa being built with no existing clientele.
If you are building a spa with no existing medical practice attached to it, begin with an Assumed Actual Capacity Rate of 10% in the first month.
If you are expanding your medical practice to include a spa and you have an existing clientele base that will support, begin with an Assumed Actual Capacity Rate of 20-35%.
An average you could calculate is 4% growth per month
Goal to be met by the end of year one is 45% capacity
Ultimate goal will be to operate at 75% capacity
Keep careful notes on your research and assumptions, so you can explain them later if necessary, and also so you can go back to your sources when it’s time to revise your plan at some later date.
Service Expense Analysis
When it comes to your expenses shopping around will do you well. Remember it is not what you “make” it is what you “keep”. I have highlighted the major expenses that are usually out of line and cause a lack of profit.
Fixed vs. Variable Expenses
Fixed expenses are those costs that remain the same month in and month out. It is easy to incorporate them into your budget as you know the number you are dealing with already. Items such as lease payments, loan payments, accounting fees when on retainer, insurances, cleaning services, and depreciation can all be examples of fixed expenses.
Variable expenses change with volume of business your company does. Meaning the “more” or “less” business you do, these numbers can rise and fall exponentially. Example variable expenses include credit card fees, education & travel, repairs & maintenance, salaries & commissions, telephone, and utilities.
Expenses and Professional Services Used to Run Your Business
Get at least three references for each individual or company you are going to use in helping you operate and grow your business.
Look at your natural skill sets – Do you love doing the task? Can you pay someone else to do the task and make more money doing what you do best? Could you have more quality time and a better life by delegating out the task?
“I’d rather have 1% of a 100 people’s efforts than use a 100% of my own”. –John Paul Getty
Advertising & Promotion
This category covers all of the tools you use in marketing and promoting your business. It is a category you have to pay particular attention to as advertising costs can add up very quickly. Items covered under this expense include; magazine, social media, television, and radio advertising, marketing materials such as business cards, menus, brochures, and referral cards, all direct mail pieces, and client entertainment.
With any investment into advertising/marketing/promotion, think about tangible return. Can you track the return on investment? For example, are you advertising with a display ad in the yellow pages? If you are investing heavily in any particular area you must have a tracking system put into place to monitor results. Otherwise, how do you know if it is a wise investment? The strongest form of marketing is “word of mouth” and it can be the least expensive. A referral card program is the best way for techs to build a clientele and it is traceable. Special events are another strong revenue tactic.
Your costs for salaries, commissions on technician’s revenues, EDD, FICA, and workman’s comp insurance are totaled and listed here.
Hands down this is one of the most challenging areas with your business and has to be monitored closely. If this area is out of alignment refer to the commission structure in for a plan that allows for profitability.
Supplies – Back Bar
This would consist of anything used to perform a service. Professional supplies need to be separated from retail products that are purchased for resale. Request that your distributors or vendors itemize them separately for you if possible.
This is another challenging area. These expenses if not checked can mount up very quickly. The three main culprits are; the actual cost of the product to perform the service is too high, product waste and inventory control.
When choosing professional products to perform service you have to compare the cost of the products needed to perform the service and how much you are charging for the service and does the product cost amount to no more than an average of 18% of the service price charged in a med spa. You may find some services are slightly higher and other come under the seven percent and in the end balance out. A business that too focused on injectables or fillers will run into to challenges with cost of goods. You want a balance of service revenue from machines as well.
Product Cost $20.00 divided by $100.00 Service Cost = 20%
The second culprit is technicians using or wasting too much product. When staff is not paying for the product sometimes there is little care in how much they use or how much is rinsed down the drain. Coach your team in the appropriate amounts of product needed for their particular services offerings. Another option is to use products that are formatted for individual services so there cannot be waste.
Create a monitoring system for back bar products where technicians have to turn in completed packaging before they can get new supplies. Appoint an individual to be responsible for inventory control and ordering. This person would do a physical count of inventory each week, note shrinkage (missing product) and create a master order form to track purchases. By all means do not let your sales reps decide what to order for you.
Retail Expense Analysis
This category covers the expenses of buying the products you retail in the med spa or spa. You are looking for the highest profit margin possible. Typically a branded line’s cost will range between 48%-56% of the retail price. Private label or specialty items can have a much lower product cost and higher profit margins that you set based upon market acceptance.
An inventory system is essential for keeping track of ordering. Most software systems allow for inventory control and adjustments. Having a point person handling this is important to monitor cost, orders, and shrinkage. It is easy to overspend in this category especially when there are sales and promotions constantly offered from your vendors.
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 Industrymagazine, 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.
By: Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
One of the most common legal issues in medical spa practices involves “fee-splitting” and how that relates to med spa ownership and employee compensation. Despite a medical spa’s superficial resemblance to more traditional retail outlets, it has to play by a different set of rules and answer to a different set of authorities because it administers medical treatments. In most states, if a medical spa owner is paying employees commission, he or she is engaging in a practice known as fee-splitting, which is illegal. Therefore, it is important for medical spa owners and operators to understand this issue and its consequences in order to avoid running afoul of regulatory agencies.
Commission: A Common Mistake
In most states, a patient who receives a medical treatment—such as many of the services provided at medical spas—is required to provide full payment directly to a physician or a physician-owned corporation; this is in accordance with a doctrine known as the corporate practice of medicine. If these physicians or corporations give a percentage of that payment to a non-physician who was responsible for securing the patient’s business, for example, they have engaged in fee-splitting.
This practice is not uncommon at medical spas, and it typically doesn’t represent any sort of shady attempt to practice unlicensed medicine—the doctors who operate these establishments simply wish to reward employees who attract business to the practice. Regardless, in many states it is illegal to engage in this practice, and doing so places both parties to the transaction at risk.
If a physician is found to be engaging in fee-splitting in a state in which it is illegal, he or she could be subject to the suspension or revocation of his or her license, as well as a large fine. Additionally, the person or people who receive the commission payments also are subject to fines. Therefore, if you are an aesthetician, registered nurse, nurse practitioner, physician assistant, or laser technician who is being paid commission, mention it to your employer to make sure he or she knows about the problematic nature of this setup. If you are a physician who is giving commissions in a state in which fee-splitting is illegal, you should stop doing this immediately. Consult your local health care attorney or AmSpa to learn about the laws governing fee-splitting in the state where your practice is based.
This does not mean that medical spa employees cannot be awarded extra compensation, however—medical spa owners can establish bonus plans, pay-per-service systems, and perhaps even profit-sharing programs that are perfectly legal in the eyes of regulatory agencies. These types of programs – like the compensation plan available in the AmSpa Store – can be very lucrative for employees, and they will prevent all involved from incurring penalties that can alter lives and end careers.
AmSpa members can check their medical aesthetic legal summary, or utilize their annual complimentary compliance consultation with the business, healthcare, and aesthetic law firm of ByrdAdatto to ensure their compensation plan meets all regulatory requirements.
A (Possible) Exception
Viewed through an impartial lens, it would seem that using a deal site such as Groupon to drum up business would represent a form of fee-splitting, as medical spa vouchers sold through these services—from which the service receives a percentage of the sale—can be used by customers to purchase medical treatments. Check with your local healthcare attorney to learn about the specifics of the regulations regarding deal sites in your state, but for this reason and others outlined in our previous blog, we don’t recommend partnering with Groupon or a similar site.
By: Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
While medical spa services command higher prices than traditional spa treatments, medical spa owners and operators shouldn’t overlook aesthetician services. These can be lucrative opportunities for added services for your patients, increasing both retention and profitability of your med spa practice.
What Can Aestheticians Do For You?
According to the American Med Spa Association’s 2017 Medical Spa State of the Industry Report, aesthetician services were one of the leading revenue-generators in medical spas. These treatments can include facials, aesthetician-grade chemical peels, and waxing, to name a few. This category also includes Hydrafacials, which is one of the fastest-growing treatments in medical spas regardless of practitioner type.
In many states, treatments such as microneedling and dermaplaning are considered to be the practice of medicine. Because of this, they should only be done by a licensed medical professional. However, there are some situations in which a person holding an aesthetician license may perform these procedures.
Microblading is also a treatment that individuals holding aesthetician licenses perform in many states. State laws can vary regarding this procedure, but it is often categorized as permanent makeup and, with some additional training, these practitioners can often offer this service in medical spas.
Contact an attorney familiar with medical aesthetic laws in your state for more information on microneedling, dermaplaning, or microblading. (AmSpa members can take advantage of their annual complimentary compliance consult with the law firm of ByrdAdatto, or check their medical aesthetic state legal summary.)
To add these aesthetician services to your medical spa, first be sure that the practitioners you hire are properly licensed to perform these treatments. This should be of paramount importance for all of your service providers, whether offering beauty services or medical treatments. In-depth training and proper licensure ensures that your patients are getting the best possible services and results, and also protects your staff and business against fines and other punishments from regulatory agencies.Your business will also need to obtain an establishment license for these procedures, and that license must be displayed in your facility during business hours. Additionally, be sure to double check with your insurance-provider to make sure you are covered to offer these additional treatments. Assuming that your other business housekeeping is in order (LLC, tax ID, etc.), you should now be set to offer another tier of services to your clients.
By: Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
Since medical spas are medical practices, they are bound by the laws governing medical advertising. The minute you are involved in any kind of medical treatment, you are subject to much more stringent requirements than traditional companies when it comes to advertising your practice.
Med Spas and Marketing
According to the 2017 Medical Spa State of the Industry Report, the three most common marketing techniques for medical spas are digital, including websites, email, and organic social media. Businesses cannot simply rely on word of mouth or good reviews bring in customers—they must create effective promotional campaigns to attract new clients because there is so much competition and because the industry is cash-based, rather than insurance-based. Given this, it is easy for medical spa owners and operators to slip into the mindset that they are going to do whatever they need to do to get people in the door. And while we encourage people to run their medical spas in such a manner, it is important for them to keep in mind that these practices are, above all, medical practices, so they are subject to the same rules and regulations that govern more traditional medical institutions.
Truth in Advertising
All state medical boards have certain provisions that deal with medical advertising. Most of them are relatively similar, but it’s important for practitioners to look at and understand their state laws regarding advertising. These rules and regulations are typically fairly easy to find, and most of them are generally similar in that they require absolute, verifiable honesty.
Unlike, say, a car dealership or a furniture outlet, the claims a medical outlet makes must be true. For example, if you say, “Dr. Thiersch is the best injector in the state of Illinois,” or “Our nurses are the best injectors in the country,” that is likely to become an issue. A medical board or nursing board is going to see a claim like that and ask what you’re basing this on. It’ll want to know where the proof of this is, and unless you’re prepared to submit something to that effect—which, quite frankly, is impossible—your practice could be in some trouble.
In the past, if you perused the in-flight magazines from the major airlines, you may have seen their lists of “best doctors in America.” If you looked at these publications in recent years, however, these lists have been changed to say “among the best doctors in America,” because that is at least somewhat truthful, and the doctors mentioned in these pieces must be concerned about compliance, too.
Whether it’s in marketing collateral, on social media, or even using influencer marketing, you need to make sure that everything that’s said about your medical spa is objectively verifiable. You can do this by citing your credentials and your certifications. We previously wrote about misleading titles that are used by some medical spa employees, and those definitely merit mention here too—if you use titles such as “medical esthetician” and “certified laser technician” in your advertising materials, you’re asking for trouble, because you have to prove that you are what you say you are, and in cases such as these, it simply can’t be done.
You can always ask your lawyer to review your advertisements before they’re posted in order to make sure you’re compliant¬. Some state boards will even allow you to submit ads to them to make sure they’re compliant, although the review process tends to take quite a while. Regardless, it’s very important that your practice does what it can to maintain compliant advertising, because the penalties for violations can be severe.
By: Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
Microneedling is a trending procedure in med spas, but many owners and practitioners are not clear if aestheticians can legally perform the treatment. The answer to that question, like many regulatory issues in the medical spa industry, can vary depending on what state you practice in. For the much of the United States, however, the answer is likely no.
Also known as collagen induction therapy, microneedling is a minimally invasive treatment to rejuvenate the skin. A device with fine needles creates tiny punctures in the top layer of the skin, which triggers the body to create new collagen and elastin.
An aesthetician’s license does not permit them to perform medical treatments, but rather aestheticians may only perform procedures for the purpose of beautification. Many med spas look at this standard and assume that aestheticians can perform microneedling, however many state regulatory boards are specifically classifying microneedling as medical treatment, no matter whether the needles penetrate the outer layer of the skin.
Illinois and California, for example, specifically listed microneedling as medical treatment in 2016 because they classify the device as medical equipment. At an American Med Spa Association Medical Spa Boot Camp in San Jose Kristy Underwood, executive director of the California Board of Barbering and Cosmetology, gave additional details as part of a 30-minute Q&A.
“This isn’t new – aestheticians cannot penetrate the skin,” said Underwood. “They also can’t use any metal needles, period. [California] aestheticians are prohibited from using metal needles.” She added that they cannot use anything that might be disapproved by the FDA, cautioning people against the Dermatude device until more information came out from the federal government related to its use.
In some states, however, there are ways in which individuals holding aesthetician licenses can perform certain medical procedures. As noted in this video update, for example, the state differentiates between an aesthetician and a person who is performing medical procedures under the supervision and delegation of a physician.
This means that if the patient is examined by a physician or a mid-level practitioner (like a nurse practitioner or a physician assistant) then an individual working in a medical spa may perform microneedling. It is very important to note for aestheticians that if you are going to do this procedure under this caveat you cannot represent yourself as an aesthetician while doing so. This means flipping over your aesthetician name tag and taking down any certification you might have hanging on the wall.
The state may allow you as a person to perform this procedure under proper medical supervision, however your regulatory board does not cover this under your license.
This sounds onerous, and it is certainly involves more of a pain point than a facial or another aesthetician service, but depending on your state this does not have to be a deal-breaker for offering microneedling services in your medical spa. The supervising physician doesn’t have to be in the room watching the aesthetician perform the procedure, and in many states does not have to see the patient before every treatment – just the first one.
Know the Law
Regulations can vary greatly depending on where your business operates so it’s very important to know the laws specific to your business. When in doubt consult an attorney in your state familiar with aesthetics.
Posted By Administration,
Tuesday, July 10, 2018
Updated: Monday, July 9, 2018
By: Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
Med spa law can often be a maze of state and federal regulations, crossed with a litany of regulatory board opinions and years of case law that can differ widely from state to state. However, although the business is complicated, understanding the following five pieces of advice can help you tremendously.
Medical spas are medical facilities.
You may be forgiven for thinking that medical aesthetic facilities operate under the same set of regulations that govern the non-medical facilities with which they are often associated like day spas and retail centers. However, medical spas are medical facilities and must be operated as such. This is the most important piece of advice a health care attorney can give medical spa professionals who are operating medical spas.
Understand your corporate structure.
Because medical spas are medical facilities, their corporate structures are more important than you might think. The regulations governing medical practices in most states recognize the “corporate practice of medicine,” which states that medical practices must be owned by physicians or physician-owned corporations. This can impact several aspects of medical spa ownership, including the next piece of advice.
In states that observe the corporate practice of medicine, payment for medical services must be made in full to the owner of the practice—a physician or physician-owned corporation. If a practice rewards employees for bringing in clients with a percentage of their payments, it would constitute fee-splitting, which is often illegal in these states. You can, however, reward employees with a structured bonus system, such as the compensation plan available in the AmSpa store.
A medical professional should always be onsite.
It’s fairly uncommon that the physician who owns or operates a medical spa is actually in the building. However, proper delegation and supervision must be practiced at all times. A physician is typically allowed to delegate day-to-day activities to other medical professionals, and having a mid-level practitioner—a nurse practitioner or physician assistant—onsite to supervise the non-licensed employees who typically administer treatments helps to keep the practice safe from lawsuits that may arise from accusations of improper care.
For more information on medical malpractice lawsuits, listen to Medical Spa Insider Episode 3, in which AmSpa Founder/Director Alex Thiersch interviews patient advocate law firm Sukhman|Yagoda on tips to avoid being sued by patients.
Consult a health care attorney as soon as possible.
Even though it might seem cost-prohibitive when you’re opening a medical spa, it is in your best interest to engage a health care attorney as soon as possible. An experienced lawyer can advise you about the numerous issues that can hamstring an aesthetics practice, including helping you create contracts that conform to your state’s laws. For example, if you want to craft an enforceable non-solicitation clause for an employee contract, a health care lawyer can help you with that. An attorney can also help you understand how best to utilize marketing tools, such as social media and how to make sure that you respect patient privacy at all times. It’s often said that it costs twice as much for an attorney to fix a problem than it would to prevent that problem from occurring in the first place, so make sure to consult a health care lawyer as soon as you get a chance, if you haven’t already.
If you run a medical spa practice, there’s a high probability that you’re going to get sued—there’s really no way around it. However, if you heed the advice presented here, you will help to protect yourself from potentially disastrous consequences.
For more information on medical spa legal necessities, and to gain the tools to run your practice efficiently and profitably, attend an AmSpa Medical Spa & Aesthetic Boot Camp, and be the next med spa success story.
By: Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
“Medical aesthetician” and “certified laser technician” are common titles to see in medical spas, but these are among job titles that come with certain risks in medical practices. They are examples of a handful of titles for professionals in the medical aesthetic industry have become prominent over the years even though they are inherently misleading. Despite the fact that they are used constantly in and around the industry, they should be phased out since legal compliance is more important than ever due to increased appetite for enforcement by regulators.
The most prominent example of this problem involves so-called “medical aestheticians.” People who refer to themselves as medical aestheticians typically have some sort of training in a medical spa setting and want to separate themselves from other aestheticians who do not. They’ve usually completed a course or two in microneedling or laser use, and they wish to distinguish themselves by calling themselves medical aestheticians. This is very common—if you search for “medical spas” on the Internet, you will undoubtedly run across the term.
However, it is very dangerous for an aesthetician to use this title, because he or she risks disciplinary action by his or her board. Medical spas and other, more traditional medical practices are subject to very strict advertising rules and regulations, and practices need to zealously guard against any kind of misrepresentation or exaggeration relative to their services. Everything has to be very clear and on the up-and-up. The problem with the term “medical aesthetician” is that the person or practice using it can be seen to be suggesting that the person in question can perform medical treatments. Of course, according to their practice acts, aestheticians are explicitly prohibited from performing any sort of medical treatments, and even suggesting that they can is a significant misrepresentation of their abilities.
Several state medical and cosmetology boards—including California, Colorado, and Illinois—have explicitly stated that people cannot use the term “medical aesthetician,” and that if they do, they are subject to discipline. I see so many people use this term that it makes me think they simply don’t know any better and are getting bad advice from schools or co-workers.
A few states offer “master aesthetician” licenses, and these allow aestheticians to perform more complex treatments than an aesthetician normally would. However, even in this case, using the term “medical aesthetician” is a bad idea.
Certified Laser Technician
It is not uncommon for people to take courses at laser training centers and, upon graduation, the school will tell them that they are “certified laser technicians.” The graduates will typically take that certificate back to their medical spa, hang it on their wall, and claim that they are certified to perform laser services in their states. However, this is not the case—they are certified by the private company that provided the training, not the state—and this is a significant distinction.
There are very few states that recognize any kind of certification for any type of laser treatment, and there’s a major difference between a state-sanctioned certification and a private company’s certification. People can run into real danger if they claim that they are certified by virtue of the fact that they have taken a course from a private company. Only a state can truly certify a laser technician. And again, if a person or their medical spa advertises that he or she is certified when that is not the case, they could be seen to be misrepresenting themselves.
It is crucial in medical advertising that professionals are fastidiously honest about where they got their certification and what it means, in every case. If you suspect that you or your practice is in violation of these rules, consult your health care attorney to find out what you can do to correct course as quickly as possible. (Reminder: AmSpa members receive a complimentary compliance consultation once per year with AmSpa’s partner law firm, ByrdAdatto.)
Posted By Administration,
Wednesday, June 27, 2018
By: Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
It’s not uncommon for med spas and other aesthetic practices to use Groupon or other online deal marketplaces. Typically, medical spas use these websites to present special discounts to users in their community, but there are several issues to consider before using these services to try and attract new patients.
On the surface, this seems like a low-risk way for a medical spa to present its offerings to a new group of customers, and medical spa deals represent a significant source of income for the deal websites. However, medical spa owners and operators need to know about a few issues related to discount marketplaces before they choose to use these sites to promote their businesses.
Your average Groupon customer is searching for a cheaper option—that’s the whole point. Patients searching for discounts are probably not going to be as loyal as patients who have taken the time to search for a quality experience. Also, the greater the discount, the less likely it is that the patient will return. Generally speaking, very few people who are directed to medical spas via sites such as Groupon become regulars—most are simply in it for the deals.
This is problematic because most successful medical spas rely on patient retention. In fact, in an average med spa up to 70% of patients are repeat clients according to AmSpa’s 2017 Medical Spa State of the Industry Report. Not only is it over 5 times more expensive to attract new clients than it is to retain current ones, but existing customers tend to spend up to 67% more than new ones, according to an Inc. Magazine study.
Medical spas that partner with Groupon and other deal sites tend to get into what we used to call the “Groupon cycle,” where medical aesthetics practices offer a deal on Groupon not because they actually want to do it, but rather because they just want to get some money in the door. And yes, it is a good way to get some fast cash, but it doesn’t create repeat business, so after a month or two these practices have to do it again just to get some money in the door.
While the idea of having this cash on-hand is appealing, constantly cutting into your margin for clients that are unlikely to return to pay full price is not a sustainable model for success. If you’re selling a lot of treatments on sites such as Groupon, you could run into a cash-flow problem—if your practice is doing most of its business giving extremely large discounts to patients who probably won’t return, you could end up losing a lot of money.
Eventually, medical spas like this operate more or less exclusively on deal sites, and they tend to get bad reputations because their customers, who have expectations that rarely are based in reality, are always complaining about them.
Over the past three or four years, five lawsuits involving laser burns have come across my desk, and in every one of those instances the patient had come from Groupon. The correlation is that patients who are searching for discounts are going to be more likely to cause problems than patients who find your practice via more traditional means.
Additionally, a successful offering on a deal site can lead to an influx of clients, which can cause a med spa to become extremely busy and tax its resources. If a facility does not have a staff of the requisite size and with the proper skills to deal with such a situation, the quality of patient care can suffer—not only for those who purchased the deal, but also for the spa’s regulars.
In most states, laws require medical facilities—including medical spas—to be owned by physicians or physician-owned corporations. And in most of these states, all payments for medical services must be made in full to the owner of the facility. If a percentage of such a payment goes to someone else, the facility has engaged in an illegal practice known as fee-splitting. The use of deal sites to sell medical treatments is, from a legal standpoint, a textbook example of fee-splitting, since the site gets a percentage of the proceeds generated by the sale of the voucher. However some states, like Illinois, have carved out fee-splitting exceptions for deal sites. Check your state’s medical aesthetic legal summary to see how your state approaches fee-splitting.
In the many years that medical spas have been working with sites such as Groupon, there has yet to be any prosecutions for this, and it seems somewhat unlikely that a regulatory agency would start now. It is worth keeping in mind, though, especially if a patient experiences a bad outcome.
If you want to create sustainable success, pass on Groupon and other deal sites and work on creating lasting relationships with reliable clients. Short-term cash isn’t worth the headaches a Groupon offering can bring. For more information on how to build and run a successful, profitable, and legally compliant medical spa attend one of AmSpa’s Medical Spa & Aesthetic Boot Camps.
Posted By Administrator,
Tuesday, June 26, 2018
Updated: Tuesday, June 26, 2018
Sciton is a Silicon Valley-Based Laser Company that proudly celebrated a big anniversary last year. 2017 marks the 20th year for this innovative powerhouse and their team of award winning physicists and engineers. Over the last two decades Sciton has established a well-earned reputation for creating skin technology that has steadily built a very loyal customer base thrilled with the company’s focus on science and achieving results that matter.
Sciton, Inc., situated in Palo Alto, is a privately owned medical device company established in 1997 by cofounders Jim Hobart, Ph.D., and Daniel Negus, Ph.D., who met while they were working at Coherent. As Dr Negus explained, "Our mission from the very beginning was to provide advanced laser and light sources to medical professionals worldwide that are technical and performance leaders, offering unparalleled results and consistent reproducibility." They also set out to give physicians the highest possible value in terms of reliability and durability, and solve real problems to improve the human condition. Sciton’s raison d’etre is actually pretty simple. As Dr Hobart says, "Dan and I formed a company to make things to sell that would delight physicians and patients.”
That fundamental commitment to their customers' success has not been limited to the performance of their systems either. Sciton also enjoys a reputation for offering comprehensive clinical training and practice marketing programs to provide practitioners with the building blocks they need to be successful and enhance their bottom line. They have broken through the hype that often characterizes the cosmetic laser industry to set up Sciton as a science-driven and customer centric company that can and always will put customers' needs first. Today, Sciton’s legacy centers around their passion for skin and advancing best in class skin revitalization technologies that stand the test of time and do not artificially degrade through planned obsolescence. This commitment has set the company up to thrive in a modern era of big pharma consolidation where innovation and customer focused need take a back seat to Wall Street profit-first mentality.
Men on a mission
Today Sciton operates worldwide in more than 45 countries and has launched 26 major innovations since their inception, but the culture of Sciton hasn’t really changed that much in two decades although the industry surely has. The science of how lasers and light interact with tissue is generally where the Sciton scientists and engineers start, as opposed to what sometimes is a more market-driven opportunity lacking rigorous underpinning.
"For example, we’ve seen the tremendous growth in non-invasive body contouring, so we considered whether we should enter this market. Our approach is never going to be that we have something, we’re not sure it works, but let’s get it out there and make some money," says Hobart.
In fact, he admits that it can slow down their growth by taking the time to make sure it works instead of putting something on the market just because it’s hot and everyone is clamoring for it, without making sure it’s based on real science and will produce consistent results that physicians (and patients) will love.
"We would rather spend the time to get it 100% right so customers are thrilled or decide we don’t have a product worth launching yet," he says.
A ton of science without the hype
Lacee Naik, Director of Marketing and Public Relations, explains the guiding principle behind everything they do. "Like Apple, HP, and other iconic Silicon Valley brands, Sciton has stayed true to its original brand promise for two decades and counting. Everything they do is based on the motto “Because Results Matter”. Even the name Sciton is derived from the phrase, “science of photons”.
"I wasn’t keenly aware of shiny new toys because when I was CEO of Coherent, the products kind of sold themselves. The scientists could figure out which was a superior product. But in aesthetic medicine, it’s often all about hype and quasi-science," Dr Hobart says.
He often looks at other technologies and is appalled, in his words. "It’s almost like physicians are being duped by all the buzz and hype. When it gets down to it, they often feel like they’ve been oversold. The shiny new toy they just bought doesn’t really have the guts inside to perform as they were led to believe it would."
“Our handbook says “do the right thing,” and that’s the basis for what every employee at Sciton does," says Dr Negus.
“We believe that we build products that physicians will buy and feel good about. Our products are reputable and long-lasting, and deliver the results that patients deserve and want and that they are willing to pay for," says Dr Hobart. "At a recent meeting, a physician commented to us that while all their other lasers seemed to always break down, their Sciton has continued to chug along for many years. We see that as providing value to our physicians.
In a crowded device market with so many new brands and companies entering rapidly, Sciton’s unique value proposition for doctors stands out. According to Boca Raton plastic surgeon Jason Pozner, MD, "You can buy cheaper but you can’t buy a better quality, long-term device for your practice. My OR Sciton laser was built in 2001 and has been upgraded a few times, but you can’t name one other technology with a better return on investment. Sciton builds smart products for smart doctors and staff. Their devices can be used by beginners and pros, and there is the ability to grow into your system and upgrade as new things come out.”
The Joule in the crown
Their flagship JOULE™ system exemplifies the Sciton approach to producing high-quality, expandable platforms that can perform a range of non-invasive and minimally invasive procedures that doctors want. The JOULE platform allows physicians to customize their own system with one or more applications at a time, in a single system. This costeffective and expandable approach allows them to configure each system to offer the greatest financial return for the best possible value. As a result of this mantra, Sciton’s systems are widely considered by many laser surgeons to be the gold standard in the industry.
According to Dallas plastic surgeon A. Jay Burns, MD, "I saw the theoretical advantage of Erbium early on, but when Jim Hobart and Dan Negus developed the Sciton product, I expected it would be the best. They demand excellence and that is exactly what they delivered. I have never been disappointed. While I’ve tried erbium lasers from other manufacturers, the Sciton system is the one I prefer and I would never go back to using CO2 after using Erbium."
Dr Burns purchased his Sciton tunable Erbium in 2001 and it is still in service today. "The Sciton JOULE platform is the gold standard of laser platforms in my opinion. Every device they have added over the years, the BBL, Erbium Resurfacing, Erbium ProFractional, diVa, Nd:YAG and Halo, is individually the best device I have used in each space. Therefore, when these devices are offered all in one platform, it is just an incredible collection of tools for the laser enthusiast," he says.
Dr Burns is certainly not alone in his admiration for the Sciton founders" commitment to quality and his enthusiasm for the JOULE system. Sacramento dermatologist Suzanne Kilmer, MD, has known Jim Hobart since he was at Coherent when she was doing the original CO2 resurfacing study.
"He started Sciton shortly after that to create an alternative resurfacing device utilizing the Erbium laser. The genius of their Erbium laser was that you could choose exactly how much ablation and how much coagulation to deliver in each pulse. I use the Sciton Erbium all the time for fully ablative resurfacing of lip lines, syringomas, and acne scars. I think of it as the ultimate skin drill!" she says. "Sciton has always had high integrity and they really value scientific data. They are smart people led by the super-smart Jim Hobart and Dan Negus," adds Dr Kilmer.
The Joule platform was built to last and is the workhorse for many laser surgeons due to its versatility and efficacy. According to Denver Dermatologist Joel Cohen, MD, "I have had my Erbium resurfacing Joule with BBL since 2007, and I still use it every day. I have learned how to use it even more effectively over the years, recognizing endpoints and building on my experience. I truly believe there is no better device to treat significant perioral and periocular wrinkles than Sciton full-field Erbium, and BBL continues to be a very reliable way to treat lentigines.”
As kinder, gentler energy based systems m a y come and go, there continues to be a role for state-of-theart resurfacing lasers to achieve optimal skin revitalization outcomes. New York City dermatologist and laser surgeon Roy Geronemus, MD, explains, "With resurfacing lasers, there is always a need to strike a balance between going deep enough to achieve the desired outcome and the patient’s acceptance of downtime. The Sciton resurfacing laser is a very versatile system that allows you to ablate as deep or as shallow as needed, with or without coagulation. We have been very impressed with the precision and control this technology allows the user to have, and the results."
The beauty of BBL
Another major Sciton innovation, Broadband Light BBL™ has redefined multi-plexing technology. It is widely considered to be the most versatile broadband light system in its class. With a single handpiece, interchangeable filters, adjustable cooling, and a large spot size, BBL is an all-inclusive system that treats acne and vascular conditions, corrects pigmented lesions, permanently removes hair and improves the appearance of sagging skin.
“Sciton BBL is my most popular choice for facial and non-facial skin rejuvenation because it’s fast, cost-effective, and efficacious. It is really a win, win, win!" says Los Gatos, CA dermatologist Patrick Bitter, Jr., MD, who created the FotoFacial® branded treatment.
“In my practice, BBL sets new standards for treating a wide range of skin conditions associated with aging and sun damage. Its broad range of wavelengths allows us to treat pigmentation, redness, and acne without the need for additional handpieces," added Mark Schwartz, MD, FACS, a New York City plastic surgeon. "BBL has been an excellent investment, and I often combine it with Halo for advanced benefits in severely photoaged skin.”
BBL is also the first and only pulsed light system in the industry to offer a full suite of branded and consumer ready treatment options for the aesthetic practitioner to seamlessly incorporate into their practice and market for instant gains. Led by ForeverYoung BBL, the BBL family of brands now includes, ForeverBare BBL painfree hair removal, SkinTyte II for bulk dermal heating without consumables, and newly launched ForeverClear BBL for the treatment of active acne.
"The BBL family of brands makes it much easier for cosmetic business owners to market and differentiate themselves from the sea of competitors that simply offer IPL for treating "reds and browns’. Our branded approach to otherwise commodity treatments helps our customers position their treatments at a premium price point, while providing all of the point of sale tools necessary to earn the confidence of today’s selective cosmetic patients," says Ms Naik.
Halo: the world’s first hybrid laser
The evolution of Halo, the world’s first hybrid fractional laser, was a happy accident. The best products usually are, like BOTOX® (Allergan Plc), Latisse® (Allergan Plc), and Post-It®’s (3M).
"Erbium doesn’t produce a deep thermal necrosis-like carbon dioxide does. In a fractional form, it creates a lot more bleeding. We realized that you could use one wavelength to drill a hole and then fire a second wavelength into that hole to coagulate the blood underneath. But then we noticed that it removed discoloration," says Dr Hobart. And that was how Halo was born.
Halo offers a basic mode with three simple preprogrammed levels for minimal downtime. The operator chooses one of the three coverage levels, and Halo calculates the exact amount of energy necessary to complete a safe and effective treatment, which makes it very delegatable to physician extenders. Patients love the results and the angelic glow that it gives their skin, which is why Sciton named their breakthrough treatment Halo. Halo delivers consistent results along with a positive patient experience without the extended downtime of other treatments. This accounts for why the Halo brand is leading the way for advanced skin revitalization that patients are asking for by name.
According to Vice President of Aesthetic Sales, Robb Brindley, "When you consider cosmetic benefit vs. downtime, Halo has truly changed the game for our customer’s and their ability to satisfy today’s cosmetic patient with an active lifestyle. Halo is like nothing we have ever seen at Sciton — our customers are ecstatic with the impact this new procedure has on their bottom line." Halo has emerged as a gem for the business minded practitioner and represents the highest net revenue procedure for facial skin revitalization in aesthetic medicine today."
Nashville dermatologist, Chris W. Robb, MD, PhD, first learned about Sciton from researching their reputation. "The regional Sciton manager was patient and came in and let us use their device. It met every single claim the company made. We are still using the same machine a decade later. No other laser company is as invested in your success. After the sale is made, the Sciton sales managers don’t vanish. I’ve seen so many reps from other companies disappear after a sale as if they know they got away with something. Sciton truly believes that if you are successful, Sciton is successful," he says.
He continues, "Halo is unique in that the hybridized wavelengths dramatically increase efficacy. The laser behaves like a non-ablative in terms of short downtime and safety, but the results can be dialled in to a patient’s needs so that they have very dramatic ablation-like results. It’s a very flexible device, perhaps the most flexible and advanced device on the market in the last eight years. Even after using the device for three years, I am routinely excited at the results we see. We just had a patient come in for two-year follow-up after one treatment and they still looked amazing. It’s fun to have a laser that patients are happy with and I don’t have to repeat treatments or justify taking their hard earned money. I use Halo as a workhorse. It helps dyschromia, fine lines and wrinkles, and stimulates hyaluronic acid, elastin and collagen on histology. It fits perfectly between BBL and full ablation.”
According to Dr Cohen, "In the past year, I have introduced HALO into my practice. My patients really appreciate the minimal downtime that typically correlates to a “sunburn” for about five days, while achieving noticeable improvement in mild lines, wrinkles, luminosity, pigmentation, and acne scars."
Dr Pozner adds that Halo has changed the paradigm, offering the best of both ablative and non-ablative wavelengths. "With Halo, I can achieve results which I would have only expected from an ablative fractional laser, but get downtimes that I would normally see with a non-ablative fractional laser. It really is the best of both worlds," he says.
Focus on women’s health
Sciton wasn’t the first medical device company to jump into the growth market for women’s health. On the contrary, they took their time and considered all of the options, in keeping with the Sciton philosophy. "I tell people that there’s the tortoise and the hare, and we’re sort of the tortoise. But we’ll win the race eventually," says Ms Naik.
In 2015, Sciton developed a separate business unit called the Women’s Health Group (WHG) demonstrating their commitment to this emerging category. "When we first encountered a competitive vaginal treatment device, we thought it was just another hoax. But we talked to several gynecologists and urogynecologists who were so enthusiastic about this treatment that we decided to build one and let some people try it and see if it works. We engineered the device several times until we started getting good feedback. We brought on Aaron Burton in the role of General Manager to concentrate on this business, hire a great team, and make important things happen," says Dr Hobart.
diVa utilizes the same Hybrid Fractional Laser (HFL) technology that was created for Halo. It provides tunable independent levels of ablation and coagulation, as well as varying levels of density, which allows the provider to customize the treatment based on the patient’s individual needs. diVa’s highly accurate motorized guidance system allows providers to deliver the treatment with increased consistency and decreased procedure time.
Johnny Peet, MD, ACOG, a gynecologist in Houston, and a long-time Sciton customer, was an early diVa user. "When I started looking into lasers in 2012, I asked two colleagues what the best laser on the market was and they both said Sciton without hesitation. So I met with the Sciton rep and I felt that he was honest and trustworthy and genuinely wanted me to succeed with my laser business. Over the next five years, I have come to see that the Sciton staff are quality people that I enjoy working with," he says.
Dr Peet worked on the development of the diVA laser with Sciton. "Our office performed the two clinical trials in 2015 that were used to develop the automated handpiece and the strengthened quartz dilator. We developed a vaginal laser that, when compared to the competition, can treat at over twice the depth, twice the density, and in half the time, three to five minutes. It is the only hybrid fractional vaginal laser and it is the only automated handpiece. No other vaginal laser has the versatility with regard to tunability of the settings. This allows us to treat every person individually and specifically," he says.
According to Nathan Guerette, MD, a urogynecologist in Richmond, Virginia, "I was an early adopter of energy based vaginal treatments and Sciton’s entry into women’s health has revolutionized how we can treat women suffering from these devastating and all too common conditions. The diVa laser allows for the most customized, precise, and automated treatment available in the world. This allows each individual woman to have her issues addressed in a unique and successful manner. Additionally, since diVa is part of the JOULE system, it can be performed with a host of other treatments, which is a significant advantage to both patients and practices as one unit can address multiple needs. Sciton’s approach is refreshing and unparalleled by other companies I’ve seen in the energy-based device arena. They are willing to go above and beyond for training and patient care and stand by their products.”
What’s next for Sciton?
Sciton realizes there is a tremendous opportunity for marketing their premium products internationally, and as part of this effort hired David Percival as General Manager for International to help identify key markets with strong growth opportunities around the world. "I’m very excited for the potential of Sciton’s business outside of North America" says Mr Percival. "I believe that over the next few years our business internationally will play a greater role in the growth of our company. We already have a strong base of key opinion leaders in Europe, the Middle East, Asia, and Latin America."
On the product development side, Dr Hobart says, "We will continue to try a bunch of stuff and keep what works both in aesthetics as well as other medical fields. At the end of the day, we have to stay true to our core values. But it’s a business of course, so everything we do has to have a return on investment. But the way we calculate our ROI is somewhat unique in that we don’t just consider the benefits to the company. We look at the benefits to the physician, patients, and society as a whole. After all, isn’t that the right thing to do?"
Sciton is a Platinum Vendor Member for AmSpa, you can learn more about the JOULE™ system here.
Sciton will also be exhibitng at the upcoming AmSpa Boot Camp in Dallas, TX July 14-15. View the full agenda and exhibitor list here.
By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
In his 2013 letter to Berkshire Hathaway shareholders, company chairman and CEO, Warren Buffett, said, “More than 50 years ago, Charlie [Munger, Berkshire Hathaway vice chairman] told me that it was far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price.” This might seem counterintuitive to the shark-like practices that are celebrated in certain sectors of the modern business world today, but I believe that if you conduct all your dealings fairly and ethically, you will give yourself a good chance for success.
When you go into business and begin forming partnerships, agreeing to contracts, and making deals with others—whether they are employees or external businesses—you should always strive to make fair deals. In other words, don’t scramble after every last dollar and screw people over just so that you can feel like you’ve “won” something. Some businesspeople will do anything to achieve this feeling, but deals don’t have to have winners or losers—a fair deal allows everyone to get what they want.
For example, if you’re negotiating with someone who you know is undervaluing his or her position, don’t try to take advantage of it just to save a few bucks. You should respect the other party, no matter what. You might even end up paying a bit more than you think you should be paying, but as long as you’re conducting business ethically, you’re likely to build a positive reputation among your peers, which should lead to future opportunities.
I believe in something I call “corporate karma,” which dictates that if you conduct your business fairly, you’ll end up attracting people—employees, business partners, etc.—who are good for your business. In regard to the previous example, if, instead of making a fair deal with the person who is undervaluing his or her asset, you decide to take advantage of his or her inexperience, that person will almost certainly find out what you’ve done and will likely be extremely hesitant to do business with you again. What’s more, he or she is likely to spread word of your shady practices, and you might find yourself frozen out of certain circles because you needed to feel like you “won” the original deal.
There are lots of things in the world of business and finance that you can’t control, but your conduct isn’t one of them. If you approach your dealings ethically and fairly, you’ll improve your chances of success. After all, the best kinds of deals are the ones in which both sides feel as though they’ve won.