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The Top 5 Med Spa Law Tips to Know Before You Open

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.

See AmSpa’s webinar on the MSO structure for information on owning a med spa if you are not a doctor, and if you live in a state that recognizes the corporate practice of medicine.

Do not reward employees with commissions.

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.

(AmSpa members: Be sure to take advantage of your complimentary annual compliance consultation with the business, aesthetic, and healthcare law firm of ByrdAdatto. Additionally, AmSpa members should be sure to access their medical aesthetic state legal summary to find answers to their med spa legal questions.)

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.

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

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Can Dentists and Chiropractors Own Medical Spas?

Posted By Aly Boeckh, Thursday, September 28, 2017
Updated: Tuesday, October 31, 2017


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

Can a dentist or chiropractor own or serve as a medical director for a medical aesthetic practice? Recently I have been asked this on several occasions since, after all, you could make the argument that the certified skills of a dentist or chiropractor might be a good match for a medical spa. However, in most states, the answer to the question is “no,” and it is important to understand why that is the case.

Dentists

Dentistry, of course, is the branch of medicine that deals with treatment of teeth and the oral cavity. To be a dentist, one must complete a rigorous education with medical components. Although a medical spa owner wouldn’t necessarily immediately think of a dentist for the role of a medical director, it is not an outlandish proposition.

When I am asked about medical directorships by dentists, they often point out that, in course of their practice, they use injectables, such as Botox and fillers, as one would at a medical spa. They feel that this particular expertise might qualify them, under the law, to become a medical director of a medical spa, a position that is typically held by a physician. But an important distinction between dentists and physicians is that the dentists are restricted to performing only the treatments specified in the dental practice act of the state in which they practice.

Within those restrictions, dentists are often permitted to use injectables in and around the oral cavity, so they could conceivably administer these treatments to lips, mouths, and the immediately surrounding areas. However, that is where we recommend it stops, because that is a reasonable interpretation of the area that is connected to the oral cavity.

I have had dentists on many occasions tell me that, in dental school, they learned about full facial anatomy—they make the argument that the cheeks are connected to the mouth, and the neck is part of the mouth, and so forth. In many instances, they have used that justification to expand the treatments they offer beyond the oral cavity and its immediate surroundings. Some have been known to administer forehead Botox, fillers around the nose and cheeks, and other treatments that one would not typically associate with dental practice.

Despite this, all the information AmSpa has received from various dental boards suggests that these regulatory bodies absolutely would not support the idea of a dentist administering Botox to a patient’s forehead, for example, being reasonably related to their practice act. Additionally, being a medical director at a medical spa involves being responsible for all the medical treatments being administered by the practice—not just the ones that involve the mouth and (if we’re being extremely generous) the face. This can include treatments such as laser hair removal and laser skin tightening and rejuvenation to other parts of the body. It is very clear that within his or her scope of practice, a dentist cannot oversee medical treatments such as these.

The bottom line is that we strongly encourage medical spas to look elsewhere for a medical director, although we are sympathetic to dentists’ cause. They simply are not qualified in the eyes of state regulatory bodies.

Chiropractors

The story is very similar for chiropractors. Chiropractic generally is regarded as a form of alternative medicine, and it is concerned with the health of the musculoskeletal system. Chiropractors treat their patients without the aid of surgery or medicine. This is a somewhat controversial field, as chiropractic’s tangible benefits are difficult to pin down. 

Nevertheless, chiropractors’ scopes of practice typically are controlled by their state’s medical practice act. They are often referred to as “doctors,” but they are restricted to administering the treatments that are specified within these practice acts—generally for chiropractors, this means treatments relating to the back, spine, and neck. Chiropractors can, in some cases, use light-emitting devices to treat ailments relating to bones, joints, and musculature, but we at AmSpa feel strongly that such a dispensation does not extend to treatments dealing with aesthetics and the skin.

It is a stretch, at best, to think that a state regulatory agency would rule that many of the treatments offered by a typical medical aesthetic practice fall within a chiropractor’s scope of practice.

Conclusion

Because of the restrictions set forth in the practice acts governing dentists and chiropractors we strongly advise medical aesthetic practices to look elsewhere for medical directors. Most states will not even permit these dentists and chiropractors to have an ownership stake in a medical spa. 

Become an AmSpa member to see your state’s legal summary of regulations governing medical spas and medical aesthetics practices.
 

Tags:  Med Spa Law  Med Spa Ownership 

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Can Non-Doctors Own Medical Spas?

Posted By Administration, Tuesday, September 5, 2017

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

Owning a medical spa or aesthetic practice for non-doctors is a goal that’s often difficult to realize. In most states, only a physician or a physician-owned corporation can legally own a medical practice. However, non-doctors can essentially own a medical spa via a management services organization (MSO) and, while such an arrangement still hinges on the participation of a physician, it allows others a very significant role in the day-to-day operations of a medical aesthetic practice.


For more information on MSOs see AmSpa's webinar on non-physician med spa ownership.

The Basics

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 medical spas are medical in nature, the ownership of such facilities is typically governed by this doctrine. (AmSpa members: check your state legal summary to see if your state observes the corporate practice of medicine.)

 

But entrepreneurs who want to become a part of the medical aesthetic industry on an ownership level and live in states that observe the corporate practice of medicine can look into setting up an MSO, which provides management services (as its name suggests). It partners with a physician’s company, which only provides medical services. This arrangement, known as a management service agreement (MSA), allows a non-physician to supervise most aspects of a medical aesthetic business, including branding, marketing, owning the real estate, payroll, human resources, accounting, and billing—everything except medical services.

 

Paying the Cost to Be the Boss

It is helpful to think of this as a lessor/lessee situation in which the MSO is the landlord and the physician is the tenant. The physician pays the MSO “rent” to occupy the space, and the MSO maintains the facility and keeps the physician as comfortable as possible. However, unlike an apartment rental governed by a lease that dictates the occupant pay an agreed-upon amount of money for a certain term, the amount paid to the MSO each period changes according to the amount of business conducted by the physician. If more patients are treated in a month or quarter (depending on the terms of the agreement) than in the previous period, the MSO also makes more money. This helps to create a strong bond between the two sides of the business—if one succeeds, they both succeed. 

 

The contractual separation of the two entities also helps mitigate risk for both parties. A physician risks very little when entering into an MSA. If the practice fails, he or she is probably going to be fine. The physician is not liable for the facility, its contents, and the land on which it is located; that risk belongs to the MSO. The MSO also typically covers the physician’s liability insurance. On the surface, this arrangement might seem heavily weighted in the physician’s favor, but that’s why the physician pays the MSO. Also, the MSO is not responsible for any sort of liability claim leveled against the physician. 

 

Of course, all this is predicated on the assumption that the arrangement is executed properly. If so, everyone stands to benefit; if not, both sides could suffer significant consequences. Be sure to consult an attorney familiar with medical aesthetic laws in your state before deciding on the ownership structure of your medical spa.

 

Word to the Wise

When entering into these types of arrangements, a few pitfalls must be avoided. First and most importantly, the doctor must always be responsible for medical decisions. Second, payment for medical services must be always made directly to the physician’s company. The MSO is paid by the physician—at the end of each pay period, it submits an invoice for management services to the physician’s company. If this is properly executed, the MSO receives most of the revenue generated by the med spa.

 

In order for the practice to work properly and compliantly, the doctor must make all medical and clinical decisions. If the physician does not actually do this, he or she is subject to severe consequences, including license forfeiture and large fines. Furthermore, the MSO may be found to be practicing medicine without a license. As such, it is vital that when setting up an MSA, all parties must understand the roles and obligations to which they are agreeing. 

 

A Formula for Success

MSOs have been used for many years by entrepreneurs to form management companies for medical organizations as large as hospitals and managed care facilities, so it makes a certain amount of sense that creating an MSO for a medical spa would be relatively simple. However, an MSA cannot be properly executed using forms downloaded off the internet, so it is important that you consult an attorney who has experience setting up MSOs if you want to enter into this sort of arrangement.

 

You can learn more about MSOs and many other legal topics of interest to medical aesthetic practices at AmSpa’s Boot Camps. We will be hitting San Jose, Calif., on Sept. 18 and 19, the Chicago suburbs on Oct. 14 and 15, and Atlanta on Nov. 6 and 7. We hope to see you there!

Tags:  Med Spa Law  Med Spa Ownership  MSOs 

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Shady at Best, Dangerous to Patients at Worst | Parallel Importation

Posted By Administration, Friday, January 20, 2017
Updated: Wednesday, May 23, 2018
As you no doubt are well aware, botulinum toxin treatments—primarily Botox, but also including competitors such as Dysport and Xeomin—are among the most popular procedures in the medical aesthetic industry. According to the American Society for Aesthetic Plastic Surgery (ASAPS), more than 4.25 million of these treatments were administered in the United States in 2015, for a total expenditure of more than $1.35 billion—the most of any cosmetic procedure, surgical or otherwise. At an average of $317 per treatment, botulinum toxin is affordable for patients, yet still quite profitable for practices. But some want more, and they are beginning to put themselves in danger in the pursuit of larger profits.


One of the ways in which practices are attempting to do this is by buying cheap, usually counterfeit botulinum toxin from other countries, most prominently China. These drugs are not particularly difficult to procure on the Internet if you know where to look and, to some medical aesthetic practices, this represents a way to avoid paying the name-brand premium that legitimate botulinum toxin carries, such as Botox.
While this is shady at best, and dangerous to patients at worst, historically it tended to be fairly easy to get away with. Recently, however, the U.S. Food and Drug Administration (FDA) has stepped up the enforcement of its statutes (fake botulinum toxin is not FDA approved, of course), seizing these drugs at the border and handing down criminal charges against those in the United States who are complicit in their importation, such as the practices that order it.


This enforcement effort has proven to be extremely controversial. “It’s caused quite a bit of angst,” said Michael Byrd, partner for ByrdAdatto, a national business and healthcare law firm based in Dallas. “There’s a lot of unhappiness, even within the governmental agency [FDA]—they refer to themselves in a derogatory manner as the ‘Botox police’ or the ‘Allergan police.’”
FDA agents may feel like their strings are being pulled by a corporation, but this is also unquestionably a matter of maintaining the health of the botulinum toxin-using public.


“Those who are against it say that it’s really just action on behalf of Allergan for Allergan to keep their prices [high]. Those who are for it, as you might suspect, point to patient welfare.”
-Michael Byrd, partner for ByrdAdatto 


Regardless, enforcement has increased, and the charges you can incur as a result of being caught with counterfeit botulinum toxin are very serious. If your owner or operator is found guilty of them, they could theoretically serve jail time in addition to facing heavy fines and the suspension of their medical licenses.


Medical aesthetic practices have also attempted to purchase less expensive botulinum toxin treatments by engaging in a practice called “parallel importation,” whereby a licensed foreign entity purchases legitimate US-produced drugs at a lower rate than US-based distributors (due to local price controls) and then resell them to US-based practices for far less than it would typically cost for the practices to procure them from domestic sources. The US Supreme Court broadly upheld the legality of this practice in the case of Kirtsaeng vs. John Wiley & Sons, Inc. (2013), although that particular case related to textbooks, not prescription drugs. As such, there are still some grey areas involving FDA compliance that make this practice risky, despite the fact that every step of the process seems to respect the laws of both the country in which the outlet is located and the United States.


“Enforcement typically stems from an employee, patient, or American industry representative reporting a foreign label on the product. Because the labeling is different on legitimate US products purchased by a foreign entity, practices engaging in parallel importation are also being reported,” explains Byrd. “When I counsel my medical spa or cosmetic practice clients, [I tell them] you have to recognize the risk that comes with any effort to utilize parallel importation. Even if a client is ultimately not found guilty of wrongdoing, an enormous business cost comes with losing inventory in a raid, legal costs to defend the action, and the business disruption that comes with an enforcement action. There is, of course, also risk regarding the legality of the use of parallel importation for prescription drugs. And so, my counsel would be that if you do anything other than buy an FDA-approved and US-distributed product, you have to recognize both of these risks.”


For now, it is probably best not to engage in parallel importation, but it is entirely possible that in the near future, it will be a viable way to purchase FDA-approved products.


 
AmSpa provides a variety of legal and regulatory resources for medical aesthetic practices and medical spas to help you stay legal and compliant. Learn more about our member benefits here


This article originally appeared in the December issue of Modern Aesthetics.

Tags:  Business and Financials  Med Spa Law  Med Spa Ownership 

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