Medspa management invite: Revenue boost or bust?

Dr. Poor has been practicing general dermatology for 20 years. He performs few cosmetic treatments in his office and has now recognized a reality: His revenues have declined and his overhead keeps increasing. He does not wish to retire nor sell his practice; yet, he cannot economically survive. 

A friend who has opened a new medical spa suggests that Dr. Poor oversee the aestheticians and electrologists. The friend will own the spa and Dr. Poor will be responsible for all medical procedures performed. Dr. Poor feels very fortunate and tells some fellow dermatologists of his good luck. 

One of the dermatologists, married to an attorney, asks if Dr. Poor is aware of the corporate practice of medicine issues in his state, as well as his liability for overseeing such employees as aestheticians and electrologists who will be doing a variety of laser treatments?

The number of medical spas, although decreased during the recession, has greatly has increased in recent years. By definition, a medspa is a location where a patient can go for a variety of cosmetic and (typically) non-invasive procedures - ranging from neuromodulators to chemical peels and laser treatments.

Some medspas are an inherent part of a medical practice. Others, like the one in this case, are stand-alone units. Some are owned by physicians; others in certain states can be owned by non-physicians.    

There are multiple reasons for the increased popularity of medspas. An obvious reason is the technological advances in so many procedures leading to decreased recovery times. Another is correlated with decreasing reimbursements from health insurance companies caused, in part, by health reform. These reasons, among others, have led many physicians to consider alternative cash-pay businesses such as a medspa. Overall, the popularity of medspas  and the potential high return on investment has many physicians and non-physicians interested in investing. 

Despite the potential economic benefits, investing, owning, or operating a medspa still means being aware of certain regulations. 

Unfortunately, many states offer little or even conflicting guidance on these specifics. Generally, the two major regulatory considerations are (1) the corporate practice of medicine, and (2) proper supervision over those providing medspa services. 

Corporate practice of medicine

The prohibition against the “corporate practice of medicine” is a rule many states have adopted that prohibits non-physicians from employing physicians or offering professional medical services. States that have strong corporate practice of medicine rules include Texas, New York and California. These states, along with several others, explicitly provide that providing the types of non-invasive, elective procedures a medspa provides does entail the practice of medicine. As a result, this prohibition must be taken into account when setting up a medspa. 

Texas was unusual in that it specifically recognized that little guidance existed and recently approved new guidelines found in the Texas Administrative Code (“TAC”), Section 193.17, “Nonsurgical Medical Cosmetic Procedures”. This statute clarifies that the provision of nonsurgical, elective procedures is the practice of medicine. As such, a Texas medspa must take the prohibition against the corporate practice of medicine into account and be setup like a medical practice. It can only be owned and managed by a Texas licensed-physician. Thus, in Texas, a non-physician cannot own the medspa in which Dr. Poor wishes to work.

Proper supervision 

The second major consideration is proper supervision. Each state delineates who can provide certain types of medical services. It comes as no surprise that every state requires that only licensed physicians perform surgery on a patient. But many states still specifically outline what kind of licensing and training is required for someone to provide a medspa service.   

In Texas, for example, a  medspa must either have a physician or mid-level practitioner (which includes a physician assistant or advanced practice nurse practitioner, but not a registered nurse) on site at all times. If the physician is not physically on site, the physician must, nonetheless, be available for emergency consultations. Suffice to say, the managing physician is ultimately responsible for any services provided and for each patient’s safety. 

Dr. Poor is advised to seek advice from a health law attorney in his state before he embarks on this new endeavor. What looked like an economic lifesaver could turn out to be a nightmare if not approached correctly. ƒ