6 Letters to Cosmetic Medicine.

The NY Times has published 6 letters to the editor

that they received after printing “More doctors turning to the business of beauty.” (front page, Nov. 30)

Among the letters:

"Physicians who take short courses to learn these procedures are abusing their medical licenses for the simple purpose of generating income. This is hypocritical medicine, not Hippocratic medicine."

Arthur W. Perry, M.D.
A clinical associate professor of plastic surgery at Robert Wood Johnson Medical School, was a member of New Jersey’s State Board of Medical Examiners from 1995 to 2005.

"I’m disgusted. We train our best students to be doctors, and look what we get: a bunch of spoiled doctors squabbling over cosmetic surgery like kids over the last cookie."

Christine R. Fry

Of course there are numerous reasons for physicians leaving the existing third party payer system to breach the cosmetic medical market, but the anger from both patients being left and existing cosmetic practices is very real. 

NY Times: More doctors turning to the business of beauty.

From the NY Times: More doctors turning to the business of beauty.

Five years ago, cosmetic medicine was primarily the domain of plastic surgeons, facial surgeons and dermatologists — medical school graduates who undergo several years of training in facial skin and its underlying anatomy. But now obstetricians, family practitioners and emergency room physicians are gravitating to the beauty business, lured by lucrative cosmetic treatments that require same-day payments because they are not covered by insurance and by a medical practice without bothersome midnight emergency calls.

Dermatologists and plastic surgeons refer to their new colleagues as “out of scope” or “noncore” physicians, and they strongly object to the intrusion, insisting that cosmetic medicine requires lengthy training.

But the dispute also has all the elements of a turf war, with specialists reluctant to cede ground in a field in which Americans spend an estimated $12 billion a year.

“Dentists are doing Botox, and urologists are doing hair transplants and vein removal,” said Dr. Ellen Gendler, a dermatologist in Manhattan who is a clinical associate professor at New York University School of Medicine. “Everyone wants to be a plasticologist.”

...Still, Dr. Kilanko said she understood the discomfort over physicians who practice outside their board certification, and she objected to the suggestion that a dermatologist might perform a Caesarean section after a day course in obstetrics.

“They would have no business performing a C-section,” she said. “But you can’t compare the knowledge of the anatomy, level of difficulty and risk of complications of a C-section with Restylane injections.”

Dr. Gendler, the Manhattan dermatologist, vehemently disagreed.

“They don’t think it’s brain surgery until they have a problem,” she said. “Then the first thing they do is send the patient to a dermatologist.”

Wall Stree Journal Article on Medical Spa Franchises: Medspa boom is a bust for some

The following article on problems with medical spa franchises ran in the Wall Stree Journal. It's a telling article that points the finger at the current crop of medical spa franchises. I signed up and read it after Ron posted his comments on being an unhappy Sona owner.

Medspa Boom Has Become a Bust for Some

By RHONDA L. RUNDLE: November 21, 2006

Jeff Nebot thought he had struck gold. Two years after opening a laser hair-removal franchise in St. Louis, annual revenue hit $3 million. And over time, the lavish salon added other cosmetic services as Mr. Nebot joined the rush of entrepreneurs into the emerging business of medical spas. Medspas (also called medispas) offer such medical treatments as Botox injections and laser hair removal in a luxurious environment rather than a doctor's office. The field has been rapidly expanding in recent years as entrepreneurs and doctors alike have sought to profit from the dual quests of many affluent consumers: prettification and pampering. For an increasing number of those who entered the business, the boom is proving a bust.

"Several Sona franchisees, though not Mr. Nebot, are in private arbitration over problems that include misrepresenting a complicated business as a turnkey operation and failing to provide needed support. Sona officials declined to comment.

Several franchisees of Radiance MedSpa Franchise Group PLLC, a franchiser in Scottsdale, Ariz., say the company's financial projections overestimated revenue and underestimated initial start-up costs, including working capital.

The president of Radiance, Charles L. Engelmann, recently said: "There are currently 32 open stores and we will have 47 or 49 open by the end of the year. None of the stores have closed." He also acknowledged that some franchisees are attempting to get their money back.

"I can't be my own medical director any more, which is an added expense I can't afford," says one Florida physician who is not a dermatologist. He says he is "facing personal bankruptcy and trying my best to get out while there is something left for my family" after miscalculating what it would take to market, advertise and build his business. Indeed, many medspa owners are doctors who hope to make easy cash at a time when income is shrinking from their traditional medical practices.

You can read the entire article on the Wall Street Journal site here. It does require a subscription. 

Sona MedSpas: An unhappy franchise owner.

Ron Berglund, a Sona medspa owner, left this comment on one of the most widely read articles on this site: What's wrong with medical spa franchises? The article Ron refers to is referenced here: Medspa boom is a bust for some.

"You may want to check out the November 21 issue of the Wall Street Journal. There is a very informative article about mdeical spas (primarily the Sona MedSpa and Radiance franchises).

Having been a franchisee (St. Paul, MN) for almost three years and now facing personal bankruptcy and financial ruin, I can vouch for the accuracy of the article. I have personal knowledge that perhaps 33% (and maybe over 50%) of the Sona franchisees have either already failed or are struggling. The Sona business model-- and I am guessing most of the franchised medspa models-- are replete with flaws, problems and booby traps.

For starters, any business that tells you to spend 25% of gross revenues on marketing and advertising is giving you a recipe for financial disaster down the road. Relying almost entirely on inflated revenues from prepaid multi-treatment packages (allowing you to take in - and spend-- thousands of dollars today without making any provision for the steadily growing future service liabilities) are also a trap for the undercapitalized and unsophisticated. Finally, Sona encouraged us to commit the mortal sin of cosmetic practice-- they coached us to overpromise results to the point of commiting fraud with thousands of clients. When the Sona-required lasers failed enable us to deliver these impossible results we were literally murdered with demands for additional treatments.

I predict a huge "shakeout" in 2007 as other medspa franchisees hit the courthouses with litigation and financial nightmares. The profitable delivery of esthetic medical services is a tricky and demanding challenge for anyone. I believe it takes a unique combination of business and marketing acumen together with great medical skill and emotional intelligence to navigate these tumultuous waters without drowning."

Ron Berglund 

The article Ron refers to is referenced here: Medspa boom is a bust for some.

From the same thread.

JustCurious asks: How does a medspa franchisee handle closing its doors? Aren't there agreements (in years) that must be signed with the franchisor and wouldn't there be penalties for closing shop? I've notice several medspa franchises closing or selling their business within 2 years of opening their doors and I'm wondering (a) what motivates them to close or sell so quickly and (b) what the penalties of closing/selling could be. Also, if a franchisee sells their medspa in this "billion dollar industry" so quickly, is that usually an indication of a failing business?

Dear Just Curious: Thanks for the response to my recent comment. You are asking two additional questions which are very important with regard to the subject at hand. First, you are asking how does a medspa legally close its doors. Closing shop would be no problem if all transactions were handled on a "pay as you go" basis. Unfortunately, most med spas sell primarily multi-treatment "packages". The Sona model encouraged us to do that almost exclusively. We typically sold five-treatment packages for laser hair removal, and often offered BOGO promotions wherein the client would purchase -- and pay cash up front for --five treatments at the "regular" price (full bikini @ $975 for example) and then would receive five FREE treatments for the underarms area. I had an excellent first year of operations since I was taking in thousands of dollars each month for treatments to be performed in the future. After signing up an average of 100 clients per month and pushing the future service obligation forward, you end up "painting yourself into a corner" and facing an insurmountable liability for performing treatments already paid for. Jeff Nebot had the same problem in St. Louis, except that his numbers were typically about triple my numbers. As this isn't enough of a problem, just imaging what happens when you try to sell or close the business!! You have several thousand clients who have prepaid and are legally entitled to the treatments they have already paid you for-- but you cannot afford to keep the Pnonzi scheme going! Believe me-- this makes any medspa almost impossible to sell because any prospective purchaser is scared to death to walk into this huge liability. That is the primary reason Jeff Nebot and I ended giving away our centers for free. Our buildout, furniture and equipment in St. Paul had cost us almost a million dollars and Jeff Nebot's investment was probably twice as much. I know first hand of several former Sona franchisees losing more than a million dollars on the whole mess-- in addition to a million headaches. There was a story posted on the Internet about the former Salt Lake City Sona franchisee closing her doors and failing to provide hundreds of clients with their pre-paid treatments. The article stated that Utah authorities chased the owners down in Texas and instituted some type of legal proceedings against them. I never heard how the matter was resolved, but I heard that the state was trying to impose some stiff penalties against the (Sona) owners.

Your second question asked how can it be that all these problems are occuring when this "med spa boom" is supposed to be happening all around us. The answer-- in my opinion-- is that the so-called med spa "boom" is to a large extent hype. I predict that the majority of the marginal operations will fall by the wayside during the next twelve month and the survivors will be the operatoins that are well funded and operated on sound business principles. Sona and many of the other franchised systems were attempting to offer a "get rich quick" scheme and also a model which-- for the most part-- utilized the physician as essentialy a mere figurehead. My personal belief is that the only truly successful med spa model requires three key components: 1. The physician is the key to the business-- similar to the dentist in the traditional dental office model; 2. The physician needs to be "on site" for a number of reasons-- business, professional and regulatory; and 3. The model requires superb marketing including a ton of cross-promotion and "guerrilla" marketing. Due to competition. typical profit margins and a number of other factors, med spas simply cnnot afford to allow advertising and marketing expenses to exceed over 10% of gross revenues. Whereas most physicians already have from 5000 to 15,000 patients in their data base who can serve as a "warm" client base for a med spa, all of the franchised med spa models start with zero and need to "buy" each client they recruit. Believe me--these outrageous advertising expenses eventually catch up with you! There is a reason the typical fast food franchises absolutely require that advertising expenses remain in the neighborhood of 7% of gross revenues. In order to survive in the low margin marketplace, there is no other way.

Ron Berglund 

Botox? Restylane? Fraxel? How big business is getting into your wallet.

Time article: Buying your face

Botox is no longer the only game in town. With competitors ready to pounce on an expiring patent, Allergan is bringing the guns to bear.

Allergan: Botox & Juvederm

Allergan, a specialty pharmaceutical outfit with sales of $2.9 billion, will put the same marketing muscle behind Juvéderm that made Botox a household name. There are some potential wrinkles in that plan, though. Botox, a facial-muscle relaxant that was used by some 3.5 million people last year, had the market to itself; Juvéderm has a competitor before it's even out of the box: Restylane, the current best-selling hyaluronic-acid filler, made by Medicis, a $344 million dermatological company based in Scottsdale, Ariz. And Medicis' Perlane, a more robust version of Restylane, is expected to get the FDA's thumbs-up any day now. Down the road, there's a possibly even bigger blow, Reloxin, a Botox-like alternative.

Also in Medicis' corner: plans for a Medicis-sponsored reality-TV show, The Hottest Mom in America.

(Please not another plastic surgery reality show.) But the Fraxel Crew is not to be outdone. Following the Thermage business model of high cost disposables, Reliants got a plan to get into consumables too.

Reliant: Doctors have money. We want some. 

Reliant Technologies, a privately held company in Mountain View, Calif., known for its popular resurfacing laser, Fraxel. Its newest model, Fraxel SR1500, which lets dermatologists treat deeper layers of skin, sells for $110,000. Orders have been pouring in, but the revenue stream doesn't stop there. The handheld device requires a special tip that needs to be replaced after four to six treatments. Cost per tip: $400. "It is a great business model," says Reliant vice president of global sales Keith J. Sullivan, with a grin.

I'll bet if Keith J. Sullivan was speaking to a medical journal and not a business publication there would have been less smirking. Anyone really think that the tip costs Reliant more than $10?

Physician Oversight & Scope Of Practice: What's legal in a medical spa?

Physician oversight & scope of practice in medspas.

We receive an ever growing number of questions about physician oversight, scope of practice, and other legal issues surrounding medical spas. What oversight is required? What can I do? What can't I do? Here's our opinion (ie. not a legal one.)

The quick growth of medical spas has led to something of a Wild West mentality. Many spa owners and even some physicians are trying to jump into this market. Unfortunately, this has landed a number of medical spas in hot water. Very hot. Medical spa professionals and many physicians don't understand the legal ramifications of what they're doing. What's legal? What's not?

Here's a sample: "Hello, I am an esthetician currently working in a day spa. My boss has decided to buy and train another esthetician and myself on the Thermage system. Since we are a medical spa, there is no practicing physician on the premises. My question to you is; how legal will our Thermage treatments be without an overseeing physician? By performing these treatments, will my license be on the line?"

Short Answer: Performing Thermage under the above circumstances is practicing medicine without a license.

Longer Answer: There are a couple of problems the question alludes to. First, the 'boss' appears to be someone other than a physician. Non-physicians can not purchase medical devices restricted by the FDA to physicians only. Second, if patients would be treated medically without an examination or being seen by a physician that is absolutely illegal. Third, 'no physician on the premises' is a big red flag. Doctors can not extend their licence to Thermage any more than they can extend it to surgery. It doesn't matter that a physician is directing that the treatment be performed or that your boss thinks it's safe. Fourth, Yes, your licence is at risk. Anyone performing medical treatments without adequate oversight is going to be between a rock and a hard place if anything happens. Thermage (and every other medical treatment) have potentially harmful side effects. Don't think for a moment that you, the doctor, or the business are protected by a physicians medical malpractice if a treatment is performed illegally. (Always check with an experienced lawyer.)

Physician Oversight

Physicians are responsible for every treatment performed under their medical license. If it's a medical treatment, the physician is responsible and liable for the performance of that treatment. The state medical board has jurisdiction as to scope of practice and physicians can't extend the scope of their medical license.

Aestheticians and medical spa technicians performing 'medical treatments' are doing so under the license of a doctor. If the doctor can't extend his license to that particular treatment, it's not covered by his licence and is being performed illegally. Anyone, including the physician, involved with treating patients without legal medical supervision is asking for trouble.

Post your question as a comment on this post and we'll add the answers here.

Question: I really appreciated this article. But I'm wondering, what are the issues involving an registered nurse or nurse practicioner, both of which are entering the esthetics industry? Does a spa offering Botox with a np need a doctor on site? What if that np is working in a state in which np's can operate as an individual business? What options does a spa have with nurses as opposed to a doctor or esthetician?   Spalady

Answer: Nurse Practitioners (NP's) and Physicians Assistants (PA's) in some states have the ability to operate outside of the direct supervision of physicians.

Both must have an arrangement with a physician to supervise them and enter into an agreement with their supervising physician that gives access to the doc. PA's are limited in that they can not open up a business by themselves and have to report more directly. (Which is one reason PA's are more attractive to physicians since they can't just open up in competition with you.)

Registered Nurses (RN's) do not have the ability to operate outside of the direct supervision of a physician in the same way as NP's.

It breaks down as this: NP's and PA's may have the ability to provide medical oversight if a physician is not physically on site, RN's do not. You should always, always, always, have your lawyer check with the state since they're the ones who will decide.

Good advice from a lawyer I know is this: write to the state detailing exactly what you are doing. Do not try to sugar coat it at all. Ask for a written reply from the state saying that they have no problem with you. Keep this as documentation if something goes amiss. That way you have a state regulatory body saying that you were performing within the scope of practice. Excellent advice.

Read the comments since there is some elaboration on scope of practice.  

Cosmetic surgery demographics by patient age.

Cosmetic surgery market by age.

The cosmetic surgery market consists largely of white females who already are committed to the perceived value of such surgical procedures; 97% of them fall between the ages of 19 and 64, and nearly 1/2 of them will have more than one procedure (either different or multiple procedures, e.g., multiple face lifts).

The non-surgical market demographics are similar but with a pronounced skewing towards younger ages due to the popularity of laser hair removal and similar non age-related treatments.

DoctorsDirect.com: Book your appointment online?

 Sent by DocBiz from Alarm Clock:

A columnist at the Washington Post wrote an article today commenting that there is no Orbitz for health care. Doctors Direct would like to get there and has raised $2.5M in Series A funding led by Spark Capital . Tommy McGloin is the President and CEO of DoctorsDirect.com. Before joining DoctorsDirect.com, he headed MapQuest for 4 years and before that McGloin headed AOL Moviefone. This one doesn't compute. Users search for docs using a variety of paremeters and can than book an appointment. That's nice but DoctorsDirect takes a booking fee and it won't touch insurance. So if you are uninsured or too rich to care about insurance, Doctor'sDirect is a swell service. It doesn't add up why a seasoned lead like McGloin sees an opportunity here.

And from the Washington Post.

What's with the Medical Spa price wars? Cheap is no way to build a medical practice.

Medical Spa physicians always seem to want to offer the lowest price. Why?

I speak with a lot of physicians. One of the first few questions that I'm asked has to do with pricing. (read the MedSpa Business or Med Spa Advertising Q&A here.) Physician and medical spa owners seem to be highly agitated by not offering the lowest price in town. This shows directly a lack of competence and belief in their own abilities. If you can't imagine why anyone would come to you except that you have the lowest prices, you have big trouble.

Anyone who will choose you based on price, will leave you just as quickly. That's OK if you happen to be able to deliver services at substantialy reduced costs compaired to your competiton (think Wal-Mart) but it's certain death if your not the clear low-price leader (think K-Mart). Does your Botox, Restylane, Thermage tips, or staff cost significantly less that your competition? No.

The only sustainable business you can build is a reputation on something other than price. Make a decison about where you want to be and start moving in that direction. No woman ever recomended Surface to her best friend with 'they're the cheapest'.

From Seth Godins Blog:

Cheaper is the last refuge of the person who's not a very good marketer. Cheaper is easy and cheaper is fast and cheaper is linear and cheaper is easy to do properly, at least at first. But cheaper doesn't spread the word (unless you are much cheaper, but to be much cheaper, you need to be organized from the ground up, like Walmart or JetBlue, to be cheaper). They are, you're not.

Cheaper is a short term hit, not a long term advantage. Cheaper doesn't create loyalty, because the other guy can always figure out how to be cheaper still, at least in the short run.

Medical Spas Online hits 5000... So where's the beef?

It's something of a surprise to see that Medical Spas Online now has more than 5000 unique monthly visitors. I feel somewhat remiss in that I haven't been posting as regularly as I might. While I'm not big on excuses, here's what's been going on and a few things in the pipe.

• Surface inked a deal with a VC firm that's resulted in the creation of a new company, Surface SE (South East). This new company is headquartered in Nashville where the first SurfaceSE Beta site is about to go live. SurfaceSE is charged with a much larger roll out that should include a number of locations in the South East of the country. (There will be more on this as it progresses.)
• Blogging does actually take time and it's common for the occasional break to recharge the batteries.
• I've been devoting some time to two other start-ups that have resulted both from this blog and speaking to physicians:
• A business start-up book for physicians and businesses on how to conceive, open and run a cosmetic practice. The book will be available for download from this site when it's completed.
  
• And a consultation and training program for physicians in the aesthetic market. (You can read more about what I think of most of the current crop of consultants and franchises here.) I receive between 5 and 10 inquires for advice, training or consulting each week and have decided to put my money where my mouth is and build a program that works. I envision this new training program to be much more along the lines of 'mentoring' and consist of 'how to' training in the business, operations and marketing aspects of the business as well as medical training. You can send me an email (jeff 'at' surface-med.com) if you would like to be alerted when this system becomes available.
  
• There are a number of businesses that I'm either starting myself or advising others on. You can read more about these on my blog that deals with business outside of cosmetic medicine. You can read my Nimble business blog here.
  

If you haven't done so already, check out the Physician to Physician and Business Discussion areas. There's some great info.

Is medical advertising ethical?

There is a new discussion area: Advertising + Marketing

 
The prevalence of advertising for cosmetic medicine brings out the charlatan element. Plastic surgeons and cosmetic dermatologists have been in this arena for many years but the addition to the market of doctors who have never advertised their services before brings the ethical conflict up more and more.

Here's what the American Medical Association says about advertising medicine:

2.2 Advertising
a. Confine advertising of professional services to the presentation of information reasonably needed by patients or colleagues to make an informed decision about the availability and appropriateness of your medical services.
b. Make sure that any announcement or advertisement directed towards patients or colleagues is demonstrably true in all respects. Advertising should not bring the profession into disrepute.
c. Do not publicly endorse therapeutic goods as defined under the Therapeutic Goods Act 1989 (C’th), contrary to the Therapeutic Goods Advertising Code.
d. Exercise caution in publicly endorsing any particular commercial product or service not covered by the Therapeutic Goods Advertising Code.
e. Ensure that any therapeutic or diagnostic advance is described and examined through professional channels, and, if proven beneficial, is made available to the profession at large.

Thermage: Lunch with the VP of Sales.

Today I had lunch with Clint Carnell, Vice President of Domestic Sales for Thermage.

I  met Clint over at a local pub in Park City and we sat down to chat about Thermage and Surface. (Clint didn't know about this blog.)

Clint is a fairly recent addition to Thermage's management team as the Vice President of Domestic Sales. Most recently, he came from the company Bausch & Lomb, where he oversaw the turn-around of a 25M division of B&L. He has also worked for Johnson & Johnson and has a long resume of larger companies. Clint seems to be a really nice guy. I liked him tremendously and I thought he really understood the marketplace and what was taking place.

I have had problems with Thermage in the past, mostly having to do with the way that I think they were selling their devices to physicians. Over our pizzas, Clint and I talked about a number of problems that I think Thermage is facing and what's happening to the market and physicians. His answers were educational, not in the least defensive, and straight forward.

Themage has been saddled with a number of problems in the past; technician error, physician education, efficacy, pain, expense, and other issues have combined to cause a recession in what was initially a promising growth curve for the adaptation of radio frequency skin tightening. In my opinion, most of this had to do with the way that Themage sales reps were presenting the device to physicians as a fire-and-forget type of technology that you could have a technician performing in the back room while you saw other patients. No physician oversight led to a vicious cycle where, since the treatment was painful, technicians would continually turn down the treatment in order to get the patient through, the patient wouldn't see any results and would complain to the physician, and then the physician would get pissed off. This cycle has ended up leading to declining Themage sales and devastating impact to Thermage's reputation among physicians.

Starting in about September 2005, Thermage has experienced a rebirth of sorts, in part because of a new management team and sales force. They've introduced bigger treatment tips (effectively reducing the price per area) and they have a number of new areas including eyelids and body treatments. They're bringing out a number of additional tips that will go deeper into the dermis to treat cellulite, as well as some specifically for fine lines around the eyes.

This has resulted in Thermage actually starting to experience growth in sales again, which is both good for them and treated patients. They have retrained their sales force and are looking to not only offer additional treatment tips for their device, but potentially expand their offering. The end game of course is that Thermage expects to become a publicly traded company in the future. (Clint and I spoke about this, but since I'm unsure what he may consider confidential I won't go into details.)

Thermage is also supporting the top Thermage providers significantly better than they have in the past. Two years ago providers were treated exactly the same whether they provided one Thermage treatment a year or 1000. As a business, Thermage has decided that the top providers are both more lucrative as a business as well as potentially more beneficial to the patient since Thermage is one of those treatments that is very treatment dependent. It is not a push button technology and results can very dramatically depending upon the treatment levels and number of hits.

(One of the gems that Clint dropped was that they are not focusing more and more of their marketing efforts on those physicians who are actually performing Thermage and expect that other physicians in the market place will look to those leaders and as they become mass market adaptors of this technology.)

In discussing the medical spa market that exists now, Clint was pretty much in agreement with me about the state of the market including medical spa consultants and franchises.

Interestingly, when the discussion turned to plastic surgeons and dermatologists, Thermage (which had been focused almost exclusively on these two specialities in the past), is becoming more and more open to what Clint described as "Blue Collar Doctors" who are physicians that are treating hundreds or thousands of patients a year that might potential be outside of cosmetic medicine as a speciality.

It'll be interesting to see how the plastic surgeons and dermatologists respond to this since there was discussion also about the recent laws passed in Florida preventing non plastic surgeons or derms from overseeing outside clinics.

I talked to Clint a fair amount of time about what their competitors were doing, including Cutera's Titan,  Palomar's new Fraxel like head and a number of others, and asked him specifically as to whether or not Thermage was worried that some of the technologies were being developed could potentially cause Thermage problems. Clint responded that he expected some good technology development out of all of these competitors and I was pleasantly surprised to see that he didn't take the opportunity to bad mouth any of them, but he felt  that Thermage was still the "gold standard". Our own physicians tend to agree with that statement.

But Thermage faces significant hurdles Fraxel, Cutera's Titan IR head, Palomars Fraxel-like head, and a number of other technologies that are being developed and are getting better. Thermage is going to have to become more than a one trick pony in order to survive as the market consolidates and Clint expressed that was indeed their understanding as well. It will be interesting to see if Thermage is able to execute over the next 24 months.

I was impressed with Clint and if he's representative of Thermage's new look I think it bodes well for Thermage.

Thermage is comission. Titan & Fraxel are hourly.

As business models: Thermage is commission, Titan & Fraxel are hourly.

(Thermage + Fraxel discussion threads)

I had lunch with Clint Carnell, Vice President of Domestic Sales for Thermage today. While we were talking about the current state of the medical spa market he referred to the Thermage business model as 'razors and blades' and it triggered the thought that there was an analogy with commission vs. hourly employees.

Physicians seeking to minimize risk will often try to hire staff on commission with the hopes that they'll achieve two things; a motivated employee, and lower cost per treatment since they'll only be paying a percentage of treatments that are being performed. Nice in theory.

Here's the flip side. Commission robs you of success. This is a business that has very high fixed costs, but once those costs are met, there is a large potential profit to be made. As a business, its usually preferable to absorb those fixed costs if possible and keep the profit rather than have it diluted by paying commissions.

(That's why Surface has decided to grow as an entirely company owned business rather than persuing franchising with it's associated problems. If you have the capital, wholy owned businesses offer the most success while franchises offer the ability to grow the business using other peoples money.) 

Thermage made a radical decision to offer the 'box' (razors) for near cost, and focus on selling the disposables (blades). Smart enough. But Thermage is not charging 100% markup. Thermage tips probably cost around $12-$16 dollars to produce (that's a wild guess) but Thermage sells them for $450 or more. That's a helluva markup and it's led to a built in profit potential for anyone who can figure out a way around it as well as being a source of friction with those who have to buy them. (I have yet to hear any physician anywhere think that Thermage tips are a 'great deal'.) Refurbished Thermage tips came on the scene soon after Thermage launched and have even been studied for safety and performance.

Thermage faces a challenge in keeping providers happy with paying a commission on every treatment they perform. If they can, Thermage promises to be the gold standard for the foreseeable future.

California Medical Board: Use Of Mid-Level Providers for Lasers, IPLs, Botox, & Other Treatments

The State Medical Board of California has addressed the Use Of Mid-Level Providers for Lasers, IPLs, Botox, & Other Treatments. (Links to PDF) It's a common question that is often brought up over in the discussion areas.

You should read this information carefully. Although it's specific to California, the information is substantially similar to many states.
Read also: Medical Spa Legal: How to...  l  Medspa Legal Discussion Area  l  Building a Medispa inside your practice  l  Medical Spa Franchises

From the Medical Board of California:

Due to an influx of calls to the board regarding who may perform what type of medical / cosmetic procedure and where, the following frequently asked questions and responses are provided for informational purposes and as a reminder. This is a reprint and update to an article published in the October 2002 Action Report.

Who may use Lasers or Intense Pulsed Light devices to remove hair, spider veins, and tatoos?

Physicians may use Lasers or Intense Pulsed Light devices. In addition, Physician Assistants and Registered Nurses (not Licensed Vocational Nurses) may perform these treatments under a physician's supervision. Unlicensed Medical Assistants, Licensed Vocational Nurses, Cosmetologists, Electrologists, or Estheticians may not legally perform these treatments under any circumstance, nor may Registered Nurses or Physician Assistants perform them independently, without supervision.

Who may inject Botox?

Physicians may inject Botox, or they may direct Registered Nurses, Licensed Vocational Nurses, or Physicians Assistants to perform the injection under their supervision. No unlicensed persons, such as Medical Assistants, may inject Botox.

I've been approached by a nurse to be her 'sponsoring physician' for her laser and Botox practice; would that be legal?

No. There is no such thing as a 'sponsoring physician'. Nurses may not, under California law, employ or contract with a physician for supervision. A  nurse may not have a private practice with no actual supervision. While the laws governing nursing recognize "the existence of overlapping functions between physicians and registered nurses" and permit "additional sharing of functions within organized health care systems that provide for collaboration between physicians and registered nurses" (Business and Professions Code section 2725), nurses may only perform medical functions under "standardized procedures." The board does not believe this allows a nurse to have a private medical cosmetic practice without physician supervision.

I've been asked by a layperson to serve as a "Medical Director" for a "medi-spa" that provides laser and other cosmetic medical services; would that be legal?

No. No one who cannot legally practice medicine can offer or provide medical services (Business and Professions Code section 2052). A physician contracting with or acting as an employee of a lay-owned business would be aiding and abetting the unlicensed practice of medicine (Business and Professions Code sections 2264, 2286, and 2400). To offer or provide these services, the business must be a physician-owned medical practice or a professional medical corporation with a physician being the majority shareholder.

I see these ads for "Botox Parties" and think that it has to be illegal. Is it?

The law does not restrict where Botox treatments may be performed, as long as they are performed by a physician or by a registered nurse, licensed vocational nurse, or physicians assistant under a physician's supervision.

Who may perform microdermabrasion?

It depends. If it's a cosmetic treatment, that is to say it only affects the outermost layer of the skin or the stratum corneum, then a licensed cosmetician or esthetician may perform the treatment. If it's a medical treatment, that is to say it penetrates to deeper levels of the epidermis, then it must be performed by a physician, or by a registered nurse or physicians assistant under supervision. Treatments to remove scarring, blemishes, or wrinkles would be considered a medical treatment. Unlicensed personnel, including medical assistants, may not perform any type of microdermabrasion.

I would like to provide non-medical dermabrasion, and hire an esthetician to perform that and also cosmetic facial and skin treatments. What do I need to do?

It is legal for physicians to hire licensed cosmetologists or estheticians to perform cosmetology services, if they have obtained a facility permit from the Bureau of Barbering & Cosmetoloty. All licensed cosmetologists, including estheticians, must perform their services in a facility with a permit.

Why can't I use a medical assistant instead of a nurse?

Medical assistants are not licensed professionals. While doctors have become accustomed to their assistance in medical office practices, medical assistants are not required to have any degree, nor do they have to pass an examination or be licensed. For that reason, the law only allows them to perform technical supportive services as described in sections 2069-2071 of the Business and Professions Code, and Title 16, California Code of Regulations, sections 1366-1366.4.

What is the penalty if I get caught using or helping an unlicensed person to perform medical treatments?

The law provides a number of sanctions, ranging from license discipline to criminal prosecution, for aiding and abetting the unlicensed practice of medicine. Physicians could be charged with aiding and abetting unlicensed practice, and the employee could be charged with the unlicensed practice of medicine. 

I understand that all of these practices may be illegal, but I see advertisements all the time for these kinds of illegal practices. What should I do?

You may file a complaint with the Medical Board. To do so, please send the advertisement, the publication name and date, and your address and telephone number where you may be reached,  to our Central Complaint Unit at 1426 Howe Avenue, Suite 54, Sacramento, CA 95825. The board will contact the business, inform them of the law, and direct them to cease any illegal practice. If it is simply the advertisement that is misleading, they will be directed to change or clarify the ad.

It is impossible to cover all of the relevant legal issues in a short article, and these questions and answers are not a substitute for professional legal advice. Physicians may want to consult with their attorneys of malpractice carriers about the use of their office personnel. In addition, the board has a number of written materials with more thorough information on this subject. There are legal opinions on the use of lasers and dermabrasion, materials outlining the legal limitations on use of medical assistants, as well as the actual statutes and regulations. To request any of these documents, please contact the Medical Board of California, 1426 Howe Ave., Suite 92, Sacramento, CA 95825, or call (916) 263-2389.