Medical Spa Interviews & Answers: Your help needed.

I've had a couple of phone conversations with some of the physicians who regularly post on this site and have come away with some thoughts for a series of interviews with doctors and professionals running successful medical spas. It seems that there's an insatiable desire for more information on treatments, marketing, operations, and almost everything else that goes into organizing and running a successful cosmetic practice.

I'm going to be contacting a number of clinics and physicians around the country (or outside) that run what I deem to be successful practices and interview them. I have a tentative list of questions but I'd like to enlist you, my dear readers, to help me make sure I'm not missing anything that's relevant.

So, I'm asking for some help in formulating the questions, the more detailed the better.

Please post your list of questions as comments. If the repeat, great. We'll know that lots of people are interested in that information.

I plan on generating a report that will be organized around the questions rather than inline, so you can see what all the answers are to the question rather than collating that information from separate interviews.

Key No. 5 to MedSpa Success: Know Thy Competition

Knowing your competition inside and out is one of the most important prerequisites to opening an esthetics practice or a med spa.

Ideally, you do not want to put yourself in the middle of a host of established competitors. If you do this, you will be forced to try to take business away from your competition in order to survive. This often results in cost cutting and promotions that have a detrimental result on your bottom line. Ideally, you will be able to secure a location which will enable you to reach a largely "untapped market" in your community. You can also establish a unique "value proposition" and carve out your own niche for your special blend of services and products.

Before you make your final decision on your location, make a detailed analysis of your competition. Clip and study their newspaper ads, visit their web sites, and call them for information. Have someone make numerous telephone calls to listen to sales consultations and gather treatment menus. Have friends and family members visit competitors and schedule consultations and treatments. Oftentimes you will be surprised how the picture painted by the advertisement or web site is a far cry from reality. Once you have thoroughly checked the local competition you will know precisely what services they offer and what you will need to offer to not only be competitive but to differentiate your business from everyone else. Pay careful attention to the services and products they offer as well as the number of employees they have and the credentials of their staff. Determine whether or not they are a true medical spa or not. If they have only a token "medical director" you will want to position your clinic as one in which the physician has active involvement in every step of the process. Enlist the aid of family and friends to make visits to med spas in the area, schedule consultations and treatments to enable you to truly evaluate the playing field. Your research will help you a great deal in designing your own unique service menu and setting prices at the highest levels the market will bear. It will also enable you to offer services and products that no one else in the area offers.

A thorough analysis of the competition will help you make your med spa unique by creating a special niche that will help you stand out from everyone else. Find and fulfill a need that will make you stand out from the crowd, no matter how crowded the playing field is. You might decide to focus on a particular specialty—such as acne treatments, mesotherapy, or injectables such as Botox and Restylane. Other options are a focus on anti-aging treatments or a med spa for men. Many marketing consultants recommend developing a "signature service" which you can promote heavily and which can be your claim to local fame. No matter what services you decide to provide, let your uniqueness be your selling point.

Before you decide to transition to an aesthetic practice or open a medical spa, it is important to research the demographics and locations of competitors in the area you are considering for your location. It is critical that you find answers to each of the following questions before you take the plunge:

a. Do the demographics (i.e., per capita and family income, etc.) of your proposed location support the types of procedures you intend to offer?

b. Is there a need for a medical spa in the area?

c. Is your location too close to a competitor?

You can determine the socioeconomic makeup of your proposed location by gathering information from the U.S. Census Bureau (www.census.gov), the town clerk’s office, and local real estate agencies and business organizations in the area. Check out the foot traffic in and around your proposed site. Excellent foot traffic can provide a significant boost to a start up operation. High visibility, convenience and free parking are all extremely beneficial. Strip malls have turned out to be excellent locations for laser centers and medical spas because they offer both visibility and accessibility. If you have the luxury of negotiating a lease with an option to expand in the future you may want to consider starting small with the plan to enlarge your space and staff as your business grows. A shorter lease with options for renewal is a much safer and lower risk proposition than a long term lease.

The Third Key to Med Spa Success

As the medicalspamd.com blog continues to tell us the ongoing saga of med spa woes and the struggling and/or controversial med spa franchises and colossi (or colossuses) such as American Laser Clinics, DermaCare, et al, I would like to try to continue an examination of the various fundamentals necessary for establishing and maintaining a financially viable med spa business model. As I read about the various blogs detailing the colorful exploits of the enigmatic medical spa founders including Mr. Mudd, Mr. Jones, Mr. Engelmann, Mr. Buckingham, et al-- I also cannot help but wonder if it is not really the same person flying from city to city stirring up all this anger and frustration?

Key to Success No. 3: Location, Location, Location.

The three most famous words in real estate are also very important for the location of your med spa. Selecting a poor location can make everything else you do a chore. If your location is hard to find, or is in an area with unsuitable demographics, you will find it very hard to build the patient base you need for success. Some of us have turned down higher priced retail facilities with excellent walk-in or drive by traffic potential in favor of hard to find industrial or "medical" spaces for budgetary or other reasons. Don't forget that if you try to save money by setting up a "destination location" you will have to spend significantly more on marketing and advertising to generate adequate traffic. Choosing a highly visible and desirable location with convenient parking is one of the most efficient ways to insure an adequate flow of patients right from the day you open your doors. In most cases paying higher rent for good foot traffic and the right demographics saves money in the long run. Keep in mind the fact that many med spas spend between $10,000 and $20,000 per month on advertising-- even more in some cases-- when you are haggling over rent for various locations. Don’t be “penny wise and pound foolish”. The exorbitant rent necessary to secure a first class location may prove to be insignificant when compared with the cost of driving patients to a “destination location”.

Since medical spas offer purely discretionary services that are in most cases moderately expensive, in most cases you will want to establish your clinic in the most upscale neighborhood you can afford. As a general rule, most patients like to visit a clinic that is within five miles of their homes. Before you decide on a particular location, you need to evaluate the demographics. This is a make or break research project that many med spa owners have omitted and paid the price down the road with business failure. By conducting primary research such as focus groups and surveys you can learn a great deal about the community. You can identify the socio-economic make up of your proposed location by obtaining information from the U.S. Census Bureau (www.census.gov) as well as contacting city offices, local real estate firms and the local chamber of commerce for demographic information. You can also obtain this information from professional consultants as well as through Internet research.

It is also usually a good idea to try to find a location where you will not be right next door to a number of competitors. If you find an area where no other med spa is located within a five mile radius you have the opportunity to be the only game in town for your nearby residents.

Med Spa Success Key No. Two: It Takes Money!

In an attempt to perhaps encourage a shift of the current focus of this blog to helpful suggestions for business success (rather than focus entirely on problems with one particular franchise and equipment and clinical issues) I am continuing my post with a discussion of a number of the myriad factors that will make the difference between your success or failure in this enterprise....

Key No. Two: It Takes Money to Make Money.

 
Everyone knows that it takes a fairly substantial capital investment to start any business. We have all heard stories about businesses being started with an initial investment of only about $200.00 years ago (the Curt Carlson (Radisson Hotels, TGI Fridays, etc.) legend), but that doesn't happen very often in today's world. If you don't adequately capitalize your business from the outset, you will not be able to properly take care of any of the 15 keys to success and you will fail. Start up expenses are important, but equally important is your ability to provide an adequate cash flow for the business during the first several years to keep the boat afloat as you make the mistakes along the way that we all make-- no matter how well prepared or well funded we are.

Many of us think nothing of spending $500,000 or more on our education, but then try to start a business on a shoe string. For your med spa, even a single room with adequate equipment and supplies may set you back from $100,000 to $300.000 depending on whether you lease or buy your equipment and how many devices you decide to purchase. Oftentimes you will be able to negotiate a substantial portion of your build out expenses with your landlord, and even roll a certain percentage of these costs into your lease. For a larger med spa, many physicians have financed over a million dollars for the proper set up (my build out of 2800 sq. feet -- for example-- was $250,000 and my equipment retailed for over $500,000). Once you are established you will face difficult decisions each day about how many employees to hire, how much to spend for equipment and product, and how much to allocate to advertising and promotion. As a general rule, the more you spend on advertising and promotion the higher your gross revenues will be-- provided you have adequate staffing and your personnel are well trained, motivated and suited for the task. Since sales of aesthetic services and products are 100% discretionary-- as opposed to traditional medical services which are largely paid by insurance and are generally more of a necessity-- the difference in sales results with an excellent and properly trained staff as compared to a mediocre and poorly trained staff can be astonishing.

A big mistake that many med spa owners have made is that as expenses rise and profits shrink they often panic, throttle way back on advertising, and try to "get by" with a smaller staff. The end result of this scenario is that the clinic gets into a "death spiral" which oftentimes leads to insolvency or bankruptcy.  Don't allow this to happen to you. Start with a sound business plan and adequate financing for at least twelve months. If you sell treatment "packages", don't succumb

Med Spa Guy

MED SPA WARS

A LONG TIME AGO... IN A GALAXY FAR, FAR AWAY...

 
It is a period of med spa wars throughout the nation. Rebel franchisees, striking from all corners of the United States and in particular from a weblog known as www.medicalspamd.com .... have caused the collapse--or near collapse -- of several of the leading med spa franchises. Many other med spa owners and physicians attempting to cash in on "med spa mania" are also struggling financially. How do you make a profit at this???

No doubt, as anyone who has been reading this weblog lately has discovered, the operation of a "medical spa" is by no means an easy proposition. Certainly-- as many of us have discovered-- it is not a get rich quick scheme. For some of us it has been a "go broke quick" reality. What can we do to increase our likelihood of succeeding in this challenging enterprise? I have come up with "15 keys to success" in an attempt to share some of the things I have learned getting arrows in my back over the past five years. This exercise will hopefully stimulate some dialogue from others who may be able to provide additional insights and suggestions. Rather than just "slinging mudd" at various nefarious individuals out there (who shall remain nameless) I hope we can move into some helpful debate about the most essential fundamentals of the business. I will start with the first  "key to success" and deliver several more a few days down the road.

Key No. One: Recognition that a Med Spa is a Business.

Even though there are a number of viable ways to add aesthetics to a "traditional" medical practice, many physicians who decide to expand to aesthetics seem to forget that med spas are similar to any other retail business. This means that all the basic principles applicable to other businesses-- from fast food to night clubs-- apply to medical spas as well. Let's start by mentioning a few things that medical spas are not:

1. "A Sure Thing": A successful med spa is certainly not a "sure thing". Just because you are doctor, or because you spend a great deal of money on equipment and/or a beautiful build out, does not mean that your venture will succeed. You will need to do all the "right things" that any business owner has to do to succeed with this venture. You will need a solid business model and business plan, and you will need to execute on this plan. You will need to hire the right people, train them properly, implement cost effective marketing programs, purchase the right equipment for your needs, and work hard. And you will find out quickly that-- without an emphasis on "sales"-- no business can thrive.

2. "A Profession": During the "golden age of medicine" it was possible to earn a decent income in medicine without the need for advertising, marketing and "selling". Advertising was traditionally frowned upon by the medical community. The golden age has been replaced by managed care.

3. "A Calling": Among the options that exist for doctors wishing to move in an aesthetics direction are the "100% med spa" option, the "50%/50%" option, and the "single room" option. Starting your med spa as a "sideline" -- whether it is a single room dedicated to aesthetics or a side-by-side med spa operated alongside your existing clinic-- can be the most conservative approach and is probably much less risky that a separate, stand alone facility. However, even the single room approach has its challenges. No matter what scale of operation you implement, it will still require compliance with every single one of these 15 keys to success.

Recognition that a med spa is a business requires you to embrace the fact that sales is the cornerstone of any successful business. Sales is a requirement-- not an option. The fact is that most people simply do not like sales. Many of us are afraid to sell because we think that a successful salesman has to be pushy nd obnoxious. Medical professionals have lived for decades in a world in which sales was considered either unethical or beneath their dignity. If you are not able to embrace the critical importance of sales to your business you will be doomed to fail. Marketing and advertising are also important factors, as these activities will cause your telephone to ring and prospects to walk through your doors. But the necessary "internal sales" activities that take place inside your facility are even more important. Salesmanship is a skill and an art that needs to be learned and fostered, and it is the lifeblood of any successful medical spa.

In addition to embracing and fostering sales and marketing, you will need to have a focused commitment to maintaining up to date profit/loss statements and striving for a satisfactory return on your investment. You will need to do your homework and make sure you understand the myths and realities of the economics or "metrics" of a successful med spa. You need to commit adequate financial resources to your venture so you do not set yourself up for failure. You will need to cover all of the bases discussed in these 15 keys to success, from your location to your hiring practices and your ongoing staff development. In the initial stages of your venture, you will want to enlist the help of legal and financial consultants to review your business plan with regard to local and state regulations, zoning issues and privacy laws. You will need to arrange for the necessary insurance policies to cover all of your operations and property. The issues you encounter in your preliminary investigation may have an impact on the location or set up of your medical spa and the services you decide to offer, as well as the staff you decide to hire and the procedures you establish for providing treatments, charting and storing records. You may also wish to enlist the assistance of marketing, public relations and web site experts to assist you in these areas as well. All of these programs should be in place before you open your doors.

Dermacare, Sona, American Laser Centers, & the rest.

We'll, since I posted that Dermacare sent Medical Spa MD a cease and desist letterthere's been a flury of activity with Dermacare franchise owners commenting and emailing me.

DermaDoc comments: "Just checking to see if anyone has heard from any other of my fellow Dermacare franchisees? News about this blog is circulating around the organization but in somewhat hushed tones, presumably to not incur the wrath of the corporate behemoth. We'll keep watching."

Actually, I've received a couple of emails. I'm surprised to see how clandestine this has become. Evidently all the owners feel that Dermacare would retaliate in some way if they were able to be identified.

It's not my intention to do a hatchet job on anyone. Certainly, there are Dermacare, Sona, American Laser Clinic, Inaara, Solara, Sleek, and other medspa franchise owners who are among the most active readers and contributers to this site. 

But, in my opinion, the current batch of  franchisee medical spas and laser clinics have serious flaws for both physicians and consumers. Of course some medspa franchises are worse than others, but I'm not a big fan of any of the current systems. Perhaps they'll change. Perhaps they'll win me over. Certainly it's obvious to those who do comment that I'm not editing them in any way. If there is anyone who's a big proponent of any medspa franchise, I'm happy for them to comment and explain their position and detail their benefits.

Of course, I've asked for happy medspa franchise owners to comment before... So far no takers. Not one. From the hundreds and hundreds of comments on this site, there's never been one glowing review from a happy medspa franchise owner. The silence is deafening.

Of course there's sometimes manipulation. I posted a poll on Does Thermage work on this site and know (I can see IP addresses) that there were Thermage reps who cast a large number of positive votes. (I'm going to redo that poll along with others which will make it harder to cheat.)

Just wanted to be clear since I know that Dermacare, ALC, Sona and the rest are reading this blog, let's hear from some happy medspa franchise owners. Comon' guys, here's your chance. Let's hear something along the lines of Midwest's comments about this site on the post from that Dermacare letter.

 Here's some snippets... (This makes me blush.)

" Oh sweet medicalspamd...you are the Angie's List of the cosmetic industry!"
"Thank God I have you as a resource medicalspamd."
"Viva MedicalSpaMd..."

See, Let's hear that from a medspa franchise owner. And no, Midwest is not my mom. 

Medspa Q&A: Legal: Can a non-physician employ a physician?

 This question pops up regularly so I'll bring it over here and answer it.

Question: Is it illegal for a non-physician owned medspa franchisee to employ a medical director? Can a non-physician owned medspa franchisee (physician owned franchisor) legally employ its own medical director? - ELH

ELH, Thanks for the question. Here's the answer. 

Answer: A non-physician can not employ a physician OR own a medical practice that employs a physician OR partner in a medical practice with a physician. Only physicians can employ or partner directly with other physicians.

Most of the generally accepted principals of business do not apply for one simple reason; You, as a non-physician, man not be involved in the practice of medicine in any way. 

Sure, hospitals and HMO's employ physicians but they have lobbyists in Washington, you do not. This is an absolute so I'll state it again, non-physicians can not employ physicians as employees. There are no exceptions (no matter what a medspa franchise might say.) Read the WSJ article on unhappy medspa owners here.

Clarification: That non-physicians can not employ physicians is an absolute rule. However, there are ways in which non-physicians can do business with physicians but they require a careful legal setup that doesn't violate the law.

• Example 1: You have a spa with a visiting physician who comes in and performs Botox and Restylane. You 1099 them at the end of the year as an independent contractor. WRONG: You can not do this as you would be employing a physician.
  
• Example 2: You have a spa and a physician solicits you to allow them to come in and treat your clients. The physician and you plan to split the revenue. WRONG: This would put you in a partnership with the physician as well as potential trouble for splitting fees. Big, big, trouble.

 Additional: In situations where a medical spa is set up incorrectly, the physician will be at risk. Every malpractice policy will be voided if a physician is practicing outside of the law, which this is. A physician who gets in trouble in a situation like this will be completely on her own and my best guess is that the prosecuting party will be happily pointing this out in court... not a good place to be.

The non-physician will be at risk as well. A physician can shut down your business at any time by refusing to extend their oversight to any medical treatments. The state could also be a problem since if it's found that you own a 'medical' business, you'll be shut down by the state tute suite.

You should be very wary about how you state what you own. While I've used examples of what you may not do, I've stayed away purposefully from exactly how you can legally set this up since I don't want to give advice that someone might follow and get themselves in trouble. Consult a lawyer who specializes in this area of medicine.

Medspa Q&A: Planning ahead for your medical spa.

This post is part of Medspa Q&A, questions that I receive from physicians. If you have a question you'd like me to answer, you can email it to me here.

Hello Jeff,
Thank you for your reply.

I graduated medical school in the summer of 2003, in Denmark, Copenhagen, and have since completed my internship (11/2 years) and worked temporarily in a general practice in Norway. I am currently on maternity leave and will be starting a PhD program in the summer of 2007.

I’ve always wanted to be a plastic surgeon. Plastic surgery seemed like the natural choice for me as I’ve always been very creative and love the combination of aesthetics and surgery. I love the challenge of correcting disfigurements and doing cosmetic enhancements.

I’ve had several opportunities to shadow other plastic surgeons and found their work exciting, but also somewhat crude and that’s why I really like the idea of non-surgical cosmetic medicine.

I have had plans for a long time of running my own clinic someday. My sister is a cosmetologist/spa manager and she introduced me to your website. We have often talked about working together and incorporating our different, but very complementary skills into a health enhancing, cosmetic business.

Until I read your website, I had no idea that medical spas existed. It seems like the perfect model for us. We have already committed to opening a medical spa.

I was hoping that I could get some information from you on how to start up such a practice, what I’d need and where I could be taught how to use fillers (e.g. Restylane, Botox, Liposolve, laser, point lift and other anti-aging techniques. I plan to learn as many techniques as possible at the same time as I’m doing my PhD. A bit of a mouthful, I know. I hope to start up the medical spa shortly after the end of my PhD program, which is roughly going to last 3 years. It will probably take longer than I anticipate and I’m also ready for that.

I’d be happy for any advice or information you could provide.
Sincerely,
Dr. E B...

Ask a question, get an answer. Here goes...

It’s certain that I know a lot about my own company Surface. I’ve opened a few clinics myself and consulted more than a few doctors opening medical spas. You’ll have to decide if what I’m about to write makes any sense for your situation.

Decide how much money you’ll need to make: Since you’re at the beginning of your career, you’re in a much different situation than the many physicians I deal with who are looking to change their practice or add to an existing clinic. One of the benefits is that your overhead is probably as low as it’s going to be for a while. (Existing practices offer different challenges.) So ask yourself; How much money do you need to make.

Many doctors make the mistake of opening a new medical spa and only after they’re in business do they figure out that they’re not able to make the money they need to take home and keep the business afloat. When you’re thinking about your startup and recurring costs, keep in mind that you’re going to have to eat. Can you live on the cheap for a while? There’s a distinct possibility with any business. Don’t think that you’re going to be taking home 20k the first month, or any month during the first year.

Decide what kind of medical spa you want to start: Perhaps the most common problem that doctors get into is the leaping before you look strategy of business. Here’s a tip: Day spas do not make any money. As a rule, the average margins for day spas in the US is 6%. Medical practices generally lie in the 50-60% margins. Physicians hear day spa and start thinking this is great. The day spa will bring in all these patients and my hard working staff will kick them upstairs for face lifts and boob jobs. Sorry. It doesn’t work that way.

So, decide very carefully about the medical spa you’re starting. The answer to this question will largely depend on what your own background is and where you have connections. What is your current situation? How is it structured? What’s the legal and liability issues? Who owns what? What’s the offering and pricing? Who’s responsible for the advertising? Who’s running the operations? Get the picture? Not easy to know in advance but there it is. This is Retail Medicine and it’s significantly different from the mainstream.

Find someone who knows more than you: This is not a recommendation buy a medspa franchise or hire a spa consultant. The truth is; The only people I recommend that you really talk to are already running successful medical spas of the type you’d like to emulate. Salesmen, professional trainers and spa consultants are in the business of retailing their services to you. (Read: Inside a Sona medspa franchise series.)

You’re probably going to research training, seminars, and conventions on the net. You’ll find lots of people telling you that they know the secret. I once actually sat in a training session at the NY Medspa Expo with the title: Make $200,000 per treatment room. Right Now! The expert advice to turn each room into a gold mine? Never let a patient leave without rescheduling a future appointment and buying at least $100 in retail. Utter tripe and a good way to kill your own reputation. I could go on ad nauseam but you get the idea. Find someone who’s in the business of running medical spas. Not a doctor who already does Botox, they can’t teach you what you need to know.

OK, so that said, what does it take to start a medical spa? Well, here are a few principal ways I’ve seen physicians start cosmetic practices.

Start with a lot of money: Get $500,000, hire the best people you can find, and then count on not making much money for the first 6-12 months until you’re able to build a client base and some sort of reputation. Of course you might make any number of mistakes in hiring, advertising, or choosing the wrong technology.

Medical Spa as a sideline: Build your aesthetic practice alongside your existing one. This is probably the most common route. It seems the easiest and probably has the least risk. But it still has challenges. When you hire full time employees your burn rate can skyrocket quickly.

(There’s often the esthetician who has ‘hundreds of clients’ that they’re willing to bring in exchange for a regular paycheck. Sorry. Any aesthetician who has hundreds of clients is not looking for a job. I can’t tell you the number of time I’ve heard variations on the ‘the aesthetician was supposed to bring the clients in’ theme.)

The advice here would be to start slowly and learn fast. If you’re going it alone, spend as little as possible until you have to. Never buy redundant technologies. Get professional help from a reputable advertising agency with medial spa experience.

Get lucky: I know a few good luck stories when it comes to starting a medical spa but not many and It’s not the kind of odds you’d like to bet on.

Hope this helps.

Black Market Botox....A Better Buy?

Botox: $50 for 100mu?

Thought that would grab your attention.  I've heard you can find Botox on the internet for that price.  I wouldn't recommend it.

Occasionally a patient will ask me to explain why those people in Florida "died from Botox."  They are referring to a story that was widely publicized in early 2005 about some people in Florida who were sent to the hospital after receiving phony Botox injections and becoming paralyzed.  There was another story around the same time of a woman in California who died from Botox injections done by a hair stylist.  Hair stylist?  Yes, you read that right.  The very important distinction is that they didn't actually ever have Botox injected into them.  They were duped and actually had raw-grade Botulinum toxin type A used on them. 

Right about now you might be thinking, well that would certainly never happen to me.  My vials all say Botox and have the purple, red, orange colors on the box.  Matter of fact, I'm guessing that the guy in Florida thought his product was safe since he used it on himself.  I actually know a physician who had ordered, but never used, this killer Botox that he ordered from the same source. He thought he'd found a better source to get the real thing at a cheaper price.

Botox is a trademarked name for a substance that is made by Allergan. Anything else is phony and potentially very dangerous and most certainly not worth the savings that might be had.  This bootleg industry has become so prolific that I wanted to be sure everyone knew what to look for and what to avoid.  Fake Botox is frequently made in China or Korea. Authentic Botox is made and distributed world wide by Allergan and has a hologram indicating it's credibility.

To view the hologram on a vial of Botox:

1) Examine the vial under a desk lamp or fluorescent light source

2) Rotate the vial back and forth between your fingers; look for horizontal lines of rainbow color on the label

3) Confirm that the name "ALLERGAN" appears within the rainbow lines.

I'm guessing that this black market industry will soon learn how to counterfeit the hologram as well.