The Pros and Cons of Medspa Arrangements for Physicians

Medical spas are exploding in popularity and those who want to launch a medspa legally need a physician to be a part of the equation. Learn the potential risks, benefits, and additional considerations to weigh before becoming affiliated with a medspa.

The Pros and Cons of Medspa Arrangements for Physicians

Has a mid-level provider approached you about acting as the “medical director” of a proposed medical spa? Perhaps you have considered the idea, but you’re unsure of the issues relevant to entering a medspa arrangement. Like most physicians who have spent a decade or more earning a degree and licensure, you’re probably risk-averse to any situation that may impact that licensure. 

There are several methods for collaborating with mid-level providers. The most common method is through a Management Services Organization (MSO), an entity designed specifically to help with the administrative and non-medical aspects of running a practice.  Here, we discuss risks, benefits, and considerations to weigh when asked to enter a medspa arrangement.

Benefits of Medspa Arrangements

Cash-based Business

Insurance rarely covers injectables and fillers. Therefore, the medical aesthetic business is cash-based. This removes the need for additional administrative overhead costs like medical billers and staff to verify insurance benefits. The facility collects payment at the time of service.

Thus, owning or having an arrangement with a medspa can be profitable without necessarily adding a heavy workload. However, all patient money paid for medical aesthetic services needs to be paid to you, the physician, to avoid running into fee-splitting problems. Ensuring compliant compensation for all parties does require some proper planning. 

Enthusiastic Patients

Do you wish that your patients were happier to see you? In many specialties, patients come to you with real or perceived problems, often in distress. In stark contrast, people visit medspas because they want to look and feel their best. They think of aesthetic procedures as a gift to themselves and walk through the door full of optimism, not worry.

With no insurance-based stressors in the medspa environment, patients feel more in control of the financial aspects of the relationship. They consider the treatments an investment. If they have appropriately realistic expectations, they’ll leave the practice happy, knowing that they have taken steps to boost their confidence.

Lower Stress Cases

Physicians suffer burnout and mental exhaustion at a disproportionate rate. While being a physician in a medical spa is still a serious endeavor, the cases you’ll encounter at a medspa will be less stressful than in a traditional practice. With exceptions such as post-surgical scarring, dermatologically complex conditions, or painful skin conditions, aesthetic procedures are elective and the patients have decision-making control. This allows physicians to play a leading role in positive patient outcomes and patient satisfaction—without bearing untenable levels of stress.

Patient Safety

With your supervision, medspas can ensure patient safety and continue to offer reliable services. Unfortunately, many medspas operate without regard for the law or the oversight of a physician, creating a risky environment for patients and mid-level providers. Your participation in a medspa arrangement helps ensure appropriate patient evaluation, care, and treatment. 

Risks of Medspa Arrangements

The Buck Stops with Your Medical Judgement

Nothing in life comes with absolutely zero risks. When a mid-level provider asks a physician to step in as the medical director, the physician is really being asked to exercise medical judgment. You, as the physician in a medspa, will have sole authority to make medical decisions. 

Medical decisions include hiring other medical staff, including the mid-level provider with whom you would be working. If you are unfamiliar with that provider’s credentials or competence, you’ll need to investigate with the medical interests of the patients in mind. 

Nothing about being in a medspa arrangement, whether as a solo practitioner, with a mid-level provider via a collaborative agreement, or through an MSO, diminishes your requirement to exercise your independent medical judgment. And this requirement of a physician in a medspa is no different from the independent medical judgment expected of a physician in a traditional medical practice.

Misconceptions about Medspas and Negligence

As a physician, you know that there’s no way to completely insulate yourself against medical negligence claims. That is why the practice of medicine necessitates the purchase of professional negligence insurance.

Contrary to popular misconception, the services rendered at medical spas are very safe. This is true both in terms of patient satisfaction and incidences of medical malpractice claims against physicians or other providers.[1] In fact, most legal cases relating to Botox are against the manufacturer, and not against providers for professional negligence.[2] 

Furthermore, while there have been a small number of cases where a mid-level provider made an error and then both the mid-level and the physician were sued, the courts hold the acting provider responsible. In one case, a physician assistant (PA) misdiagnosed a patient’s skin condition, which led to the patient having an allergic reaction. The patient sued the PA and the physician, despite the fact that the patient had never met nor been treated by the physician. The court dismissed the physician from personal liability because he had nothing to do with the patient’s injuries.[3] 

Additional Considerations for Physicians

There are other business and personal considerations to make before agreeing to an arrangement with a medspa:

Malpractice Insurance 

You will need to notify your malpractice insurer that you are also working in medical aesthetics. If you are part of an MSO, the manager can agree to pay for the difference between your current insurance premium and your insurance premium with coverage for medical aesthetics. In addition, if your employer currently pays your malpractice insurance and you would require a new policy, the manager in an MSO can agree to pay that, too. 

Training in Aesthetic Medicine

Physicians with minimal aesthetics knowledge or training should consider taking some Continuing Medical Education on the topic. In the alternative, many injection and filler manufacturers offer certifications and training in best practices. It is crucial to ensure that you’re operating within a scope of practice that reflects your knowledge and training so that you can deliver the necessary standard of care to the patient. 

Documentation

Physicians and mid-level providers must both ensure proper documentation. The traditional medical role requires charting and other documentation for insurance purposes. That’s not the goal in a cash-based business. In a medspa, the charting and documentation focus on keeping an accurate record of patient services. This documentation also serves as protection from potential negligence claims. 

Supervision

Certain procedures require on-site physician supervision, which helps to ensure that the “med” stays in medspa. Which procedures require on-site supervision, versus which procedures merely require a physician to be available for supervision telephonically or electronically, is state-specific. For example, in Illinois, a physician must examine every patient before the administration of laser treatment. Any ablative laser procedure, such as laser skin resurfacing, requires physician on-site supervision.

Legal Entity Formation

You may want to create a legal entity, in the form of a Professional Limited Liability Company, Professional Corporation, or a Service Corporation, to further insulate yourself from liability. Through this entity, you could hire other mid-level providers to help run the medspa, granting you maximum flexibility. 

Is a Medspa Arrangement for You?

Ultimately, you may decide that a medspa presents a profitable, lower-stress opportunity to diversify your practice of medicine. But there are risks, too.  With so many entrepreneurs launching medical spas, you’ll need to assess the proposal—and the individual making the proposal—very carefully. Don’t work with just anyone! Make sure you can trust the person with whom you’ll enter into a medspa arrangement.

If someone approaches you about joining a medical spa, and you want the arrangement reviewed by an experienced healthcare attorney, please schedule a free consultation call with Jackson LLP: Healthcare Lawyers.


[1] This generalization is premised upon our nationwide survey of claims involving physicians’ medical negligence and Botox. While a few medical negligence claims were found in that survey, an overwhelming majority of the cases were against Allergan, the manufacturer.

[2] Most cases related to Botox are against the manufacturer or in other contexts outside of medical negligence by a provider.

[3] Paetsch v. Spokane Dermatology Clinic, P.S. 348 P.3d 389 (Wash. 2015). 

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.

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