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« Common Mistakes When Starting A Medical Spa | Main
Friday
May272005

How To Build A Medical Spa Inside Your Existing Practice

The physician’s conundrum

Everywhere, physicians are contemplating or engaged in expanding into the “medical spa” market. Seduced by the industry buzz around this hot new phenomenon, many doctors see the medical spa as a means to boost their income and eliminate the grind and countless headaches of their daily practice. They read about growth statistics, see dazzling new equipment at trade shows, watch competitors popping up, and fear that they may be falling behind the times. With pen in hand they’re ready to sign lease agreements, loan documents and lots of checks in order to catch up with a crowd of savvy entrepreneurs who know where the real action is. And the truth is that they may be right. Medical spas are the natural evolution of cosmetic medicine, and those who don’t join the revolution will watch from the sidelines as their fate is decided.

Medical spas are the forerunner of a revolution in cosmetic medicine. From Galen until now, the primary method of care has been through the skilled hands and individual knowledge of a physician. But that’s changing. The default method of care is becoming technology-based. Just as inn every other market, technologies are developed that replace an individual’s knowledge and skill.

Lasers, IPLs, radio frequency, infrared, personal DNA testing, Point Lift, Liposolve, Clear², PDT, telomere clipping, recumbent DNA technologies, bio-identical hormone balancing, anti-aging drugs, and a smorgasbord of other technologies in development promise to change medicine in the same way that computers, jet engines, and GPS have changed aviation. Technology now enables a technician (under medical supervision) to perform effective medical treatments and places the physician in a decision making and supervisory roll instead of being the primary practitioner. In the near future, physicians will have more in common with Neil Armstrong than the Wright Brothers.

Changing technology poses very deep problems for physicians. Technology allows easy replication and scalability, forces an unimaginably steep new learning curve on overworked doctors, and eliminates many of the barriers and protections that physicians have relied on in the past. And it’s only going to get worse.

Consider this. The combination of markets that medical spas compete in is huge ($40 - $50 billion per year and growing), highly fragmented (individual practitioner model), completely new (technology-based), and up to now, is free of any meaningful national players (yet). Already there are very deep pockets investigating ways to exploit this emerging marketplace. The Wal-Marts and Home Depots of this new medical marketplace are being built as you read this article.

But there’s opportunity here as well. Technology opens new doors for physicians, who can see and manage this new paradigm. That’s why a ready supply of smart and motivated physicians tired of the daily grind of insurance patients are moving into the marketplace and successfully competing. For the first time, physicians outside the default specialties of plastic surgery (cutting and stitching) and dermatology (diseases of the skin) have the potential to earn the income and lifestyle of these two medical specialties. This new market is inevitably giving rise to a new specialty whose focus will be “non-surgical, cosmetic, medical technologies.” You can see the fragmentation today. Many Dermatologists now label themselves as “cosmetic” to distinguish themselves as a subspecialty.

As a physician, you can’t get enough good information fast enough. This is a new business and demands a huge investment of time to make the right decisions. Sales reps will stream into your office armed with charts and graphs with arrows pointed ever upward, advertisers will drop phrases like “top of mind awareness,” and you'll begin to have a creeping suspicion that the market is getting away from you. Go slow. There are a host of land mines in the area and there are some that will be advising you to jump directly on them.

So, how do you build a medical spa inside your existing practice? The good news is it can be done. Surface Medical Spas ( the authors business ) has six locations (with three more in development), four physicians, master aestheticians, technicians, patient coordinators, managers and office staff. Every treatment at Surface is governed by a set of proprietary protocols. As a business, we have advised dozens of individual physicians, managers, and investors around the world about opening and operating medical spas. Be advised this is not easy, but here are a few suggestions.

Physician heal thyself:

This is your business. Consultants make their money by telling others how to run businesses that they don’t or can’t run themselves. Believe me, any medical spa consultant worth hiring would be running their own medical spa. Many of these so-called consultants will tell you that you need to offer massage, retail should be 30%-40% of your gross sales, and you’ll need hydrotherapy, aromatherapy, and maybe a juice bar. Wrong. The day that retail is 30% of our gross sales I’ll eat my left foot. Our retail is around 3% because retail is the least effective and profitable thing we do. If it ever gets to 5% we’ll cut back. If this is going to be your business, make your own decisions.

Find someone smarter than you:

The most important step is good management. Without that, people can, and have, lost everything. If you don't have good management skills, hire someone from outside the medical world. We get calls from interested physicians, investors and businesses around the world and we take the time to talk to them all for free. Successful businesses will be happy to talk to you and give you some advice.

Medical Spa Franchises 

“Turn key solutions.” That’s how almost everything is marketed to physicians. Buy this technology, hire this personnel, run these ad slicks, and everything will fall into place. Sorry. It doesn’t work that way. Most of these medispa franchises are sold as a “we’ve already worked out the kinks” deal. It’s a lie. Franchises focus on the treatments that everybody else will be able to replicate with ease. It’s more a case of, “In the kingdom of the blind, the one-eyed man is king.” You don’t need any of the current franchises. ( Read: What's wrong with medspa franchises & consultants l Inside a medical spa franchise series)

All technology is not created equal:

Despite what company reps will tell you, choosing the right technology will create big differences at the end of the year. Efficacy, cost per treatment, initial costs, usage, and a long list of other considerations should go into technology decisions. Many physicians all too quickly jump and then end up with $80,000 towel racks that they still have to make payments on every month. Used medical devices are readily available from the constant stream of bankruptcies and failed medical practices. Choose your technology carefully.  ( Medspa physician discussion area )

Understand the medspa marketplace:

Medical spas are a luxury business. For most physicians, it comes as an unwelcome surprise that their new patients are more demanding. Long waits, shabby offices, poor communication, and ambivalent staff, are all in the past. If you’re touting yourself as a luxury service, you better act like one. Hire top-notch people that are service-oriented, friendly and courteous. Protocols can be taught easier than attitude.

Rein in your ego:

This is business. It’s not personal. If you feel you must charge twice as much as your competitors because you “deserve it,” get used to empty appointment book.

Do not use “advanced” or “laser” in your name:

The number of “advanced” laser clinics is staggering. Don’t do it. It’s inane, overused, and bland. I actually had a physician ask me if changing his name from Advanced Laser Centers to Advanced Laser Group would get him more business. Nope.

Network with successful medical spas:

Successful business owners are happy to help newcomers to the industry. We have constant dialogue with physicians and investors who are investigating the marketplace and have advised clinics on four continents. Successful medical spas will be happy to build bridges with smart businesses. ( medical spa business discussion area )

Don't look to day spas to solve your problems:

Physicians hear “spa” and immediately think that day spas have the answers they’re looking for. Wrong. Most day spas can’t run themselves. The average net margins for day spas are around 8%. The average physician’s is around 60%. Physicians running day spas are entering a business that they; know nothing about, doesn't make any money, is highly competitive, has no barriers to entry, and is rife with employee and other problems. Don't do it.

Don't base your pay on commissions or percentages:

Commissions sound like a great solution. You save overhead and motivate your staff to grow the business. False. Commissions are used in spas to keep overhead low. But guess what? Staff members working for commission aren’t working for you. Commissions lead to overly aggressive staff, constant drama, and high employee turnover that can hurt your reputation as a luxury business.

Be Frugal:

You may have heard that you have to spend a fortune to “build out” your clinic. Nope. You don't have to start with treatment tables that have your clinics name embossed on them. Spend all your money before you open and you won't be able to spend it where you’ll really need it… getting patients in the seats. A great place to start saving money is our must have business tools for medical spas area.

Stay lean:

Physicians practice medicine based on science. You don't need to offer pedicures and you don't know anything about them anyway. Stick to the basics.

by Jeff Barson, Managing Partner and Co-Founder of Surface Medical Spas

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Reader Comments (7)

Thank you.I wish that I'd found to this information sooner. After two months and $14,000, I find I have little to show from the consultants I hired.
06.11 | Unregistered CommenterDermgal
great article, primary importance is first line greeter, the telephone and the person at the front desk making the appointments, treat those clients as numero uno and they are, and follow through with great practitioner who values doing quality work and you have the beginnings of a great business

To Interested MD’s and Others:
As a frequent contributor to this site, it occurred to me recently that maybe someone like me can be of more direct help in assisting others in navigating this newly exciting but seemingly confusing non-invasive aesthetic/cosmetic industry. I got into this field in 2002 and worked with a wonderful plastic surgeon the last 3 years until early this year when I decided to go out on my own because I wanted to work on an idea of setting up a network of aesthetic practices which can be an attachment to an existing traditional medical practice or an existing spa or even in a retail mall. I want to see if there is much interest here among you for something of a CO-OPERATIVE aesthetic network wherein interested physicians and other professionals work together in offering a consistent line of FDA-approved ONLY platforms with uniform treatment protocols. I have been in this industry long enough to tell you that there are 3-4 worth-to-invest platforms:

1) Skin Tightening
2) Body Shaping/Contouring
3) Fat Reduction/Lipo Selection
4) Skin Resurfacing

Here are some basic parameters of the co-op aesthetic principles:

1) The network is owned by medical professionals and I am a part of it.
2) I believe if we can ALL band together we can always get the BEST platforms and force manufacturers to compete in giving us the best deals
3) Initial start-up equipment down payment not to exceed $50,000 with a monthly obligatory equipment payment not to exceed $2000 per location
4) Treatment regimen not requiring more than 2-3 visits per platform
5) Offer of Patient’s Bill of Rights and simplified menu of services
6) Services of minimal to no downtime only
7) Platforms that can be mobilely transferred between places
8) Services can be transferable when patients relocate


Here are my commitments to you:

1) I will travel to each location to do whatever to assist you in getting the business going
2) I will be paid just for the travel related costs and reasonable consulting fees upfront
3) I will be compensated mostly on a % basis of the revenues generated on the back-end.
4) I am not financially tied into any specific manufacturers
5) I will share my expertise with you

I am offering this proposal to you all since I believe it IS time that we take control of this industry away from the manufacturers and band together to offer the best services CLINICALLY and PROFESSIONALLY to our patients. I am open to hear of your suggestions also. By the way, I live in Los Angeles.

03.1 | Unregistered Commenterpmdoc

I have be open for 2 years and need to relocate my medspa due to the need to increase my space. The name of my medspa, unfortunatly has the name of my town in it. Now that I am moving to another town 5 miles away, should I keep the name even though I am in another town, or change it? Thank you

03.29 | Unregistered CommenterDave

Dear PM Doc: I know of several physicians who may want to engage your services. Would you please send me an e-mail with your contact information? Thank-you.

Dear MedSpaGuy:
My email address is: pmhdoc@gmail.com Thanks

03.30 | Unregistered Commenterpmdoc

Dave:
My guess is it depends on if your original town name has a better prestige to it. For example, here in SouthernCA,if an entity with the names of Beverly Hills or Newport Beach in it would be better off keeping the name no matter what. Besides if you are known for something unique that people would drive the distance to see you then you should keep it. For example, if you were the only one in the 5-10 miles radius that has the CO2 laser or thermage that people recognize by names.

03.30 | Unregistered Commenterpmdoc

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