When I became a lawyer close to 15 years ago, I had never heard of a medical spa. Treatments involving Botox® (Allergan, Inc., Irvine, CA), laser hair removal, and soft tissue fillers were new in the medical industry, and being offered almost exclusively by physicians. No one could foresee how, in just a few short years, the term ‘medical spa’ would not only emerge, but explode into a billion dollar industry. Even though we are only recently emerging from a devastating recession, revenue from aesthetic procedures has continued to steadily increase.
The explosion in the number of medspas and aesthetic treatments has brought increased scrutiny from medical boards and governing authorities. The medspa industry now faces increased regulation, and violation of local laws often results in substantial fines, suspension, and even criminal prosecution. The risk of getting in trouble while operating a medspa has never been higher, particularly now that non-physicians and non-medical professionals are entering the arena.
As a lawyer focusing almost exclusively on medspa‑related matters, I get calls every day asking the same basic questions. I am continually amazed at how many industry professionals are unaware of the basic legal guidelines that govern the industry. No matter what profession or education — I’ve dealt with physicians, surgeons, nurses, and even other healthcare lawyers — very few people are properly educated on what they can and cannot do in the medical aesthetic industry. And since ignorance of the law is never an excuse, it is time for the industry to focus on educating itself.
For this reason, I formed the American Medical Spa Association (AmSpa). AmSpa is the only association of its kind, geared toward educating the medspa industry, and we have summarised nearly every state’s medical spa laws in an easy-to-read format at americanmedspa.org. Knowledge of only a few basic legal principals is often enough to keep your aesthetic practice out of hot water, and to keep the profits flowing.*
I’m often surprised at how many practitioners are unaware of the prohibition against fee splitting. It’s been around forever, and the laws in many jurisdictions haven’t changed for some time. The rule is simple: physicians may not split medical fees with anyone other than physicians. Therefore, non‑physicians may not split medical revenue with physicians. This means that when a fee is paid for an aesthetic treatment — Botox for instance — that fee must be paid directly to the physician or physician-owned corporation only, and no part of that fee can be split with a non-physician.
In the medspa setting, this problem often manifests itself in one of two ways: first, a nurse, laser technician or other professional is paid a commission on the amount of revenue he or she generates (such as 10% of all revenue generated from fillers or laser hair removal); or second, non-physicians (including patients) are paid referral fees for bringing in new patients. Both of these practices, depending on the jurisdiction, may constitute fee splitting.
The prohibition against fee splitting stems from policymakers’ belief that allowing non-physicians to share in medical revenue has the potential to affect patient care. The long-held belief is that physicians should be motivated by healing, not volume, and so paying others for referring business is inherently unethical. Accordingly, if you’re paying your employees a commission for the medical treatments they are performing, or if you receive commissions for medical treatments, be careful because you may be guilty of illegal fee splitting.
The medical aesthetic industry is different from other medical practices because many of the treatments are not performed by physicians. Botox and fillers are often performed by nurses and laser treatments are performed by technicians, and as a consequence, the physicians are not performing or even supervising these medical treatments. In some cases, the physician leaves their practice entirely in the hands of the nurse or laser technician without procedures in place to ensure proper supervision.
Although it is difficult to make generalities regarding supervision, the fact remains that the treatments we are discussing here — Botox, soft tissue fillers, and laser treatments — are generally considered medical treatments. As such, these treatments must be supervised by medical professionals. Clients are constantly coming to me after being investigated because lasers were being used without a medical professional in sight. There are very few places in the industrialised world — I can’t think of any off-hand — where you can receive medical treatment by a non‑medical professional. Therefore, at a minimum, medical supervision is required on site for the practice to be compliant. If a physician is not on site, a nurse, nurse practitioner or other medical professional should be present and the physician should be available by phone.