Medical spas will become increasingly popular in 2024. More demand for non-invasive cosmetic services like Botox injections, fillers, and laser hair removal will drive the global market.
According to Med Spa statistics, the global spa market is expected to reach a value of nearly $34B this year, with a CAGR of 13.8%. By 2030, a Grand View Research report projects profits will reach $49B — a surge attributed to an increased emphasis on wellness and anti-aging solutions. This demand for convenient, effective, and minimally invasive cosmetic treatments and spa procedures is driving rapid expansion in the industry.
The American Med Spa Association (AmSpa) has found that the industry remains resilient, with stray growth. The association’s founder and CEO, Alex Thiersch, JD, said, “After robust growth and rebound after the pandemic, the industry continues to thrive and shows no signs of stopping anytime soon. We have added more than $4 billion in total revenue and more than 30,000 jobs in the past three years. Med spas now employ more than 100,000 employees across more than 11,000 med spas in the U.S., and it’s clear we still haven’t begun to reach our potential capacity.”
Equally impressive? Almost 70% of med spas are women-owned.
Curious to learn more about how to open a med spa in your area? Keep reading for an overview of the steps involved.
Navigating the regulatory landscape
Establishing a med spa requires careful consideration of the industry’s legal and regulatory requirements. As healthcare providers, these spas must comply with a complex web of federal and state laws designed to protect patients and ensure quality care. Potential med spa owners and managers must understand these regulations to avoid legal pitfalls and maintain a successful practice.
One key area of consideration? The corporate practice of medical doctrine (CPOM), which limits non-physicians’ involvement in medical decision-making. Med spas must comply with licensing requirements, insurance mandates, and other industry-specific regulations. Understanding these legal and regulatory hurdles will empower potential owners and operators to lay a solid foundation for a successful, compliant medical spa business.
CPOM
A legal principle in many states, the CPOM restricts the ownership of medical practices to licensed physicians or physician-owned entities. Med spas, as providers of medical services, must be owned by a physician.
Individuals who want to open a med spa but lack a medical license can establish a management service organization (MS) and enter into a management service agreement (MSA) with a physician. Under this arrangement, the MSO handles the business’s administrative aspects, like accounting, operations, and payroll, while the physician is responsible for all medical decision-making.
This structure offers several benefits. The MSO can assume liability insurance responsibilities, freeing physicians from this burden. The physicians can focus on providing medical care while the MSO manages business operations.
A caveat: All client payments must be made to the physician’s company, and the physician retains ultimate authority over treatment decisions. While the MSO may receive a significant portion of the revenue, the physician remains the medical spa’s legal owner.
Compliance
Med spa owners must navigate two primary compliance hurdles: the Health Insurance Portability and Accountability Act (HIPAA) and Occupational Safety and Health Administration (OSHA) regulations.
HIPAA mandates secure handling of patients’ protected health information (PHI). Businesses must implement robust security and privacy protocols for compliance. Using a HIPAA checklist and working with a compliance expert can streamline the process (and ensure you don’t miss any crucial steps). While formal HIPAA certifications don’t exist, all medical entities must maintain ongoing compliance to avoid penalties and legal repercussions.
OSHA focuses on workplace hazards and employee safety. Med spas must comply with specific OSHA standards to prevent injuries and protect their employees. Key areas of focus include:
- Bloodborne pathogens (and an exposure control plan)
- Falls, trips, and slips
- Hazard communication
- Laser safety
- Recordkeeping
- Tuberculosis
- Workplace violence
Meeting these standards requires developing detailed procedures, providing comprehensive training, and maintaining accurate records. Check the OSHA website for more details on each standard.
Insurance considerations
In addition to regulatory compliance, med spas need insurance coverage in several areas:
- General liability, which protects against lawsuits arising from accidents or property damage.
- Professional liability, or malpractice insurance, which covers claims of negligence or injury related to medical procedures.
- Workers’ compensation, which covers employees who’ve sustained injury or become ill while working.
Consult with an insurance agent and provide a detailed business plan to determine the appropriate coverage for your med spa.
Opening a medical spa in NJ
While federal regulations provide a general framework, you must also understand the specific requirements at the state level. New Jersey requires a licensed physician to oversee the ownership and operation of all medical spas.
When developing your med spa business plan, consider the type of business entity structure. Improper incorporation can lead to legal penalties and potential closure. Whether you form an LLC or corporation, register it with the state and IRS.
If you form an LLC or partnership, NJ requires all partners to be licensed physicians and extends this requirement to include individuals authorized to provide medical or closely allied professional services, like physical therapists, nurses, nurse midwives, and optometrists. If you opt to form a corporation, it must be licensed by NJ’s Department of Health and Senior Services and comply with their regulations.
A note about advertising restrictions for med spas
As a medical practice, med spas are subject to the same advertising regulations as other healthcare providers. All advertising for their services must be accurate and truthful. Misrepresenting credentials, expertise, or skills is illegal. Also prohibited? Any deceptive or misleading advertising, like ads that imply guaranteed outcomes.
The profit potential of med spas
Despite the significant investment and regulatory requirements associated with opening a medical spa, many physicians and investors are drawn to this venture because of its potential for solid profits.
Operating a med spa differs markedly from a traditional private practice. A key distinction lies in the limited insurance coverage for most med spa procedures. These services, typically considered cosmetic or elective, require patients to pay out-of-pocket. This pay structure eliminates needing to negotiate with insurance providers and grants greater flexibility in offering customized treatment packages.
As patients increasingly prioritize wellness and self-care, med spas are becoming an integral part of the American healthcare landscape, making them relatively recession-resistant businesses.
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