In Part 1 of this blog series, we reviewed applicable health and medical regulations, protecting your assets, and state regulations. In this blog, it’s time to look at a video of reasons medspas succeed when they open their doors and a handful of other important legal considerations.
Reasons Medspas Succeed Upon Opening Their Doors
The Corporate Practice of Medicine Doctrine
This doctrine restricts the practice of medicine to physicians and certain professional corporations which are allowed to practice medicine in a state. In short, lay corporations cannot engage in the practice of medicine. Special planning and documentation are required in developing a management service organization (MSO)—where the non-physician owned MSO oversees and owns aspects of the business such as the brand, building, and technology.
Prohibitions Against Fee Splitting
Lay corporations are prohibited from practicing medicine through the employment of physicians and other arrangements whereby the lay corporation receives profits from the provisions of a physician’s professional services.
Warning: Franchise systems involve the use of lay corporations. Thus, special planning and documentation is required. In some states this may require the ownership and operation of the business through several different legal entities.
HIPAA Security & Privacy Regulations
Aesthetic medical practices (aka medspas) are health care providers. Just because they don’t involve health plans doesn’t mean they shouldn’t obligate themselves to be HIPPA compliant. Make sure you understand these regulations and get an official opinion from a healthcare attorney before you open your business.
Medical Directors: Partners By Necessity
Whose medical practice is it – yours or your Medical Director? Whether you are an owner, franchisee or an area developer, care must be taken in the recruitment, employment, compensation and termination of Medical Directors.
For example, does it make a difference if your Medical Director is an independent contractor or an employee? Can you terminate a Medical Director who becomes impaired? If you terminate a Medical Director, do the patient files belong to the Medical Director? Can you stop a terminated Medical Director from opening a spa, center or clinic across the street from you?
There are no standardized agreements to employ a Medical Director. Each state has different legal requirements. Each business has different operational requirements.
Insurance Coverage
Do you understand the differences between business and malpractice coverage? Do you know the differences between “specified perils”, “open perils” and “tail coverage?” Will you have coverage if a former Medical Director testifies during her deposition that you violated the corporate practice of medicine doctrine or engaged in fee-splitting? What if your Medical Director had no prior aesthetic medical experience prior to the date he approved your medical protocols? Will you have coverage if your Medical Director does not participate in a peer review program?
In particular, medical spas should maintain the following types of coverage: medical professional liability, medical spa liability, general business liability, employee benefits liability, group health insurance, directors & officers, workers compensation and employment practices.
With this information, we are only skimming the surface of the due-diligence that is required for lay-people to open a medspa. For more information about how you can open a medspa as a lay-person, contact the team at Acara Partners.
