With an enormous spike in the medical aesthetics industry, it is becoming more and more common for our dental clients to ask if they can own a medspa. Unfortunately, the answer is one all-too-commonly used by lawyers …“it depends.” As the medspa industry experiences exponential growth, state regulators have been slow to add parameters around ownership requirements, leaving aspiring spa owners left trying to interpret grey areas of the law. While many dentists have been injecting Botox and other neurotoxins for years, the debate still rages on as to whether this is within their scope of practice. Furthermore, for those looking to take the next step and enter full-blown spa ownership, below are three key considerations to help you navigate the wild world of medical aesthetics.
State Law
Most of the confusion around ownership stems from the fact that states have drastically different regulations on who can own a medspa. While some states have clearly articulated that a medspa is, in fact, the practice of medicine and must be regulated as such, others have taken a more passive approach, failing to even define medspas in their statutes. Compounding the confusion is the issue of whether the state subscribes to the Corporate Practice of Medicine (CPOM) theory. CPOM is a legal doctrine that allows only properly-licensed healthcare providers to own a medical practice. Though states vary in both their subscription to and enforcement of this theory, the underlying idea is that healthcare providers should remain free from corporate or investor influence when making medical decisions for their patients. In the world of medical aesthetics, the emergence of Management Service Organizations (MSOs) as a workaround to CPOM is the bridge some groups use to legally function, much the same way DSOsfirst arrived on the scene in dentistry. While an unlicensed (or under-licensed) individual may not be able to own an actual clinical entity (think: the medical facility that is injecting or shooting lasers), they can own a management company that supports the operation and receives a hefty fee in exchange. Understanding which side of the spectrum dentists land on is likely buried somewhere deep in state dental and medical board guidelines.
Licensure Type
Unsurprisingly, the next consideration when determining who can own a medspa turns on the individual’s level of licensure, if any. While dental boards may give guidance on the dentist’s ability to inject neurotoxins, this does not mean that they may automatically own a medspa. Historically spa ownership was limited purely to physicians, however a growing number of states having been joining the independent practice movement, wherein licensed nurse practitioners (NPs) can practice medicine independent of physician oversight after meeting certain criteria. Currently 28 states have approved some level of independent practice for NPs and a handful of others have proposed legislation working its way through the approval process. For those states that have passed such laws, an NP is generally able to own a medspa, giving the dentist the opportunity to partner with an NP (or, of course, a physician) to operate under an MSO model. In some states, such as California, dentists may take a minority ownership stake in the medspa, as long as a physician maintains at least 51% control.
Physician Arrangements and Medical Directors
Ironically, while some states may allow a dentist to own a medspa, they may still be required to contract a third-party Medical Director.[1] The credentials of the Medical Director again vary by state, but generally the individual will have to be a physician or NP (in an independent practice state), or in some instances, may be the dentist themselves. The Medical Director should have a written agreement with the clinical practice that articulates the duties owed to the practice, how good faith exams are conducted, frequency of in-person compliance checks and compensation. It is also important for the team to know who is on call for emergencies should the Director be away or otherwise unavailable.
[1] A good example of this odd arrangement is in Connecticut, where a 2014 statute articulated that anyone (both licensed and unlicensed individuals) may own a medspa, but the spa must employ a physician or advanced practice registered nurse (APRN, commonly referred to as an NP) as a Medical Director. PA 14-119.