Day Spas Can Boost Your Bottom Line

Aesthetic services may be the answer to your revenue prayers.

BY BRAD RUDEN, M.B.A.

Confronted with increasing overhead and potential decreases in future reimbursements, many ophthalmology practices are feeling financially squeezed. To combat this, some practices have expanded the range of services they offer their patient base by providing aesthetic services and cosmeceutical products. The primary attraction in adding these is that they are not covered by insurance plans, meaning patients who want them pay out of pocket. Such "cash in hand" services can provide an immediate boost to a practice's revenue without imposing an undue burden on the doctor's time.

In the interest of disclosure, I must reveal that I am a principal in a company called Elegance Anti-Aging, LLC, which assists ophthalmology and LASIK practices in opening medical day spas for providing aesthetic services. In this article, I will detail some of the product and service options that could increase your revenue.

Aesthetic Services

Many of my ophthalmology clients now offer at least a small range of aesthetic procedures. The most common are: botulinum toxin injections, collagen and wrinkle-filler injections, permanent eyebrow shading and permanent eyeliner application.

While these options are fine, I believe many practices are missing a substantial revenue opportunity by not offering more. According to a survey from the American Society for Aesthetic Plastic Surgery, 11.5 million cosmetic procedures, surgical and nonsurgical, were performed in 2006 (the most recent year for which they had data) in the United States, an overall increase of 446% since the collection of statistics began in 1997. The survey reports that Americans spent a whopping $4.5 billion for nonsurgical procedures, with botulinum toxin (Botox, Allergan) injections and laser hair removal topping the list. The impressive growth in the industry reflects an increasing acceptance of aesthetic procedures, particularly in the area of anti-aging. While women presently account for the majority of all procedures performed, aesthetic procedures are also being sought by growing numbers of men and other non-traditional segments.¹

Aesthetic procedures are in demand by people in all walks of life. Demand has caused the day-spa market to grow from almost nothing a decade ago to a major industry now worth billions of dollars annually.²

Ophthalmology's Advantages

The ophthalmology practice has two distinct advantages in offering aesthetic services. First, many day spas are owned by businesspeople and staffed by aestheticians. The services these spas can provide are limited due to the lack of a medical practitioner. A medical day spa — one which operates under the license of an ophthalmologist — can offer a wider range of services than a spa not supervised by a physician. For example, laser treatments must be performed by a licensed physician or by someone under the direct supervision of a physician, so a spa staffed only by a cosmetologist or an aesthetician cannot offer those services.

Second, most spas need to build a level of trust with their clientele. However, an ophthalmology practice has already developed this. Some surveys indicate that, of the five senses, the sense of sight is the one people most fear losing.^3,4 Thus as your patients' eyecare provider, you have an inherent level of trust built into your relationship with them. So given the growth and popularity of the aesthetic industry, it is likely that a fair percentage of your patients — if prompted — will inquire about aesthetic procedures.

Getting Started

Opening a medical day spa will require an equipment purchase (or lease) in the neighborhood of $200,000 or more. The basic items needed are a laser (for acne treatment, hair removal, etc.), a jet peel and a light mask (ancillary items that would run from approximately $190,000 to $200,000). The space required for these items is minimal and will depend on the size of your practice and potential patient volume. Some practices open a separate suite for these services; others remodel a couple of exam rooms. Once in place, the aesthetic services that can be provided include:
► Laser hair removal
► Laser skin resurfacing
► Acne treatments
► Treatment of pigmented lesions
► Laser collagen stimulation
► Tattoo removal

Provided it is allowed in your state, we encourage practices to hire an aesthetician or nurse to provide the actual services (under the supervision of a physician). In this way, these services do not add more strain to the physician's already busy schedule.

However, be mindful that the dynamic growth of the industry has spawned a generation of spa-smart consumers who are savvy about the latest treatment options. Many will come with a clear idea of what treatments they want. If a practice cannot achieve the desired results, the entire patient relationship can suffer. Be careful to offer only services you believe you can deliver. With health-focused chat rooms, and a plethora of Web sites that rate healthcare services, physicians cannot afford to make a mistake.

The Key to Good Results

Again, patients will not settle for less than good results and can be quite vociferous when they are disappointed. Just as positive word of mouth can grow a practice, negative word of mouth can destroy one. Proper training, experts say, is crucial to obtaining results that satisfy patients. Without it, the right equipment is not sufficient.

CNN recently reported that the International Medical Spa Association (IMSA) claims the medical spa industry has grown by 160% in the last 3 years alone.⁵ IMSA believes the result of this growth is that there are many medical day spa providers who simply are not qualified to provide certain procedures. CNN further stated the American Society for Dermatologic Surgery (ASDS) says botched laser skin procedures increased 41% from 2005 to 2006. The network quoted Alastair Carruthers, president of ASDS, who said, "We see a definite increase in the number of people being damaged by untrained individuals using these lasers and we think that this is going to be more of a problem."⁵

Training and proper treatment protocols are key in delivering superior results. Some practitioners simply take a weekend course and then begin offering services. While this may work in most instances, it is when the results are unsatisfactory — or disastrous — that the training (or lack thereof) is highlighted. The organization with which I am involved tries to reduce potential negative results by going beyond training. We also offer continuous oversight for the doctor and staff by having an experienced physician available for telephone or Internet consults as well as additional on-site training as needed. We also provide a complete set of treatment platforms and nomograms for the physician and staff to follow and we have begun investigating the use of an independent credentialing service — all in an attempt to standardize the treatment process and meet the patient's expectations.

Cosmeceuticals

Many who are interested in aesthetic treatments are also interested in cosmeceuticals. "Cosmeceutical" is a conflation of the words "cosmetic" and "pharmaceutical." The term refers to products that can be sold as cosmetics (over the counter, without a prescription) but have drug-like actions and benefits, their makers claim. Like cosmetics, cosmeceuticals are topically applied, but they contain ingredients that influence the biological function of the skin.

The cosmeceuticals industry offers products that are designed not just to rehydrate skin, but to encourage more rapid turnover of cells, repair cells damaged by sun or other environmental exposure, and/or restore components of the skin, such as collagen, that have broken down as a result of such damage or because of a decrease in hormone production. Typical products offered are medical-grade anti-aging moisturizers, lightening serums, firming lotions, etc.

Cosmeceuticals are the fastest-growing segment of the personal care industry. As the population's median age increases, this market is expanding. It is estimated that the U.S. cosmeceutical industry earned approximately $1billion in 2006 and that will grow by approximately 8% annually.⁶

How can your practice get involved? Promoting a cosmeceutical product line is not very different from promoting an optical shop. Set up a display in or adjacent to the waiting room. Consider opening some products so patients can try free samples while also providing educational material for them to read. By offering cosmeceuticals to your patients you can create a line of passive income as they stop by the practice as needed simply to purchase the necessary products — all without needing to be seen by the doctor or aesthetician.

Financial Benefits

Patients will gladly pay for these products and services as long as they are getting the perceived benefits. While the outlay for equipment and products may be daunting, if the proper mix of services and products are offered and promoted, my experience has been that a medical day spa (as an adjunct to an existing practice) can generate gross collections of $300K to $500K annually with substantial net profits. Feedback from my company's clients indicates that most practices bring patients in once or twice a year, but aesthetic services and cosmeceutical products can bring a patient in four to seven times a year. Those visits can add substantially to a practice's bottom line (and help offset possible decreases in Medicare/insurance reimbursements).

The additional benefit is that you will also have further cemented patient loyalty through multiple patient contacts, providing these patients with more opportunity to assist you with word of mouth referrals. OM

References

1. 2006 ASAPS Statistics. The American Society for Aesthetic Plastic Surgery Web site. www.sugery.org/press/statistics-2006php. Published March 9, 2007. Accessed Jan. 30, 2008.
2. Porter S. Aesthetic Cosmetic Procedures Can be Boon to FPs. American Academy of Family Physicians Web site. Published May 17, 2007. http://www.aafp.org/online/en/home/publications/news/news-now/bottom-line-series/20070517cosmeticprocedures.html. Accessed Jan. 30, 2008.
3. Open Your Eyes—RNIB Campaign Report. Royal National Institute of the Blind. http://www.rnib.org.uk/xpedio/groups/public/documents/PublicWebsite/public_oyereportword.doc. Published January 2006. Accessed Jan. 30, 2008.
4. A Clear Vision: Solutions to Canada's Vision Loss Crisis. Canadian National Institute for the Blind Web site. http://www.cnib.ca/en/about/publications/research/A%20Clear%20Vision%20Sept%2023.doc. Published 2004. Accessed Jan. 31, 2008.
5. Berke R. Laser Surgery in Wrong Hands can be Dangerous. CNN.com Web site. http://beta.cnn.com /2007/HEALTH/09/20/berke.lasersurgery/index.html. Published Sept. 21, 2007 Accessed Jan. 14, 2008.
6. MedSpas of America, Inc. StockGuru.com Web site. http://www.stockguru.com /profiles/medp/ndex.php. Accessed Jan. 30, 2008.

Brad Ruden, M.B.A., is the owner of MedPro Consulting & Marketing Services and a partner in Elegance Anti-Aging, LLC, a company that assists ophthalmology and LASIK practices in opening medical day spas for the provision of aesthetic services. You may contact him via e-mail at bruden@medprocms.com, or visit his Web site, www.medprocms.com.