Hands down, the most frequently asked question we receive from medspa clients – or those hoping to break into the industry – is, “can I own?” 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. Below are three key considerations to help you navigate the wild world of medspa ownership.
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 stated 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. The emergence of Management Service Organizations (MSOs) as a workaround to CPOM is the bridge some groups use to legally function. 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.
The next consideration when determining who can own a medspa turns on the individual’s level of licensure, if any. While an aesthetician may be able to shoot lasers or a registered nurse (RN) can inject under physician supervision, this does not mean that these professionals can automatically own a medspa. 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. In other states, such as California, other licensed professionals, such as dentists, RNs, optometrists and chiropractors, may be able to take a minority ownership stake in the medspa, as long as a physician maintains at least 51% control. Of note, California recently passed independent practice legislation, however it likely won't take effect for at least two to three more years.
Physician Arrangements and Medical Directors
Regardless of your level of licensure or lack thereof, it is of the utmost important that you have a Medical Director in place to properly supervise the clinical team. The credentials of the Medical Director again vary by state, but generally the individual will have to be a physician, NP (in an independent practice state), or in some instances, a physician’s assistant (PA). 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. For individuals with the proper license level to act as their own Medical Director, they may certainly do so, but it is still important for the team to know who is on call should the director be away or otherwise unavailable.
This article was originally published in American Spa Magazine and is reproduced with permission.