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Medical Spas - Legal Considerations for Physicians

Given the recent third-party reimbursement cuts and increasing overhead issues facing physicians, more and more doctors are seeking alternative sources of revenue outside the traditional practice of medicine. Many are turning to medical spas to offer their patients healthcare goods and services that are not covered by third-party payors and for which they may charge a higher fee schedule and accept cash payments. However, when entering into the medical spa arena, a physician must determine whether the facility is a physician's office or a cosmetology/beauty parlor.

As more and more physicians consider establishing medical spas and offering services to Americans seeking a more youthful appearance along with health and wellness services, the lines between medicine and cosmetology have become increasing blurred. Thus, as physicians enter this rapidly expanding and potentially lucrative market, they must be aware of the legal and regulatory issues that await them. Before venturing into the world of medical spas and cosmetic practices, physicians should consider the professional licensure, fee-splitting, medical records and privacy, advertising, supervision of ancillary providers and professionals and other applicable legal and regulatory matters which apply to medical spas. As a primer, this article will outline and briefly discuss each of these issues. However, physicians who either have established and operate medical spas or are considering doing so should always seek the advice of legal counsel with experience in representing physicians and physician group practices on medical spa matters.

Perhaps the most important issue for Florida physicians to consider is that of professional licensure and supervision. In order to determine whether ancillary professionals and providers need to be licensed to perform certain procedures or can be supervised by a medical doctor or osteopathic physician when performing them, the first step a physician medical spa should take is to determine what services they plan to offer. Typical services offered include dermatological procedures, minor cosmetic procedures, Botox and other filler procedures, laser hair removal, massage therapy, hormone replacement therapy, anti-aging services, weight loss, diet and nutritional counseling, lifestyle change, and other health and wellness services.

In order to provide certain services such as massage therapy, or even chiropractic or some wellness services, providers must be licensed by the appropriate Florida professional licensing board. For example, while a medical doctor may be able to personally perform massage therapy, a medical assistant most likely would not. Rather, the medical doctor who wants to delegate massage therapy to an ancillary provider would need to hire a licensed massage therapist. In this regard, medical spas may also need to obtain an establishment license to provide licensed massage therapy through professionals other than their medical doctors or osteopathic physicians.

Additionally, the applicable Florida laws concerning the performance of dermatological procedures such as Botox injections, laser hair removal, and intense pulsed light ("IPL") treatments are far from clear or easy to understand. These laws and regulations are spread throughout various Florida licensure acts and professional board rules and can often conflict with one another. For example, the Florida Board of Medicine has stated in its meetings and included in its meeting minutes its position on the use of lasers to treat patients, and in particular, their use to perform laser hair removal. The Board has taken the position that only Florida licensed or medical doctors, osteopathic physicians, advanced registered nurse practitioners ("ARNP's") and physician assistants may perform laser procedures of any type, including laser hair removal procedures.

Additionally, the Board takes the position that ARNP's and physician assistants must be "appropriately supervised" by a medical doctor or osteopathic physician to perform such procedures. However, the Board has not specifically stated whether it requires direct supervision by a medical doctor or osteopathic physician for the performance of such procedures. But, Section 458.348, Florida Statutes, states that laser hair removal procedures must be performed under the direct supervision of a physician unless certain conditions and circumstances apply. Yet, to date, the Board has not necessarily enforced this direct supervision requirement. Thus, although the Board has stated its position on laser hair removal in its meeting minutes, it may not yet be fully enforcing all of Section 458.348, Florida Statute's requirements. Therefore, physicians would be well advised to ensure that they understand the supervision and licensing requirements for the provision of laser hair removal and other laser services prior to implementing them in their medical spas.

Physicians must also determine whether they consider their medical spa patients to be patients or clients for purposes of both medical record keeping and privacy requirements, and for professional liability insurance and medical malpractice prevention purposes. The conservative approach is to treat all clients as patients and all of their documentation and records as medical records for both Florida law and HIPAA Privacy Regulations purposes. While some medical spas do not consider all of their treatment or client records to be medical records, this issue is far from clear and has not yet been fully analyzed or adjudicated by the Board or any Florida or federal courts. In order to avoid allegations that a physician or other licensed healthcare professional violated the provisions of Section 456.057, Florida Statutes (the Florida Medical Record Ownership Law Applicable to individually licensed healthcare professionals) or the HIPAA Privacy Regulations, physicians would be well-advised to treat all records and documentation of their medical spa patients and clients as medical records and to apply appropriate privacy and security compliance principles in order to protect those records.

One of the most confusing aspects of medical spa operations is whether the services being provided to a client or patient are healthcare services or strictly cosmetology procedures. Many medical spas employ licensed aestheticians who strictly perform cosmetology procedures. While the Board and other Florida healthcare regulatory agencies may not view such services as healthcare services (although this issue is far from being decided at this point), patients may view them as healthcare services if such services are offered in a physician's office where other professional, medical or healthcare services are being offered. If a patient is allegedly injured through a cosmetology or aesthetic procedure, that patient may seek to assert a professional negligence or medical malpractice claim against the medical spa or its physician owners.

For years, the plastic surgery profession has struggled with the issue of when does patient dissatisfaction with a procedure become medical malpractice. That same issue is applicable to medical spas that offer cosmetology or other cosmetic procedures. When analyzing this issue, physicians would be well-advised to check with their medical malpractice or professional negligence insurance carriers to see if the procedures and services they are offering in their medical spas or practices are covered by their professional liability insurance policies. If they are not, physician should certainly take that into account when structuring their medical spa business entities and evaluating wealth management and asset protection issues.

Physician owners of medical spas also need to be aware of the Florida fee-splitting prohibitions which have been adopted and enforced by the Florida Boards of Medicine, Osteopathic Medicine and Chiropractic Medicine. Essentially, the fee-splitting prohibitions prevent a physician from paying or sharing any part of their fees for professional health care, medical or consultative services with a third-party, including other physicians, without those third-parties performing certain substantive professional healthcare, administrative or management services.

One area in which the Florida Board of Medicine has been particularly active and concerned about is the payment of marketing or advertising fees to management companies when those fees are based on a percentage basis. Thus, when structuring compensation arrangements with employed or independently contracted healthcare professionals and providers, physician owned medical spas should be cognizant of these fee-splitting prohibitions and have any compensation arrangements reviewed by health care counsel in order to ensure compliance with the applicable Florida laws. Additionally, when structuring independent contractor vendor arrangements for practice management, marketing/advertising, and other services, physicians who own medical spas should also have such arrangements reviewed to ensure appropriate compliance with the prohibitions.

Physicians who own medical spas also need to be cognizant of the applicable Florida laws and regulations concerning the advertising and marketing of healthcare goods and services. The applicable Florida licensing boards have all promulgated rules governing advertising by medical doctors, osteopathic physicians, chiropractic physicians, etc. It is very easy for physicians to run afoul of those rules when advertising discounted or free services as well as the credentials of their licensed and certified healthcare professionals and providers working in their medical spas. The Florida Department of Health, the Florida Board of Medicine and the Florida Board of Chiropractic Medicine have been very aggressive about investigating alleged advertising violations and imposing disciplinary action against licensed healthcare professionals whom they feel have violated Florida's advertising laws and applicable Board rules and regulations.

Finally, physicians who own medical spas must be careful about using drugs and medications such as Botox for off-label purposes. Improper use can lead to both regulatory and disciplinary action by professional licensing boards and the Federal Food and Drug Administration. It can also lead to potential civil liability in medical malpractice/professional negligence lawsuits. Therefore, physicians would be well-served to know not only when, but also how to properly use off-label drugs and medications. Additionally, they should strongly consider using informed consent forms with their use of such medications and drugs to educate patients regarding off-label use and the potential risks associated with it. This will also help to reduce allegations of improper or unconsented use of these drugs and medications.

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