How To Avoid Common Mistakes How To Avoid Mistakes When Planning & Financing Your Medical Spa
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for non-surgical treatments. 2,000 Americans will turn 50 every day (1
every 8 seconds) for the next 20 years. Studies show the number of
Americans over 55 will grow by 60% in the next 20 years and their
buying power will exceed $2 trillion by 2007. Wow.
In fact, the news gets even bigger. Americans spent just under $9.4
billion on cosmetic medical procedures in 2003. In 2004, American
consumers spent $44.6 billion on anti-aging products and services, and
the total anti-aging market is projected to reach $72 billion by 2009
(Business Communications Co., Inc., February 2005).
However, there are problems. Right now, Medical Spas are like the Wild
West. Physician practices, Day Spas, cobbled together franchise chains,
add-on clinics, and even hair salons are taking the title of Medical
Spa or laser clinic. So while the opportunity is there, it would be
wise to take note of the old cartographer's adage when marking
unknown or dangerous territories on the map, "Here be dragons".
Here be Dragons: The current system is outdated and inefficient,
relying on a fragmented delivery system of individual physicians (often
Plastic Surgeons and Dermatologists but including a growing percentage
of Obstetricians and Gynecologists, Family Practitioners, and
Internists). Physicians are offering "add-ons" treatments to their main
scope of practice and competing against their immediate neighbors
without a specialty offering, cohesion, or scale. The idea in most
cases is to snag patients with some sort of "soft" offering and
then kick them upstairs for more invasive procedures. While these new
technologies have lowered the barriers to entry in some ways,
(evidenced by the growing number of physicians entering the
marketplace) the influx of these outside physicians is proof that this
is a new market that is not currently "owned" by any existing
specialty. This new paradigm of cosmetic medical technologies means
that cosmetic medicine is becoming more and more "businesslike".
Those physicians who understand and embrace this new paradigm will
survive. Those who do not will watch as the market passes them by.
The increasing development of effective non-surgical medical
technologies has made a scalable and replicable solution possible for
the first time. IPL (Intense Pulsed Light), RF (Radio Frequency), IR
(Infrared) devices, Clear² PDT, Pointé Lift, and other developments
mean a steep new learning curve for doctors. What equipment to choose,
how to bring in new patients, where to get training, how to compensate
staff.
It pays to learn from the experience (and mistakes) others have made.
If you're looking to enter or expand as a medical spa, here are a few
tips to consider when planning a medical spa start-up or expansion.
Charts and Smiles: Open a medical spa and your office is a never ending
stream of sales reps and advertisers (Always smiling and usually with
charts.) who are only there to "help you grow your business". The
charts and smiles crowd will turn you green with envy as they describe
how successful all of your competitors are, show you the before and
after pictures, and present charts with big red arrows that go up and
to the right. What should you do? Educate yourself. No one will ever
work harder on your business than you.
Never trust a skinny chef: If it doesn't make sense to you, it's
probably BS. I'm commonly astounded by the day spa consultants that
have assumed the title of "medical spa guru". Keep your eyes open.
Most of these new experts drop lots of names but few phone numbers.
Anyone offering consulting services should be happy to give a list of
references and more importantly, a list of competitors. The only real
medical spa consultants worth hiring are the ones already running
successful operations themselves. Call a few nationally know medical
spas and ask for recommendations. Successful business owners are
usually happy to share their know-how and experience.
Medical means physician: If you are not a physician, you can not
"own" this business. You may own the building, you may pay the
staff, you may have a franchise with a "medical director", and you
may think you're in charge. It doesn't matter. All medical law is
designed, written and interpreted to keep a physician independent in
medical decision making. That means that if you are a non-physician in
this field, the physician providing medical oversight has the power to
"pull the plug" at any time. There's also this to consider. What
constitutes adequate medical oversight is decided by state medical
boards. The board members making the rules are physicians themselves,
some of which may be loosing money to "medical spas". It's never
a good idea to enter a business where the competition can change the
rules at any time, but that's exactly where the current crop of
franchises are. If you don't have a physician on-site and seeing
every patient before their treated, you're in danger of having the
rug pulled out from under you. Hard.
Big dogs eat little dogs: This is not a level playing field. I often
tell physicians that this business is like opening a women's shoe
store inside your practice. The market is going to decide who wins and
loses. If you don't have absolutely compelling answers to this
question, "Why would a patient choose to come to me over my
competition?", wait until you do. (If your answer is price, start
over.) A copy-cat strategy is a no-win business plan. The next five
years will see dramatic and disruptive changes in this marketplace.
Large, well financed medical businesses with smart physicians and high
quality care are going to open up next door to you. If you're not
well established with deep roots, you'll be gone.
Financing is easy. Financing smart is hard: Speak the words "Medical
Spa" as a physician and you're everyone's best friend. Banks,
lenders, technology companies will all have big smiles on their faces
and their hands out, ready to lend or finance anything you need.
The $80,000 towel dryers: Choosing the right technology is one of the
things that will let you move ahead a step, or put you in cement boots
where you stand. I always think of the way one physician described the
pair of IPL that he'd bought; as $80,000 towel dryers. Before you
decide on which system to buy you're going to need to crunch the
numbers. How many shots will the IPL heads last for until they need to
be rebuilt? How much support is included? What kind of training is
provided? Does the device work better than its competitors? Before you
sign your next few house payments away, make sure of your technology
decisions.
· Leasing is the best way to go if you want to pay for your
equipment as you use it while preserving your capital. Many of the
technology companies have delayed payment plans as long as six months.
· Buying used equipment is often the best way to save money if
cash flow is not an issue. (We purchase used medical lasers and IPLs
online from a broker we trust.)
Don't guild the lily: Cash flow is a problem many start-up medical
spas face. Revenues and growth projections are commonly exaggerated in
the excitement of a new business. Before you invest in embroidered
leather treatment tables, make sure you can pay your bills. One medical
spa startup spent $350,000 on build out and didn't have any money
left to attract patients. They were out of business in four months.
More information is available online at wwww.surface-med.com