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Devising and Implementing a Growth Strategy for a Medical Spa

Learn from the experiences of others how to hire staff, train them, and effectively plan for the growth of a medical spa.

As covered in last month's article, there are several questions you should contemplate before seriously planning a medical spa for your practice. If you have decided that a medical spa is right for you, your practice, and your patients, you will need to take the right measures in order to maintain and manage the spa effectively. For the final installment of the series, West Palm Beach-based dermatologist and medical spa owner, Kenneth Beer, MD, and Devon Boggs, a practice administrator for Sarasota Plastic Surgery, provide a wide array of valuable Spa growth strategy requires diligence, perseverance and tolerance for riskinsights and questions to consider in managing, staffing, and running a medical spa. They offer two perspectives based on their experiences with different practice/patient backgrounds.

Who will staff the spa?
Your medical spa staff should be trained on all service offered in addition to what is available at the medical practice. You should reasonably expect staff to have a working knowledge and understand most important facts, but their key duties should not be neglected in favor of educational undertakings. This is where a patient education coordinator (PEC) can take over. The PEC needs to be easily accessible. If the medical spa is located within the medical practice, spa staff can walk patients to the PEC and make the introduction. If the spa is off-site, obviously it will be more difficult to make the "hand-off" or transition. If the spa customer has to get in his or her car and drive to a second location, the chances of missing the opportunity are increased. It may be a good idea to have a PEC at the spa in this situation.

Incentive compensation is the final piece of the puzzle. Creating an incentive compensation plan that encourages patient education over hard-selling is critical for success. This requires a certain amount of finesse. The management team needs to determine what procedures and services they want to focus on and dedicate available practice resources to growing them. The tricky part is determining the appropriate level of compensation and determining what aspect of the business to emphasize. Overcompensation can create a high-pressure sales environment while insufficient funding might not effectively motivate the employee to achieve practice goals.

According to Dr. Beer, the biggest challenge in operating a medical spa is staffing. "Getting staff that is dedicated and on the same page as you is difficult in most markets," he says. "Many estheticians require a higher level of attention, and it is challenging to find employees who want to make your spa work as much as you do."

Ms. Boggs agrees. "Opening a medical spa can turn into a second full-time job," she says, noting she has had to delegate many of her current duties to address the new challenges. Doing so has worked out well for her because she has an excellent staff that is more than capable of handling the increased workload. However, if your practice is already stretched thin on manpower, you may need to begin recruiting early to backfill practice staff that will transition to the spa, as well as for new spa personnel.

Ms. Boggs also feels "having the right staff is the key to success. Make sure you hire the right manager, with the right credentials, and pay them what they are worth. When recruiting a manager, it is important to examine all resumes thoroughly and keep a sharp eye for individuals who are qualified, have the ability to operate autonomously, are versatile, possess strong leadership skills, and have a proven track record of success."

Don't overlook or justify red flags on a resume. Most of us are guilty of this at one time or another. It might have been because we were in a hurry to fill a position, we didn't spend enough time with the candidate, or we simply liked the person and forgave them the sins of the past with the hope that history would not repeat itself.

Is there a need for my medical spa?

Will your patients be interested in taking advantage of expanded cosmetic services? The best way to find out is to ask, and a great place to start is with your existing patients. There are several ways to conduct a cost-effective market survey:

  • Cosmetic/aesthetic interest questionnaire;
  • Patient satisfaction survey;
  • Direct mail.
Who is the competition?

One way to learn about the competition is to first identify them and then visit their operation. Make an appointment and see what they offer. Hotels, resorts, day spas, other medical spas, and laser centers are Final piece of the puzzle: Incentive compensationall competing for the aesthetic patient. You may not be able to compete with the luxury of a golf or tennis resort, but you have other competitive advantages; your existing patient database, the fact that you are a true medical practice with easy access, one-stop shopping, and you are a known and trusted medical provider. IPSA defines a medical spa as a facility whose medical program is run under strict supervision of a licensed healthcare professional. Your nonmedical competition may not be able to duplicate your higher-end procedures.

Can this be done alone?
You can do it alone, but you will most likely have to give something up (i.e., treating patients or all of your free time) in order to complete this project. A growing number of resources are available that offer everything from basic advice to turn-key franchises. You must decide how much of your personal touch, time, and involvement you want to devote to this endeavor.

Do I need to complete a business plan?

You can dramatically increase your odds for success by going through the process of creating a focused business plan. The SWOT analysis discussed earlier is a good place to start because it likely generated awareness of factors you may have overlooked or not thought enough about. A good business plan needs to address a variety of important topics, including:

Income and Revenue: Think about all of the possible income streams from services, procedures, and retail. As Dr. Beer points out, "the break-even point for a spa is very different from a medical practice, and the margins are thin. The medical spa business is built on small margins and if you are not selling a lot of products, the margins are even thinner."

Some questions to ask—and answer—are: How many stations will we operate? What is the pricing structure? What services will we offer? Who will provide the services? The list of services offered by some medical spas is sometimes so overwhelming that it is easy to lose focus of the original goal. The management team must discuss what they want to offer initially and what can be incorporated as the spa grows. Typical medical spa offerings include: microdermabrasion, Botox®, fillers, chemical peels, post-procedure services, hair removal, laser procedures, cellulite treatments, manicure, hairstyling, facial, make-up, massage, and nutrition/diet counseling.

Expenses: Determine accurate figures related to expenses for labor, workman's compensation, taxes and benefits, cost of goods, rent, etc. Some practices report their labor cost alone often exceeds 50 percent of their total revenue.

Construction and Setup: Diligent business planning requires close examination of such key items as construction costs, furniture and fixtures, equipment needed, uniforms, initial retail inventory, linen, training, marketing, and architecture and design. Quality contractors can be difficult to find and good contractors will likely have several other projects going on at the same time. A contractor is only as good as his sub-contractors, and you will most likely need to identify a project manager from your staff to coordinate activities with the contractor and his or her team of subs.

Profit and Loss Projections: Setting realistic profitability expectations is essential to the success of this project. It is important to set sensible goals and revenue projections during this phase in order to complete a breakeven analysis. Use this information to pinpoint a time in the future when you can expect the spa to become an asset rather than a liability.

Business Planning Resources: There are numerous useful resources to help guide the business planning process. One informative web site that offers a nice business planning kit is www.resourcesanddevelopment.com.

Additional Medical Spa Resources

There are numerous articles and websites dedicated to the subject of medical spas. These resources generally address the benefits that await all who enter this market. Reality-based information on opening a medical spa that will complement your existing practice is much more difficult to find. I found the following websites valuable while working on this article.

Is a medical spa worth all the effort?

Perhaps Dr. Beer answered this question best by saying, "after getting a lot of pushback from patients who thought it was anything from a brothel to a nail salon, people are starting to recognize that there is place for a spa dedicated to skin care. It has the potential to draw away a lot of product sales and light services such as microdermabrasion from the medical/cosmetic office. I am now at the point where my medical spa is beginning to Devising and Implementing a Growth Strategy be accepted for what it is: a skin care refuge. After a year plagued by hurricanes and delays, the spa is breaking even and probably the most gratifying thing is when I have people come to me saying they had the best massage or best facial or were able to spend an hour discussing their skin issues with my trained estheticians.

"One of my best friends told me when he found that I had opened the spa that I would never make more than a minimal amount of money in the business," Dr. Beer continued. "He also said that given the risks to my practice reputation and amount of money tied up, that it was not worth it. My most gratifying day will be when my spa is profitable enough and prestigious enough that I am able to have this famous businessman, who is never wrong, tell me that I was right for opening it when I did."

Undertaking a medical spa growth strategy requires diligence, perseverance, and a tolerance for a certain amount of risk. However, the likelihood of success will be significantly enhanced if you surround yourself with intelligent, motivated people and understand that customer service is the differentiating advantage. Take the time to plan, and have a plan for all eventualities.