Survival of the fittest

August 1, 2007

What will it take for medspas to survive? What is the role of franchises in the medspa industry? While most parties have their own ideas, all agree that oversight and supervision are prerequisites for survival and success.

Key Points

National report - Only the fittest franchises and chains are surviving as the medical spa industry muddles through the results of widespread poor business planning and weathers lawsuits due to lack of clinician oversight.

Experts tell Dermatology Times that they expect consolidation in the industry, with physicians, such as dermatologists, overseeing clinical operations and experienced business people managing the purse strings.

Crash courses with bad outcomes

But dermatologists insist that, until now, the medspa business has not been much of a threat. The problems facing franchises that enter the medspa space can be traced to lack of attention to important details, according to Vic A. Narurkar, M.D., a dermatologist in San Francisco, and assistant clinical professor of dermatology at University of California, Davis, Medical School, Sacramento, Calif.

"What a lot of these chain spas have done is they have trivialized the practice of dermatology by claiming that you can take a weekend course in Botox or fillers or lasers and then become experts in skin disease. Many are masquerading themselves as being dermatologists, when they are not," Dr. Narurkar says. "In the Bay area, we have not been affected one bit. The city has been infiltrated by medspas and chains, and usually they open and shut down. They are not great, sustainable business models for the most part, and they often wind up harming patients rather than helping them."

The complications that result can be dramatic. Earlier this year, the American Society for Dermatologic Surgery (ASDS) launched a patient safety campaign, warning consumers of the pitfalls of undergoing medical procedures without appropriate physician oversight at medical and other spas.

ASDS noted such highly publicized cases as the 2005 case in which a 22-year-old North Carolina woman died from a lidocaine overdose as she was preparing for laser hair removal at a spa.

Tides of change

Sharilyn Abbajay, founder of Abbajay Consulting, a Maryland-based business consulting firm that specializes in spas, agrees and says the medspa business is going in that direction.

Ms. Abbajay, who is on the board of the International Spa Association, says medical spas, which feature dermatology-type cosmetic services, represented the largest segment of spa growth in the United States during the last four years, growing 200-plus percent. She adds, however, that the numbers of spa franchises have diminished in recent years.

"I would say, about eight years ago, there was a strong trend in especially laser clinics. But the treatments were getting into the hands of nonphysician technicians. There were a lot of lawsuits, and then you saw a drop in franchise numbers. Now you see just a few chains out there, with most of the growth in individual doctor-owned medical spas which are not affiliated with franchises," Ms. Abbajay says.

One characteristic among franchises that remain viable is physician oversight.

Carl Mudd, founder, president and CEO, Dermacare Laser and Skin Care Clinics, Phoenix, Ariz., says the key to his success is that 44 of the company's 50 franchises are physician-owned; the rest have on-site physicians overseeing procedures, which include laser hair removal, laser toning, injectables, FotoFacial (Advanced Aesthetic Dermatology), Botox injections and more.

Dermacare Laser and Skin Care Clinics' medical board chairman, Sidney Smith, M.D., is a practicing dermatologist. The rest of the board is made up of three other physicians, who, along with Dr. Smith, make decisions regarding how patients are medically treated, according to Mr. Mudd.