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Protect Your Practice: 5 Tips for Minimizing Your Medspa's Legal Risk

Understanding the source of lawsuits and staying on top of state requirements will ensure your Medspa avoids legal trouble

The Medspa market is booming. Analysts expect the industry to become a nearly $64 billion business by 2032 as more practitioners open up locations to meet the increasing demand for aesthetic services. However, with increased revenue opportunities comes increased scrutiny. Aesthetic medicine isn’t just one of the most common specialties for malpractice lawsuits — lawmakers are noticing the industry’s surge in popularity and are taking steps to increase regulations.

While there’s no silver bullet for protecting your Medspa from litigation, you can take actions to reduce risk and protect you and your business from legal action — steps that go beyond the standard HIPAA-related privacy protections. Read on for tips to help you put safeguards in place to reduce liability and provide a better, safer service for your clients.

Understand the root of common Medspa litigation 

If you do not understand the most common causes for lawsuits, you won’t be able to prepare for them properly. According to Dermatology Times, patients are most likely to sue Medspas for these reasons:

  • Lack of supervision: Both state law and type of procedure will often determine the required level of physician supervision, so it’s crucial to fully understand what each service requires and have personnel in place. 

  • Poor training: If you have not properly trained staff on protocol and treatment procedure, you’re increasing your risk of potential lawsuits.

  • Poor aesthetic results: There’s always a chance aesthetic procedures do not turn out as planned, so ensure you have processes in place to mitigate failure and address mistakes as they arise.

  • Lack of informed consent: Patients need to fully understand any procedure's potential risks and outcomes before beginning.

These four common reasons for litigation will give you a starting point to examine your current patient intake process, service procedures, and other protocols to help shore up deficiencies before they lead to a lawsuit. Also, these areas are likely to falter as your business scales up to meet increased demand, so make sure they don’t fall by the wayside as your business grows.

Always delegate tasks to authorized practitioners

As much as you’d probably like to, there’s no way you can oversee every aspect of your Medspa business or interact with every patient at each step of their journey. Delegating responsibility is essential to keep operations running smoothly, but it’s also crucial to understand what you can delegate, what you can’t, and who is authorized to take on specific tasks. 

For example, some states require that injection procedures be performed by licensed physicians or physician assistants (PAs) — meaning that you cannot delegate these responsibilities to registered nurses or other staff. 

Of course, much of what you can delegate comes down to state laws and regulations. Telemedicine, in particular, is a tricky subject, as each state has its own requirements on what services patients receive remotely and who needs to be present. It’s important to take stock of your current menu and consult a lawyer to determine who can perform each task and whether these tasks need direct supervision. 

Treat Medspa procedures like medicine

Medspas are meant to feel welcoming and relaxing for patients — often the opposite of a hospital. This can lead to a sense that aesthetic treatments and procedures aren’t medicine, even though many laws and regulations require licensed medical professionals to perform them.

Most importantly, Medspas must ensure their licensed physicians or PAs are performing thorough “good faith examinations” — a term used in California, though it can be more broadly applied to general wellness exams across the US — during the intake process. These exams allow MedSpas to assess any medical conditions that may impact requested procedures.

Additionally, Medspas need to: 

  • Keep well-documented records that follow HIPAA regulations to protect patient privacy.

  • Implement procedures to cover practitioner errors and take corrective action.

  • Establish protocols to ensure all practitioners and delegates are following procedures.

Even if some states don’t technically consider Medspa treatments to be medical procedures, providers must perform them with the same level of care and concern as any hospital, primary care provider, or specialist would. 

Be careful with compensation

Commissions are a valuable incentive to help increase profits, especially as Medspas attempt to align their offerings and revenue structures alongside those found in beauty salons and spas. While commissions are not illegal in and of themselves, improper handling of them can lead to legal headaches.

There are two specific forms of compensation that can land your business in ethical or legal hot water, especially if your state has specific laws against them: 

  • Fee splitting is exactly what it sounds like – the patient’s fee for services rendered gets split between the physician who provided the service and a separate individual or organization.

  • Kickbacks involve direct payments to or from physicians in exchange for a referral.

To avoid potential lawsuits, the American Med Spa Association recommends paying out bonuses based on performance metrics rather than giving direct commission-based compensation.

These compensatory restrictions also apply to client referral rewards — another common feature found in non-medical beauty salons and spas. For example, a gift card to a client for referring their friend could be seen as a form of kickback, whereas a discount or VIP program would not. 

Regularly consult with healthcare lawyers

This may seem obvious, but as your Medspa looks to add new services or expand into new territories, it’s important to regularly consult with healthcare lawyers to ensure additions or changes meet state and local regulations.

This is especially important as state legislatures begin to catch up with the latest technological advancements or aesthetic procedures. As the Medspa industry grows, it’s also undergoing increased scrutiny, and procedures or products that were once legal may have new restrictions or be banned outright. 

2022, in particular, saw a wave of attempted legislation from various states to introduce restrictions or change rules regarding allowed procedures or employee delegations. Michigan’s SB 1060 would have restricted the administration of Botox injections to physicians, PAs, or nurse practitioners. On the other hand, Rhode Island attempted to pass SB 2869, which would have enabled registered nurses to perform aesthetic services. While neither of these bills passed, they will likely not be the last attempts in these or other states to change the current legal landscape for Medspas.

Check with your lawyers for advice on whether any current or foreseen issues may arise when implementing new services or adopting new technology. There may not currently be any legal issues, but potential changes may force your hand — and eat into your profits — if you’re not careful.

(The material contained in this article is provided for informational purposes only and should not be construed as legal advice.)

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