Summary of article from Ars Technica, by Beth Mole:
Unlicensed cosmetic procedures at a med spa have been linked to an outbreak of HIV, marking the first time cosmetic treatments have been associated with such an outbreak. At least three women who underwent “vampire facials”, a treatment involving the injection of a patient’s own platelet-rich plasma into their face, at the unregulated VIP Spa, tested positive for HIV. The spa, which had poor hygiene standards and reused disposable equipment, was shut down in 2018 and the owner was later convicted for practicing medicine without a license. Investigators tested nearly 200 other spa clients for HIV and found a total of five infections linked to the facility. The report highlights the importance of identifying potential novel sources of HIV transmission among people with no known risk factors.
Summary of article from Ars Technica, by Beth Mole:
The Centers for Disease Control and Prevention (CDC) reported that 19 women across nine US states have been poisoned by counterfeit Botox injections. Almost half of these cases resulted in hospitalization, with four individuals treated with botulinum anti-toxin. The Food and Drug Administration (FDA) reported these fake products were administered by unlicensed or untrained individuals in non-medical or unlicensed settings.The FDA and CDC noted symptoms from the counterfeit injections similar to botulism, including blurred vision, difficulty swallowing, dry mouth, constipation, and muscle weakness. They advised anyone experiencing these symptoms to seek immediate medical attention.The counterfeit Botox was primarily used for cosmetic purposes by women aged between 25 and 59. Exposure to the counterfeit product can lead to botulism or similar illnesses, potentially resulting in muscle paralysis or even death.
Physicians are raising concerns over the lack of regulation and policy enforcement in the medical spa (med spa) industry, following the death of Fairfield resident Jenifer Cleveland after an IV treatment at a med spa. Dr. Patricia Aronin, affiliated with the TX400, a group of Texas physicians, has called for changes in the industry, which she describes as largely unsupervised and prone to malpractice.
Med spas, offering services ranging from IV therapy to skincare and cosmetic procedures, have grown in popularity but lack sufficient oversight. According to Dr. Aronin, many people do not realize that these services are medical treatments requiring adequate supervision and record-keeping. She asserts that the current state of affairs has been deteriorating over the past decade and has called for changes before more incidents occur.
The issue is compounded by the structure of the medical industry and Texas law, which has created opportunities for illegal practices within med spas. Dr. Aronin highlights that the Texas Medical Board requires good faith examinations and proper medical record-keeping, both of which she suspects are lacking in many med spas.
In response to Cleveland’s death, the Texas Medical Board temporarily suspended the license of Dr. Michael Patrick Gallagher, who served as the medical director at the med spa where Cleveland received her treatment. Dr. Aronin emphasizes that the role of the medical director in med spas is a critical area requiring reform, including clearer guidelines on hiring practices and the responsibilities of the position.
Dr. Aronin also calls for patients to be more proactive in advocating for their health, urging them to inquire about qualifications, practices, and equipment at med spas. She stresses the need for the public to recognize that med spa treatments are serious medical procedures, not casual beauty treatments. As of 2022, 63% of med spas were owned by non-physicians and non-surgeons, according to the American Med Spa Association.
I’m going to let you in on a little secret. Most med spas in Texas are not compliant with Texas law.
Either they are formed as the wrong legal entity type, they lack proper ownership or oversight, they are not following the standard of care, or all of the above.
The consequences can be significant for everyone involved.
For med spa owners, the Texas Medical Board can shut down your business. In extreme cases, you could be charged with practicing medicine without a license. If a patient gets injured, you could face civil liability. If your MedSpa is not formed or owned in compliance with Texas law, the insurance company could deny coverage, leaving you you holding the bag.
Physicians associated with non-compliant med spas can be disciplined by the Texas Medical Board. Those physicians are literally putting their medical licenses at risk.
Med Spas Provide Medical Services
I’m using the term med spa to describe several types of businesses—traditional med spas, IV hydration or IV therapy businesses, medical weight loss clinics, those types of retail medical services.
It should come as no surprise that the “med” in med spa stands for medical. We call them med spas because many of the services they provide are considered medical services. Botox injections, microneedling, dermaplaning and dermablading, cool sculpting, medium and deep chemical peels, are all considered non-surgical medical cosmetic procedures by the Texas Medical Board.
IV hydration and therapy, medical weight loss injections, and hormone therapy are also considered medical services. If a procedure involves injecting a patient or removing living tissue, it is probably a medical procedure.
Med Spas Must Be Formed Correctly
Because med spas provide medical services to the public, they must comply with Texas law just like any other medical practice, and that means they must be formed as an appropriate legal entity.
In Texas, medical practices can only be formed as professional associations, professional limited liability companies or PLLCs, or partnerships with other licensed physicians.
Many med spas in Texas today are incorrectly formed as corporations or regular LLCs. This is not allowed. Corporations and LLCs cannot be medical entities. The other requirement is proper ownership.
Med Spas Must Be Owned by Physicians
Medical entities, like med spas, cannot be owned by non-physicians. They must be owned by persons licensed to practice medicine in Texas.
Let me say that again.
Med spas cannot be owned by non-physicians. They must be owned by persons licensed to practice medicine.
A physician is a person licensed by the Texas Medical Board as a medical doctor, an MD, or a doctor of osteopathy, a DO.
But all is not lost. There is a way to structure a med spa correctly, even if you are not a physician.
Management Model
Through the magic of the management model, non-physicians can run a med spa and share in the profits.
Here’s how it works.
We still create a medical practice, like a PLLC, that will be owned by a physician, but we also create a management company owned by you that will run and manage the medical practice. You will be responsible for running the practice, but you do it through your your management company.
When patients pay for MedSpa services, that money is deposited into the Medical Practices Bank account. You, as the manager, have access to the Practices Bank account and you will pay all the business expenses from that account—rent, supplies, payroll, utilities, insurance, for example. What’s left over is paid to your management company as a management fee for your work in running and managing the practice.
So, in the management model, a physician still owns the medical practice, but you own the management company that runs the medical practice, and you take the profits as a management fee.
Special Arrangements
Let me pause here and say that if you happen to be a physician, things are more streamlined. We don’t have to use a separate management company. Physicians, of course, can own the medical practice.
If you are a podiatrist, chiropractor, or optometrist, there still must be a physician owner, but we don’t have to use a separate management company. You can jointly co-own the medical practice with the physician.
If you are a physician assistant, Texas does allow you to co-own the medical practice with a physician. However, you can only be a minority owner and the physician must be the majority owner.
Nurse practitioners unfortunately do not have the same opportunity as physicians. physician assistants. Nurse practitioners cannot co-own any part of a medical practice with a physician. The same is true for registered nurses.
So, if you’re a business person, a nurse practitioner, or a registered nurse, you must use the management model to operate a med spa.
Good Faith Exams
We have talked about the correct legal entity type and the correct ownership. Now let’s talk about an operational issue, the good faith exam.
A good faith exam is a medical examination conducted by a physician or a mid-level provider, like a physician assistant or a nurse practitioner, to assess a patient’s current condition and develop a plan of treatment. If you’ve ever been to a doctor, you have received a good faith exam.
Some med spas hire mid-levels on a part-time or as-needed basis to come into the med spa to perform these good faith exams. Other med spas use telehealth exams. Patients will schedule a telehealth exam prior to a med spa visit. The mid-level will perform a good faith exam and rule out contraindications and then write an order for a med spa treatment like IV infusion or a Botox injection.
Common Questions
That covers some of the requirements for Texas med spas. Now let me answer some common questions I get from clients.
Question 1. No one else I know is doing it this way. Are you sure this is right?
Yes, I’m sure. It’s unfortunate that many med spas are not formed or operating correctly. If you have researched med spas, you know how difficult it can be to get straight answers.
The problem is there is a lot of misinformation on the internet. Much of it is incomplete or just plain wrong. Some of it might be right for other reasons. states, but not in Texas.
It’s important to understand that each state has its own laws that apply to med spas. It’s no wonder there is so much confusion. The information I’m giving you is correct for Texas, but it won’t apply to other states.
Question 2. I don’t want the physician to have access to the business. How can I protect my business?
Well, I don’t blame you, and because of that, we build in certain protections into the documents.
We specify that the physician cannot sell or transfer their interest to any other person without your permission.
We give you access and control to the bank accounts for the medical practice. In that way, you control the money. We create a process to change physicians if that ever becomes necessary. If the physician some day decides they want to move on, we don’t have to create a brand-new medical practice.
We just transfer ownership of the existing medical practice to a substitute physician.
Finally, the management company that you own will own your med spa’s brand and name. The management company will license that name to the medical practice. The medical practice can’t use it without your permission. In that way, you always maintain control of your brand.
Question 3. How does the physician get paid?
The physician gets paid a flat fee every month for supervising the mid-level provider.
In Texas, mid-level providers must be supervised by a physician. The Texas Medical Board has established rules for this supervision. Physicians who don’t properly supervise the mid-level provider can be disciplined by the medical board.
The physician usually doesn’t see the patient. They supervise the mid-level provider who does see patients and for that they get paid a monthly flat fee somewhere in the range of $1,000 to $3,000 per month.
Question 4. What kind of insurance do I need?
You need a general liability policy for slip and falls and you need a professional liability policy for hypothetical malpractice claims.
Physicians and mid-level providers probably already have a malpractice policy. Sometimes you can add the MedSpaw as an additional insured to those policies.
My preference is that you get the med spa its own malpractice policy that covers every practitioner who works works for the med spa. That way, you don’t have to depend on others to have the right amount of insurance for your business.
Question 5. Are there any legal risks for the physician?
There is always some level of risk. A patient who has a bad experience can file a complaint with the Texas Nursing Board or the Texas Medical Board. If that happens, the provider will have to justify the services they provided to that patient.
For the physician, it’s important that they take seriously their responsibilities to supervise the mid-level provider. There must be a supervising agreement between the physician and the mid-level. The physician needs to review a sample of patient charts every 30 days and address any concerns with the mid-level, and the physician needs to be available to answer the mid-level’s questions as they come up.
For the mid-level provider, it’s important that they are thorough when performing the good faith exams and that they keep good medical records. What are the next steps?
Conclusion
I’ve covered a a lot of information. I would encourage you to watch this video more than once. You will probably key in on new information each time.
Well, that’s it. Best of luck to you. You’re on an exciting journey. I look forward to the opportunity to help you along the way.
The FDA has issued a warning about the dangers of using unauthorized versions of fat-dissolving injections, citing reports of severe side effects such as scarring, infections, and skin deformities.
These injections, also known as lipolysis injections, are typically used in problem areas such as the chin, legs, upper arms, and abdomen.
While the FDA has approved one injection, Kybella, from Kythera Biopharmaceuticals, there are many unapproved versions being sold at clinics and med spas, as well as online.
Common ingredients in these unapproved injections, such as phosphatidylcholine and sodium deoxycholate, have not been approved by the FDA.
The FDA advises against purchasing fat-dissolving products from websites, as they may be ineffective and carry a risk of severe side effects. If experiencing side effects from these injections, it is recommended to see a healthcare provider.
The Texas Medical Board suspended Frisco anesthesiologist Dr. Michael Gallagher after a mother of four died in July at a med spa for which he was the medical director.
She died after receiving an IV treatment administered by the non-licensed owner of the business.
The med spa did not have protocols or policies for the staff’s IV therapy administration.
There was only an unsigned agreement between Gallagher and the med spa.
There were no licensed medical staff or experienced personnel onsite while IV therapy was being administered.
The treatment the patient received before dying included vitamin B complex, vitamin B12, TPN electrolytes, and ascorbic acid. TPN electrolyte solution requires a prescription and is known to cause complications.
IV therapy is a growing market, but complications can be deadly because it is often administered in medical spas with little medical supervision.
The American Med Spa Association defines a medical spa as a hybrid between an aesthetic medical center and a day spa” with four core elements: (1) the provision of non-invasive (i.e. non-surgical) aesthetic medical services; (2) under the general supervision of a licensed physician; (3) performed by trained, experienced and qualified practitioners; (4) with onsite supervision by a licensed healthcare professional. AmSpa – Med Spa FAQ
While that definition is technically accurate, it obscures the point that because med spas offer medical services, they are considered medical practices in Texas and must comply with the rules and regulations that apply to traditional doctor’s offices.
What kinds of services do med spas offer?
In addition to providing aesthetic cosmetic treatments common in many spa settings, med spas provide services that cross the line into the practice of medicine. A small sample of these services include:
Laser Hair Removal
Botox injections and other dermal fillers
IV infusions
Platelet-Rich Plasma injections
Hormone therapy
Cosmetic surgeries
The Texas Medical Board refers to these types of services as Nonsurgical Medical Cosmetic Procedures and requires that an appropriately trained physician, or properly supervised midlevel practitioner, perform an appropriate patient assessment and issue an order for the medical cosmetic procedure. Title 22, Texas Administrative Code, Section 193.17, Nonsurgical Medical Cosmetic Procedures
What legal structure must med spas have?
Because med spas are medical practices, they must follow the requirements of Texas law regarding professional entities. Medical practices can only be structured as professional limited liability companies (PLLC) or professional associations (PA). Texas Business Organizations Code, Section 301.003(3)
They may not be formed as corporations or regular limited liability companies (LLC).
That means that nurse practitioners or unlicensed persons cannot form a “partnership” with physicians to own a med spa. Said another way, unless you are a physician, chiropractor, optometrist podiatrist, or physician assistant (in limited situations), you cannot own a med spa. This too is a violation of the Corporate Practice of Medicine.
Can a non-physician co-own a med spa with the physician?
In certain circumstances, non-physicians can co-own a medical practice with the physician. The only allowances are for podiatrists, chiropractors, optometrists, and sometimes physician assistants. Texas Business Organizations Code, Sec. 301.012 That means that nurse practitioners, registered nurses, estheticians, or unlicensed persons cannot form a “partnership” with physicians to own a med spa. Said another way, unless you are a physician, chiropractor, optometrist podiatrist, or physician assistant (in limited situations), you cannot own a med spa. This too is a violation of the Corporate Practice of Medicine.
Can a dentist be the “medical director” of a med spa?
I’ve seen mention that the Texas State Board of Dental Examiners allows dentists to use Botox for dental esthetic and dental therapeutic purposes. I cannot confirm that policy, but it would not be surprising as there are several therapeutic dental uses for Botox: high lip lines, Temporomandibular Joint Disorder, Bruxism, and dentures no longer fitting due to shifting jaw muscles. However, Botox for facial cosmetic purposes would not be in a dentist’s scope of practice.
In my view, dentists can only prescribe Botox and fillers for dental purposes. I do not think dentists can provide Botox for purely cosmetic purposes. The other issue is that since cosmetic Botox is a medical service, and dentists are not medical doctors, they cannot own or co-own a medical practice. Neither are dentists qualified to serve as “Medical Director” since they are not licensed to practice medicine in Texas.
What are some of the risks of a non-compliant med spa?
It is a violation of Texas’s Corporate Practice of Medicine doctrine for corporations or standard LLCs to provide medical services. Doing so could bring civil and criminal penalties. Texas Occupations Code, (Medical Practice Act), including sections 155.001, .003, 157.001, 164.052(a)(8),(13), and 165.001, .051, .101, .151, .156
Is the physician required to be on-site or at mid-level required to be on-site?
Either the midlevel or the physician can do the good-faith exam via telehealth or in person. They must be the ones to write the order for the medical procedure.
How often should a med spa perform good faith exams on patients?
At a minimum, a Good Faith Exam (GFE) should be performed annually, but may be required more often depending on the circumstances.
The good faith exam should be performed on any patient receiving treatment for the first time. From this GFE, the provider develops a treatment plan which will often include multiple treatments over several sessions. A GFE does not need to be performed for each session included in that treatment plan.
With that said, a new GFE should be performed:
If a patient seeks additional services not anticipated during the initial GFE, or not included in the initial treatment plan;
The patient discontinues the treatment plan, but then desires to resume treatment after a substantial delay; or
A patient’s health changes materially, either during the course of a treatment plan or thereafter.
There is no hard and fast rule. It is a question of the applicable medical standard of care. When in doubt, a physician or midlevel should decide if a GFE is required.
Med spa growth across Texas and the nation continues to increase. The American Med Spa Association (AmSpa) found in 2018 that there were 5,431 med spas in the United States with average revenue of more than $1.5 million. That was up by 9% from the year before.1
Revenues during 2020 were strong relative to other industries. While 52% felt the impact and project revenues below $1 million, 37% projected revenues between $1-4 million.2
The outlook for the future is bright. Sixty-two percent (62%) of med spas owners expected their revenue in 2021 to increase by more than 10%:3
Many respondents expressed optimism for the post-pandemic future, with some citing the so-called “Zoom effect” as a reason why more people than ever before might seek out aesthetic services.
It’s no wonder Texas is experiencing a growth in med spas. Unfortunately, there is a lot of misunderstanding about med spas. While people rush to open practices and reap the financial rewards, many (or most) are not following Texas law. Starting a med spa without the right knowledge, structure, ownership, and licensure could subject you to legal liability, civil and criminal penalties, cease and desist orders from the Texas Medical Board, breach of contract, and a host of other unanticipated risks.
What are Med Spas?
The American Med Spa Association defines a medical spa as a hybrid between an aesthetic medical center and a day spa with four core elements: (1) the provision of non-invasive (i.e. non-surgical) aesthetic medical services; (2) under the general supervision of a licensed physician; (3) performed by trained, experienced and qualified practitioners; (4) with onsite supervision by a licensed healthcare professional.4
While that definition is technically accurate, it obscures the point that because med spas offer medical services, they are considered medical practices in Texas and must comply with the rules and regulations that apply to traditional doctor’s offices.
In addition to providing aesthetic cosmetic treatments common in many spa settings, med spas provide services that cross the line into the practice of medicine. A small sample of these services include:
Laser Hair Removal
Botox injections and other dermal fillers
IV infusions
Platelet-Rich Plasma injections, including O-Shot
Hormone therapy
Cosmetic surgeries
The Texas Medical Board refers to these types of services as Nonsurgical Medical Cosmetic Procedures and requires that an appropriately trained physician, or properly supervised midlevel practitioner, perform an appropriate patient assessment and issue an order for the medical cosmetic procedure.5
I once had a client physician who was the supervising physician for a med spa. Unbeknownst to him, the med spa did not hire a midlevel practitioner and was allowing a registered nurse (RN) to “order” and administer Botox injections. He immediately resigned from the clinic and reported the conduct to the Texas Medical Board. Last I heard, the TMB was imposing civil penalties against the clinic.
There are also specific licensing requirements associated with some of these services. For example, clinics owned by non-physicians that provide laser hair removal services must be licensed by the Texas Department of License and Regulation. That licensing requires specific training for the employees and contracts with designated and supervising physicians. Because the laser equipment emits radiation, it must also be licensed by the Radiation Control Program of the Department of State Health Services.6
These licensing requirements cut both ways. If a person with an esthetician license is working in a medical office, the medical office is required to have a salon license. 7
Legal Structure for Med Spas
Because med spas are medical practices, they must follow the requirements of Texas law regarding professional entities. Medical practices can only be structured as professional limited liability companies (PLLC) or professional associations (PA).8 They may not be formed as corporations or regular limited liability companies (LLC).
Time and time again, I see “med spas” offering medical services through corporations and standard LLCs. Doing so is a violation of the Corporate Practice of Medicine doctrine and could carry civil and criminal penalties. 9
Ownership of Med Spas
Equally important, medical practices can only be owned by physicians.10 The only exceptions are podiatrists, chiropractors, optometrists, and sometimes physician assistants. 11 That means that nurse practitioners or unlicensed persons cannot form a “partnership” with physicians to own a med spa.
Said another way, unless you are a physician, chiropractor, optometrist podiatrist, or physician assistant (in limited situations), you cannot own a med spa. This too is a violation of the Corporate Practice of Medicine.
Physician Supervision
In addition to the ownership requirements, nurse practitioners and physician assistants (“midlevel practitioners”) must be supervised by a licensed physician as required by the Texas Medical Practice Act and the rules of the Texas Medical Board.12
This supervision is memorialized in a Prescriptive Authority Agreement or Collaboration Agreement, which documents the procedures and prescriptions the physician is delegating to the midlevel to perform.13
If the med spa is jointly-owned by another authorized person (chiropractor, podiatrist, etc.), the physician generally will also serve as the Medical Director for the practice and be responsible for all medical protocols and policies.
Danger for the Uninformed
These are just a few of the compliance issues Texas med spas must satisfy. There are also in-office and website disclosure requirements, registration requirements, reporting requirements, restrictions on the type of marketing or advertising the practice can engage in. The list goes on and on.
If you need help forming a med spa, or if you have already formed one and need assistance bringing it into compliance, please don’t hesitate to contact me at 214-855-3040 or wemmert@ccsb.com.
