Beautifying your bottom line

May 1, 2003

Consider the pros and cons before adding cosmetic procedures, advises this article from Medical Economics OB/GYN edition.

 

(This article—which addresses the practical aspects of adding cosmetic procedures to your practice—first appeared in our sister publication, Medical Economics OB/GYNedition.)

Beautifying your bottom line

Jump to:Choose article section...Repairing damaged marginsChange can be goodGrooming for successWhat price, beauty apparatus?What pulls the patients in?

By Cynthia Starr

Cosmetic procedures can bring in extra revenue, but you need to consider the pros and cons carefully before adding them.

In recent years, some ob/gyns have begun taking a more active role in keeping America beautiful. They eliminate spider veins that creep across the face and legs. They remove unwanted hair, smooth crumpled brows, polish weathered skin, and fill in furrows left by time or craters caused by acne. While the terrain is not a traditional one, ob/gyns who provide aesthetic services believe the treatments offer a logical way to expand their practices.

Just how many ob/gyns offer cosmetic procedures route is not known, but the numbers are still assumed to be small. "Certainly, there's no ground swell," says Judy Bee, a management consultant with the Practice Performance Group in La Jolla, Calif.

The American Academy of Cosmetic Surgery, whose members represent a diverse array of specialties such as dermatology, maxillofacial surgery, general surgery, and otolaryngology, has 66 ob/gyns among its 1,400 members, according to Kelly Miller, communication director of the AACS. Ob/gyns also appear on the roster of the American College of Phlebology, a group devoted to improving the treatment of venous disorders. A search of the phlebology Web site turned up 26 gynecologists among the organization's more than 800 members. The American College of Obstetricians and Gynecologists neither supports nor discourages the practice, noting that aesthetics is not within its purview, and "as with other surgical procedures, credentialing for cosmetic procedures should be based on education, training, experience, and demonstrated competence."

There's still something of a professional stigma about these procedures, too, and a few ob/gyns who provide cosmetic services declined to speak with Medical Economics. But one New England pair had a different motive for declining our invitation, explaining that much time and effort had gone into acquiring the necessary skills; they were worried that disclosing relevant information might spark unwelcome competition.

Other ob/gyns, however, were quite willing to share what they'd learned about the risks and benefits of doing these procedures. Here's what we learned.

Repairing damaged margins

For Neil Goodman and his partners, doing aesthetic services presented an opportunity to improve shrinking profits. Managed care had pinched the earnings of Women's Health Resources in Yonkers, N.Y., and its nine physicians—six ob/gyns, two perinatologists, and one internist. "We could barely afford employees' raises—let alone our own," Goodman says. "To improve our situation, we decided to offer auxiliary services not affected by managed care."

Women's Health Resources now offers laser hair removal (its most popular service), vein treatments, skin photorejuvenation, and injections of collagen and Botox Cosmetic (botulinum toxin type A). Goodman began learning how to do these procedures 2 years ago, practicing on friends, relatives, and employees, but didn't start treating patients until early this year.

"When I first started, I was skeptical, but the treatments do work," he says. At present, he estimates he spends 8 to 10 hours a week on aesthetic services. Two of his colleagues are learning to do the procedures so they'll be able to help as volume builds.

It's too soon to estimate how profitable the new venture will be, but Goodman isn't worried. The practice sees 800 patients a week and has some 80,000 women on its mailing list. "We put information about our cosmetic services in our mailers, place brochures in the waiting room, and word of mouth spreads quickly," he says.

Goodman finds that he enjoys the work and feels comfortable doing it. "Physicians have been learning how to use lasers in new ways throughout their training. It's not that much of a jump."

It was insurance hassles that motivated J. Antonio Garcia to add aesthetic services. Garcia, a solo practitioner in Tacoma, Wash., began exploring new avenues after a run-in with an insurer. "I started thinking about how I could practice without having to please anybody but the patient."

Medical Aesthetics, now entering its fifth year, is housed in the same building as Garcia's ob/gyn practice, but each is a separate entity with its own entrance. Ob/gyn nurse Barbara Powers was hired and then trained to administer almost all the cosmetic treatments. Garcia can perform the treatments, too, but he confines himself primarily to sclerotherapy and Botox injections, usually scheduled 2 days a week. Powers does laser hair removal and uses lasers and pulsed light to eliminate blemishes, such as spider veins, age spots, and tattoos that are past their prime. She also provides collagen injections, microdermabrasion treatments, and infrequently, a machine-based deep massage designed to reduce cellulite. (The latter is "something I want to phase out," Garcia says. "It's not that popular.")

Initially, Garcia wondered if his efforts would pay off; it took about 2 years just to break even. "I was sleepless in Tacoma for a few years because I was paying for machines and had no patients. What sustained me," he adds, "was the thought that I wasn't going to be run out of business by third-party payers."

Elaine E. Huber is someone else who got involved in aesthetic services as a way of limiting insurance hassles. Owner and medical director of Women'sCare, Huber maintains two offices: one in Somerville, N.J., and another in the more affluent Whitehouse Station. These are staffed by two additional ob/gyns, a part-time family practitioner, and a full-time nurse practitioner. The practice began offering laser hair removal 3 years ago.

Business, initially sluggish, has become "consistently strong," Huber says. In contrast, when she began offering laser treatment of spider veins this past January, the service was immediately in demand. "I realized I'd had a slew of patients who were asking where they could go for treatment of their veins," Huber says. "I decided I could provide the service they were seeking."

More recently, Women'sCare began offering microdermabrasion, done by Huber or her nurse practitioner. Patients pay $100 per treatment by the NP, $150 by the physician. "For the best outcome, you do a series of six treatments at 7- to 10-day intervals," Huber explains. "Then you do maintenance treatments every 1 to 3 months. Patients can pay per session or they can receive a discount if they prepay for a six-treatment package. It's basically a lunchtime facial."

The price of laser vein removal varies with the size of the area requiring attention. The minimum cost is $495 per treatment, and most people require more than one session, repeated at 10-week periods. "I have some patients who pay $1,200 for just one treatment because of the large area of involvement," Huber says. As with all aesthetic procedures, patients pay at the time of service.

If vein treatments continue to be in such high demand, Huber might learn sclerotherapy, since not all veins are responsive to the laser. She is also considering a laser that will address age spots, sun damage, and wrinkles. "I probably spend about 10% of my time doing cosmetics now," Huber says. "You see immediate results. I love it."

Change can be good

Some ob/gyns are simply interested in a change of pace. Norman Cohen, owner of The Vein Clinic in Jacksonville, FL, first became interested in vein therapy in the 1980s, when he had an ob/gyn practice in Boca Raton. "I went to some 1-day classes and begged my way into a couple of clinics just to observe," he recalls. "It wasn’t that hard to learn. Before long, I started doing spider veins in my office."

In 1997, "looking for something new to do," he called a practice in Jacksonville that he'd visited when he was learning phlebology, and the owners hired him. Cohen has since purchased the practice. With an NP and a physician assistant, he provides all manner of vein treatment, including office phlebectomy surgery and the new endovenous laser ablation for varicose veins. He also performs noninvasive cosmetic procedures, such as laser hair removal, Botox injections, microdermabrasion, and photorejuvenation.

"There's no more night call for me," Cohen says. "My beeper goes off six times a year, and four of those times it's a wrong number. I'm not going to say it's a stress-free practice, but it doesn't compare to the pressure of worrying about OB. I work very hard, and we do some very sophisticated procedures. But it's fun, and patients like us."

In 1997, Howard Ellis was also seeking a change. He took a year off from practice to train with a plastic and reconstructive surgeon who performed a variety of cosmetic laser treatments. "I spent a year using lasers for hair removal, vein therapy, facial rejuvenation, and skin resurfacing. I gave Botox injections and sold skin care products," Ellis says. "I realized this isn't something that has to be done by a dermatologist or a plastic surgeon. Ob/gyns already have a population of female patients, and some have 20,000 and 30,000 active charts. They already know lasers, and quite honestly, this is not very difficult stuff to learn."

At that point, Ellis approached James Mirabile, who had a thriving practice in Overland Park, Kan., and suggested an experiment. Mirabile would continue to provide ob/gyn, and Ellis would see gynecology patients and perform cosmetic procedures. The endeavor has proven very successful. MedCOSMETIC, the aesthetics business, shares a location with For Women Only, the original ob/gyn practice, and four more MedCOSMETIC offices have opened across the state line in Missouri.

Ten years ago, Jerry Ninia got an opportunity to learn phlebology when he joined an ob/gyn practice in which the senior physician had long been offering vein treatment. "I received hands-on training under the guidance of someone with experience," he says. "It was like an old-fashioned apprenticeship." Ninia furthered his education by joining the American College of Phlebology and attending conferences for additional hands-on instruction.

"There is no residency in phlebology, although that might change in the future," says Ninia, who is now a member of the association's board of directors. "We're working on getting board specialty status for the discipline."

A solo practitioner, Ninia spends 90% of his time attending to patients at Island Obstetrics and Gynecology Center in Port Jefferson Station, N.Y. The rest is spent at the Varicose Vein Center, housed in a renovated Victorian house in nearby Port Jefferson, where patients come for laser removal of spider veins of the face, as well as removal of pigmented areas, such as café au lait spots. "We also do laser hair removal, but we don't market it aggressively because we like our niche in phlebology," he adds.

Grooming for success

Certainly the demand for cosmetic services is intense. A survey by the American Society for Aesthetic Plastic Surgery found that the administration of botulinum toxin injections rose by 46% from 2000 to 2001. In the same period, laser treatment of leg veins rose by 66%, laser hair removal by 75%, collagen injections by 85%, and dermabrasion by 123%. Still, a number of considerations are essential before you offer aesthetic services.

Most important, you must be skilled at the procedures you're planning to do. "You can't dabble in cosmetics—you have to take it as seriously as you do ob/gyn," says consultant Judy Bee. Although the potential consequences of a mistake during noninvasive cosmetic procedures are less dire than for a delivery, they can still provoke grief. (See "Talk to your liability insurer" below.) Burning a patient with a laser, for example, is no small matter.

"Also, the treatments are expensive," she adds. "If you tell somebody you can take care of something in two passes, and it takes four or five—boosting the cost—they're going to be really ticked off."

Acquiring necessary skills is a do-it yourself affair. "A good place to start is at a professional society conference ," says Ninia. "That gives you the chance to see patient demonstrations, attend lectures, develop contacts, and see whether you like the specialty." But that's just a start. Don't make the mistake of immediately "buying an expensive machine, and thinking you're good to go," he adds.

You'll need hands-on training. One place to get it is from the companies that sell the equipment. Physicians interested in private sessions on phlebology techniques can visit Cohen in his Jacksonville, FL, office for a 3- or 5-day course. He estimates that between 30 and 50 physicians visit his office each year.

Ellis and Mirabile also spend a significant amount of time teaching physicians—in 1-day seminars all around the country. The seminars cover laser and light-based treatments, Botox and skin care products, as well as how to integrate these services into an ob/gyn practice. In addition, physicians who've already purchased lasers can visit the MedCOSMETIC office in Overland Park, Kan., for a day and a half of hands-on training. Ellis and Mirabile also make office calls.

It's important to know your limits, says Antonio Garcia, who will not do invasive procedures. "I don't do any breast augmentation or anything else that I think is too far from my field."

Huber says she's undecided about Botox and wants nothing to do with liposuction, which she believes should be done in a hospital or surgical center. Ellis will not do liposuction, either. Ninia doesn't administer collagen or Botox. And when Goodman runs into a higher level of vein disease than he's used to treating, he refers patients to a vascular surgeon who comes into the office once or twice a month.

From a business perspective, it's best not to offer every possible service yourself, says Geoffrey Anders, President of The Health Care Group in Plymouth Meeting, PA. Survey your patients to find out what most interests them. Subcontract the services you don't want to do, he adds. "You'll make less than if you did them yourself, but you'll have more time to concentrate on what you're good at, and you'll still make a percentage."

If you're going to hire an NP or an aesthetician to do some of the work, however, check your state's regulations first. In some states only physicians can administer laser treatments.

What price, beauty apparatus?

Plan to spend first, earn later. The equipment is costly, and aesthetics services could be slow to grow. Some physicians see a seasonal aspect. For instance, Ninia is busiest in spring and summer, perhaps because his patients bare their legs in warmer weather. Both Cohen and Garcia observed that right after September 11, patients were reluctant to spend money on aesthetics, though that resistance seems to have passed.

Goodman has leased two lasers for $77,000 to be paid out over 3 years. That period is just about up, and the ob/gyn expects to trade in the equipment for a faster more versatile model—and another 3-year lease. When Huber leased a laser for vein removal from the same company at $125,000 over 3 years, she was given a free upgrade for her original laser, and they gave her equipment for microdermabrasion at no extra cost.

"You have to be careful not to get too many machines," Garcia advises. "I think I made this mistake, and it's a constant drain." Most of his equipment is on a 5-year "dollar lease," meaning he'll own the equipment outright at the end of the term. That happens at the end of this year, and will produce "an important bump" to his bottom line.

If you can get a relatively short-term lease—3 years is probably the minimum—you can test the market without committing to the full capital costs of the equipment, Anders says. However, if you know you have the volume, he believes purchasing makes more sense. " Rather than borrowing at 7% to buy equipment, you'll pay the leasing company 11% in their overhead and profit."

Anders also cautions against putting off the purchase because you assume the equipment will become obsolete. "There is a difference between being obsolete and not being state of the art," he remarks. "You could have an older machine that gives you perfectly acceptable results."

In contrast, sclerotherapy and Botox—which require no major equipment—generate more income per treatment. The materials used in sclerotherapy are very inexpensive. Although Botox is quite costly, you need no inventory, buying it only when you know you'll be administering it.

What pulls the patients in?

If you do decide to offer aesthetic services, make sure your patients know it, and let the other doctors in your area know, too. Don't be afraid of possible competition. "More people in the market create more demand for the services," says Anders. "If one ob/gyn practice starts doing this stuff, and another picks it up, the market will expand, because patients in your community will come to view cosmetic procedures as something ob/gyns ordinarily provide."

Consider hiring a public relations agent (not an advertising agency). "The best thing is to get the media to talk about you," Anders says. "Having someone else talk about you is a hundred times better than talking about yourself."

Describe your new services in mailings to patients, and buy advertising. Garcia's aesthetics practice is listed under several headings in the Yellow Pages—beauty, hair removal, and skin care—a tactic that has worked well.

Think about offering a free sample of services to patients in an effort to stimulate a positive buzz. The physicians Medical Economics spoke to find that patients who initially come to the practice for a cosmetic procedure sometimes become ob/gyn patients. Powers says female patients sometimes send their husbands or boyfriends her way—about 5% to 10% of the patients seen in the aesthetic practice are male.

But be aware that cosmetic patients may demand a higher level of service than your medical patients. "If you keep clients waiting for an hour beyond their scheduled appointment, you're going to blow it," Anders says. Bee agrees, noting that "OB patients, and to a certain extent GYN patients, are tolerant of reschedules because a patient is in labor. Cosmetic patients are not." You need to be even more willing to accommodate people and make sure they're pleased, Ninia comments. "Ob/gyn patients understand there's a certain level of discomfort after an operation or a delivery, whereas cosmetic patients just want to look and feel good."

Patients seeking cosmetic services may also crave more plush surroundings. Visit the office of a dentist who does a lot of cosmetic dentistry, Bee recommends, adding that it's likely to look quite different from one of a dentist who doesn't stress cosmetics. At the same time, your employees need to be well informed and have some sales savvy so they can promote these services effectively. They also need to "look the part," she stresses—so they must dress and look their best. Huber provides laser treatments or microdermabrasion for her staff members as a "nice perk," but they also then "feel good about promoting it."

Finally, be prepared for a raised eyebrow here and there. "You have to be willing to face some disdain from your peers and physicians in other specialties," Bee says. "There is real snobbery about cosmetic procedures—some consider it frivolous beauty parlor stuff." Garcia takes a long view. "I was the first to have an ultrasound machine in my office in the ‘70s, and I got more flak about that than I ever got about this. Now everyone has an ultrasound machine. I think aesthetics will be commonplace too one day."

The author is a freelance writer based in Ridgewood, NJ.

Talk to your liability insurer

The physicians interviewed for this article say they haven't had any change in their premiums as a result of offering aesthetic services. Two of the physicians, however, were obligated to provide evidence that they had trained to do the pertinent procedures. And Howard Ellis, an ob/gyn from Overland Park, Kan., pays premiums on behalf of the practice's aestheticians. Each is charged $500 annually.

But ob/gyn's premiums could go up in the future once malpractice insurers get a better handle on this uncharted area. Physicians Insurance in Seattle is doing a survey to get a better understanding of how many policy holders are doing cosmetic services, says Tom Myers, president and CEO. In the meantime, the company continues to provide coverage without any premium changes.

Similarly, the underwriting committee at Medical Insurance Exchange of California, based in Oakland, is also reviewing the subject of aesthetic procedures, according to company vice-president Ron Neupauer. "We're getting a lot of inquiry from doctors," he says.

Consultant Geoffrey Anders of The Health Care Group in Plymouth Meeting, Pa., speculates that general liability insurance might be more appropriate than physicians' professional insurance. "There's an argument that some of the cosmetic services are not medicine at all," he says.

For more information

American Academy of Cosmetic Surgery
www.cosmeticsurgery.org

American College of Phlebology
www.phlebology.org

American Society for Laser Medicine and Surgery
www.aslms.org

Cynthia Starr. Beautifying your bottom line. Medical Economics OB/GYN edition. 2002;21(9):40-45.



Cindy Starr. Access online: "Beautifying your bottom line".

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