Opportunity That's More Than Skin Deep

Physician's Money Digest, July 2007, Volume 14, Issue 7

A fascinating and disturbing Los Angeles Times story titled "Needs of patients outpace doctors," discussed a looming health care crisis stemming from acute physician shortages in many areas of the United States. As a spokesman for a national physician-search firm commented in the article, "Doctors are working longer than they want. They are having a hard time taking vacations." Meanwhile, they are also coping with declining insurance reimbursements, rising malpractice insurance rates, and shrinking net income. For instance, a study released by the Center for Studying Health System Change found that physician net incomes fell 7%, adjusted for inflation, between 1995 and 2003, while other professionals and technical and specialty workers enjoyed 7% salary growth.

Against this backdrop of worrisome news, any development that makes a doctor's lifestyle more appealing is a breakthrough. Investing in a physicianbased, franchised aesthetic skin-care clinic provides a medically related revenue source that allows physicians to focus on their core interest and competencies: practicing medicine, but without the insurance reimbursement hassles a traditional practice entails. And unlike traditional practices that are typically sold at their "meltdown price" for equipment and furnishings when a doctor retires or relocates, the franchise can change hands for a profit.

However, it's important to understand that not all aesthetic skin-care businesses offer the same advantages or necessarily create a viable, long-term asset. In fact, many "medspa" franchises have failed, and most are not medically based. To protect their financial investment and, equally important, their reputation, a physician considering a franchise must research the following:

  • Use of the brand name and trademarks. Physicians tend to steadily build their "brand" from scratch by treating patients with care and respect. But going into the business world requires a different approach; brand recognition has to occur much faster. Owning a franchise means that you're starting your business with built-in brand equity, financially assisted by an organization with a vested interest in your success. Physicians can even continue their existing practice and enjoy the franchise as an additional revenue source.
  • Monthly in-depth business analysis and business training. Physicians know their way around the human body, but their body of business experience is typically less robust. Therefore, the franchising organization should assist franchisees in every aspect of the clinic's operation, including site location, office layout and design, staffing levels, pricing, and other aspects of operating a franchise.
  • Marketing support. Writing an effective ad, drafting a public relations campaign, and publicizing a grand opening are tricky. The franchising organization should offer its experience in marketing, advertising, and public relations to effectively announce the new business and keep it in the public spotlight from then on. Otherwise, the "medspa" down the street will gradually sap all the business in the area.

Just a few other things to keep in mind: According to the American Society of Plastic Surgeons, 8.4 million minimally invasive procedures were performed in 2005—a 13% increase from the previous year. This is truly an exciting time to participate in an industry that benefits from an ultra-high media profile and affluent customers who deal with doctors on a cash basis.

But there's no guarantee of success. Look for guidance and support from a well-established franchising corporation led by experienced professionals who understand the practice of medicine. Without this safety net, physicians stand little chance of creating and protecting a fiscally sound enterprise. Conscientious research during the investigative phase will pay off big dividends down the road.

Carl Mudd is the founder and CEO of Dermacare Laser & Skin Care Clinics. He welcomes questions or comments at 877-700- 0788 or Carl@dermacareusa.com. For more information, visit www.dermacareusa.com.