Legal Restrictions on Operating Medical Spas
September 17, 2004
There are a couple sets of state laws that can restrict physician involvement in medical spa ownership and management. The first is the "corporate practice of medicine doctrine." The second set of laws are concerned with and the limitation of physician referrals and "fee-splitting".
Corporate Practice of Medicine Prohibition
A significant number of states prohibit the hiring of physicians by non-physicians and non-physician entities. These restrictions, called "corporate practice of medicine" prohibitions, are designed to prevent conflicts of interest. The laws prevent medical professionals from pursuing financially advantageous relationships over the needs of their patients.
Anti-Referral and Anti-Fee Splitting Laws
Many states have anti-referral laws that prohibit physicians from referring health services to entites with which they have a financial relationship. To minimize risk, physicians should receive a straight salary instead of a percentage of sales or a piece of the overall business. Anti-fee splitting laws are similar to anti-referral laws. Many states prohibit physicians from sharing their fees with people who refer patients to them.
What to do about it
Spa owners wanting to add medical services can get around these laws by obtaining a license as a freestanding clinic by the state's department of health. Under a turn-key administrative services agreement ("TASA"), the spa manages the equipment and employees physician uses the spa as a secondary office and the spa owner leases the physician space in the spa,. The spa schedules clients and provides marketing for a fee.