In this episode, hosts Brad and Michael share the story of an ENT surgeon presented with the opportunity to become a medical director for a medical spa. We discuss the responsibilities and challenges of a supervising physician role. Dive into medical director agreements, navigate state-specific compliance considerations, and uncover the risks physicians face in these positions. From legal requirements to business implications, tune in for key insights and potential pitfalls of being a supervising physician in the med spa industry.
Listen to the full episode using the player below, or by visiting one of the links below. Contact ByrdAdatto if you have any questions or would like to learn more.
Transcript
*The below transcript has been edited for readability.
Intro: [00:00:00] Welcome to Legal 123s with ByrdAdatto. Legal issues simplified through real client stories and real world experiences, creating simplicity in 3, 2, 1.
Brad: Welcome back to another episode of Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, with my co-host, Michael Byrd.
Michael: Thanks, Brad. As a business and health care law firm, we meet a lot of interesting people and learn their amazing stories. This season’s theme, easy for me to say is Compliance Fundamentals. We’ll take real client stories and of course, scrub their names and learn lessons about building, navigating compliance obstacles in the business of health care.
Brad: Wow. We we’re going to talk about compliance a lot this season. Michael, what does that mean?
Michael: Well, compliance is a broad word. It’s describes all state and federal laws that govern health care, and for us, a lot of times, specifically the practice of medicine. Health care is one of the most heavily regulated [00:01:00] industries in the United States. And compliance means that you’re running your practice consistent with these various laws.
Brad: Well, and we say this too, Michael, compliance is not stagnant. Can you help with talk about that?
Michael: Right. Yeah. There’s a misperception that compliance is a task. You create a list, you check the box, do these things, you’re good to go, and it’s a moving target. It’s an ongoing thing because all – there’s so many variables in running a business or a health care business that affect whether you are in compliance from moment to moment. So, compliance really becomes a way of life, a part of your culture to your business.
Brad: Excellent. Well, what do you have? What story do we have today?
Michael: Well, our story today is going to be about medical supervision. But before we start, the idea of supervision stirs up a lot of thoughts.
Brad: [00:02:00] You’re not about to share some dark tale about one of your old bosses yelling at you. Are you?
Michael: Well, maybe. I have to be careful, Brad, because one of my most influential bosses later became, you’re my partner at our old firm, and he listens to our podcast. Shout out to Allen.
Brad: Hey, Allen. so are, are you afraid to share now?
Michael: No, no. As you know Allen and I have a great relationship. We’ve been friends pretty much since the day he hired me. And even in those early years when he was my boss, he didn’t pull the boss card on me very often. He really collaborated. but I do seem to remember you having some scar tissue from your first boss as a lawyer.
Brad: Oh, yes. My first boss out of law school, he went to Duke and he mentioned this daily. And he made Attila the Hun look like a fun guy you get to hang out with while he sacked your village, basically. He’d throw papers at people, he’d curse [00:03:00] you out, he’d throw books at all subordinates. If he didn’t agree with you, he just would go ballistic. I mean, a real gem to work with, honestly.
Michael: Oh, man. Well, I do have a favorite supervisor story, but this is I guess probably further evidence of me being a 13-year-old boy. When I was a seasoned veteran, as about a second year lawyer, me and a couple of other attorneys decided to prank the brand new guy that had just joined our firm. And so when the name partner was out of the office at a meeting, we went down to his office and called the new attorney, pretending to be the name partner, and asked him to go downstairs and get us a grape Nehi. Do you know what a grape Nehi is?
Brad: No idea.
Michael: It’s a very hard to find soda. Oh. And so the story goes, he came back like an hour later, of which none of us were [00:04:00] working and left a grape Nehi at the door of the name Partner under our direction. It was my first power trip as a supervisor.
Brad: That is just mean.
Michael: Probably not good for future me to be an actual supervisor.
Brad: Well, I don’t have a similar story with my kind of young Brad. I think I was three years out and I had my first associate to work with, and his name is actually, Beau Haynes was the first associate I worked with. Shout out to Beau. Actually, he and I were on a conference call the other day. He’s still practicing in New Orleans. And it was funny, me trying to lead him as a three year attorney, as if I had this incredible guides to help him out. It’s interesting when the first time you start working with associates.
Michael: I know. Okay, well, let’s flip it. I want to hear a little family life version of being a supervisor, AKA dad. Do you have like a big parenting fail that you’re willing to share? Just with me. No, no one else.
Brad: Okay. [00:05:00] Since this is only a 30 minute show, I’ll just kind of keep it real tight. Can only give one story?
Michael: Yeah.
Brad: But I think my most famous story was Micah, my wife, was out of town on a girls’ trip. I had Madeline, Ellis, and I think Madeline was like five, maybe. And that first night Micah was gone, she kept waking me up over and over and saying, she misses mom. She misses mom. I was like a super nice dad, “No, don’t worry. She’ll be back,” put her back to bed. And it happened again, happened again. Like on the ninth time, I was not super nice, dad. I was like, you need to go to bed mom’s not here. And then she starts crying and crying. And I was like, I finally did the whole, like, what? And she’s like, “I want to talk to mom.” “Fine.” I’m like, “Why do you want to talk to mom?” “My ears hurt.” “What do you mean your ears hurt?” She said, “They hurt a lot.” I said, “Like a lot like when you go see a doctor?” “Yes.” So, all night long, she’s been waking me up to tell me her ears hurt, but she wanted to tell mom, not me. So next morning, get them up, get in the doctor, get in there, double massive ear infection. [00:06:00] So my worst or my best day ever as a dad.
Michael: Great job. Great job.
Brad: Thank you. What about you?
Michael: Well, I also have a Rolodex, but when Aiden, my youngest boy, started a new school in fifth grade, he was getting bullied- and he was getting bullied by a much smaller kid. And so, I was trying to do the how do we work things out? And it wasn’t working. It wasn’t working. And so, I told him when mom wasn’t around, I don’t think she knows the story yet. I was like, “Well if he pushes you, you just need to give him a punch one time to let him know that you’re not going to take it. You got to stand up for yourself.” And he did. And it worked. And then all of a sudden he came home like a week later, and he had a bunch of like a [00:07:00] $20 bill in his wallet. I’m like, “Where’d you get that money?” He’s in fifth grade. And this kid that he had punched the week before had then paid him $20 to be his bodyguard. And I was like, oh, man, this is just not a good lesson. So we got to get moving, but do you have like a work fail that you want to share?
Brad: Yeah. Real quick. My work fail would be probably during COVID, we were working seven days a week, obscene hours. And let’s just say I was overly past burnout. And I was starting to be very short with the employees when they would ask me a question. And lucky our director of people operations, Chrissy, came and talked to me and said, “Hey, you’re not really being a really good boss right now, much less a good human being to be around.” My words not hers. “Stop being such an asshole.” And that was a really good conversation. I thank her all the time because I probably, if she had not said anything, I probably just would stay that course and become that evil boss I had.
Michael: [00:08:00] I thank her all the time too. Yeah. I mean, I don’t really have any – no, I’m just kidding. What comes to mind generally is just that, especially earlier on, I really avoided hard conversations. And so when an employee needed to hear a hard thing, I would sugarcoat it or avoid it. And I still have that emotion rise up in me, but I have learned over the years to lean into it and deal head on knowing that that actually is a gift and there’s a good way to do it. But without giving the specific examples, that’s a good fail.
Brad: Well, as the resident Labrador that loves everyone, even when they’re hitting me, I understand that, but I think we need to get into today, today’s story.
Michael: Totally agree. [00:09:00] Our main character today is an ear, nose, and throat surgeon from Texas. We will call him Dr. Allen.
Brad: Shout out to our old partner.
Michael: Oh, yeah. Dr. Allen had a small office and it was a hundred percent surgical.
Brad: Yeah. And for our audience members that are not familiar with that, that’s pretty common for a single owner plastic surgeon who will have just a stream of revenue. a lot of them are really focused on the surgical side, so they’re not even looking at all the other multiple different revenue sources that we’ve talked about in other shows. Some. And that normally means then they’re going to try to be much smaller and linear because they only have one source of revenue.
Michael: Yeah. And so Dr. Allen similar to plastic surgeons, ENTs do the same thing. And he, not only that had a practice that was focused on one procedure he did rhinoplasties, [00:10:00] AKA nose jobs. And we’ll call his practice Nehi Rhinoplasty.
Brad: Shout out to the soda. Well, many people if you’re not familiar with it, but why would someone choose rhinoplasty is maybe to involve reducing or sometimes increasing the size of their nose. A lot of times they want to have the word I’ve heard “enhancing the facial harmony.”
Michael: Or deviated septum.
Brad: Well, so there’s another reason some people say it’s not only just for that, it’s a functional correction, right. Which is they have breathing problems or structural issues so deviated septum or nasal deformities. And again, this can be a great source of revenue for a plastic surgeon practice.
Michael: Yeah. And you become a subject matter expert on something, this niche and you get really good at it. The problem with a single revenue source for a single procedure is that if there’s a lean year, it can hit particularly hard. And [00:11:00] Nehi Rhinoplasty had slowed down quite a bit in 2024.
Brad: Yeah. And this reminds me of like 2008. We saw a slowdown with the economy, and then it impacted a lot of our plastic surgeons. And during covid, many of our practices based on state laws had to be shut down. And then when they reopened, their business went ballistic for a long time. And what we’re seeing now, right now in 2024 is there’s kind of almost like a market correction, which is, it’s getting back to the more normal looks. So a lot of people are talking about the market has kind of softened a little bit just because it had been so bonkers because of the lockdowns.
Michael: Well, so during this all is happening in the background, Dr. Allen was approached by an RN with her own kind of injectable focused medical spa. It was also pretty niche with a kind of single service, or at least focus on different types of injectables. And she was unhappy with her current medical director. [00:12:00] We will call her Nurse Kathy.
Brad: Kathy huh? Shout out to my boss in New Orleans?
Michael: Yes. But let’s be clear, not the one from Duke who yelled at you all the time. I’ve met Kathy and she’s an icon in the health care world, and hat tip to her, she figured out how to train young Brad.
Brad: She did. Kathy had to work really hard to train little Brad.
Michael: Well, so I should probably pause and address the vocabulary word we’ve talked about before, the word medical director. It gets thrown around a lot and it’s a generic term that can mean a lot of different things. And so, it has a role in the hospital setting where you are kind of overseeing a type of department and or it can be seen in the setting like here. So, it really becomes important when [00:13:00] you hear that term to understand actually what is being asked or what is the role of the physician in that circumstance.
Brad: Yeah. And the interesting thing about the term medical director is really depending on your state, a lot of medical boards, when they hear that they have emotional reaction that something negative is happening here, and they’ve now connected a negative term medical director, even though many states it’s supposed to happen in some capacity to that verbiage. And then ultimately when you hear the term medical director, what you’re trying to figure out is what’s being asked of you, the physician. Are you being asked to do something? And most of the time it’s, you’re being asked to show up and be the supervising physician. And in that role, overseeing that the clinical care is being consistent. So, at least at our firm, even though we do have medical director agreements sometimes, which required, but really focus on the supervision aspect of it.
Michael: Right. Yeah. And [00:14:00] so that’s Nurse Kathy here was looking for someone to step into this supervision role that you just mentioned, and she had a mutual acquaintance who had connected her to Dr. Allen.
Brad: I mean, I’m going to ask you a question, but between my boss, Kathy and your old boss, and my old partner Allen, who we were involved with here?
Michael: Well, Dr. Allen called us to help him sort through the opportunity. Dr. Allen had heard us speak actually at a conference for ENTs, and so he had saved our name in case he ever needed it.
Brad: Nice. I know that there’s a monthly fee with being a supervising physician. It’s not typically, well, sometimes it’s a big number, but when Dr. Allen was thinking about how he’d help, what was this revenue stream like? What was he thinking about?
Michael: Yeah. I mean, oftentimes no matter how big the number is when you compare it to their day job, it’s [00:15:00] passive income, and so oftentimes it’s not going to make or break their career. And so, Dr. Allen was nervous about it when he was approached about it and frankly, he was used to doing nose jobs. I mean, he had not really even supervised other providers because his practice, he was it, and had been it the whole time. And so, he was thinking that this would be kind of a way to dip his toes into it and explore this idea of creating another revenue stream through supervision, and it would be a good way to explore this particular relationship first. He then shared with me, he had a vision to bring Nurse Kathy into his practice after six months or so to become an employee inside Nehi Rhinoplasty.
Brad: All right. Love there’s a vision involved. How much of this vision was discussed with Nurse Kathy [00:16:00]?
Michael: I asked the same thing. I was like, it’s not a small thing to think to someone who has their own business. Well, I’m just going to have you come be my employee as kind of a future thing. And so Dr. Allen, going back to his vision a little bit, he had an unused office and an exam room, and he also believed that Nurse Kathy was struggling to make her business work, and so he hadn’t really broach the subject with her yet, but he saw a potential fit.
Brad: Yeah. I can see from his vision how this could be a win-win for him. She’s struggling, he’s got space. She can come in and help work at his place and become an employee, but obviously it can be a lose-lose because as you and I know, if there’s no alignment as it relates to where they’re trying to go and try to build something, and you start doing something with this assumption, which is a word we could keep talking about in other ones, that this is [00:17:00] how it’s going to happen, so I can see how this could be a lose-lose without those conversations.
Michael: Yeah. Yeah. Well, one of the challenges I faced is that we have two people running really small practices, and they’re used to living on a shoestring budget. And I saw this on both sides. I mean, both from Dr. Allen and what I learned about nurse Kathy?
Brad: That’s a hard one to navigate, Michael, especially in this particular case when there’s stakes for some compliance concerns.
Michael: And so, as an example, starting with Nurse Kathy, I learned she was paying her current medical director $500 a month and then said she was only able to offer Dr. Allen $750 a month to be the supervising physician.
Brad: Yeah. And not knowing what that other physician is doing at $500 a month as the supervising physicians. When we hear things like that, whether it’s 500 or 750, it starts to [00:18:00] make us a little bit nervous, kind of a red flag moment as to, well, what type of supervision are you doing? Are you really just a name only or are you more of an absentee physician? And we understand that there is a, there’s some pressure there when it comes to the cost for her to be compliant. But at the same time, Dr. Allen needs to think about the fact that he, he may be lending his license to someone in this scenario and really not improving anything except a little bit of cash flow, and the compliance concerns just raised some serious risk.
Michael: Right. Right. Yeah. and Dr. Allen had never filled this role before. And he again, going back to kind of dealing with this, them both being small practices. So he’d never done this role before. He was not used to working with attorneys, and so he was actually used to getting his information from his medical society.
Brad: [00:19:00] Well, first off, the fact that he had to work with you, maybe he’s still not used to working with attorneys. Just kidding, audience. But secondly, it’s great to be part of a medical society. It’s great to be able to go out there and learn what’s going on and being active, so there’s nothing against any good society or any educational association. There’s a caution though, as a solo surgeon, if you’re only getting your informations from the society/your buddies from your legal support, you may be missing out on things that really truly apply directly to your practice versus the global world out there. And as we’ve talked about in a lot of different shows, every single state’s going to be different. And so there’s risk associated as to how you’re working with someone, especially if they’re just some type of form some friend gave you or you download it off Chat GPT and you think this is going to be sufficient.
Michael: You nailed it too. That’s the problem. Dr. Allen shared with me that he wanted me to review a medical director agreement that he had gotten from a colleague in Florida.
Brad: [00:20:00] No. Oh, just we saw that coming.
Michael: Florida is different from Texas in so many ways. The ownership rules are completely different, and the supervision rules are completely different.
Brad: Yeah. And just going back to Florida for a second – for our clients in Florida, although anyone can own it, they have some very restrictive rules when it comes to supervision. You basically, number one, have to tell the medical board, Hey, who are you supervising there? The physician and the nurse practitioner, the PAs. And then are you board certified or board eligible as a dermatologist or a plastic surgeon? Is that practice within 25 miles of your practice? And do you list it as a location that you’ll oversee? Now, there’s some exceptions that rule I won’t bore the audience with today, but it really starts, I mean, Florida says and you can own it, but then they start diving into how many people can you oversee? What type of limitations are that? And then it’s even weirder as you know, the RNs there technically by the nursing board aren’t even supposed to be doing injections there. Depending on the agreement written, [00:21:00] it could be very upside down for him.
Michael: Yeah. One look at the agreement and it was written to try to navigate all those laws and it’s, it’s worthless in Texas. And so, I had the difficult task of educating Dr. Allen that there’s much more to it to take this role on in Texas.
Brad: Well, I’m curious, how’d it work out?
Michael: Let’s go to break, Brad. And talk about supervision requirements that Dr. Allen would have to commit to in Texas and some lessons on supervision.
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Brad: Welcome back to Legal 123s with ByrdAdatto. I’m your host, Brad Adatto, with my co-host, Michael Byrd. Now Michael, for those that don’t know this season theme is Compliance Fundamentals. And today we’re talking about real stories, sometimes sad stories, that happen to our clients, and sometimes what happens in news, and although this particular story where we left off, it was really focusing on what was happening between Dr. Allen and Nurse Kathy.
Michael: So the quick recap, audience, the stars are Dr. Allen and Nurse Kathy, and then we have Nehi Rhinoplasty. Nurse Kathy had asked Dr. Allen to become a medical director for her injectable-focused medical spa. And we ran into some obstacles. Obstacles both being kind of lack of sophistication [00:23:00] because they were really small businesses with very narrow focuses and had not really had a lot of experience working with others, and then not a lot of kind of business savvy. And so, we walked through that, and where we left off was just this Florida medical director agreement being presented to me and not working at all, and me having to try to educate Dr. Allen on what does it take to supervise, and in his case in Texas.
Brad: Well, we’re focused on compliance, Michael, and let’s talk about Dr. Allen. He’s here in Texas. What are some of the first things you visit with him on?
Michael: Yeah, well, we talked about corporate practice and medicine and we’ve done a lot of CPOM discussions on other episodes, but essentially, a doctor has to own a medical practice in Texas. And so for [00:24:00] him to go forward with Nurse Kathy, he was going to need the MSO model. And so, we talked a little bit about that. MSO is the solution to corporate practice of medicine. Then we dove into supervision, even if we could solve that. And we talked about for him to properly delegate and supervise in the kind of chain of care. We talked about the good faith exam, the need for all new patients to be physically examined by him, or a nurse practitioner or a physician assistant to receive a diagnosis and a treatment plan. They have to be cleared that they’re okay for whatever those treatments are going to be. And then we talked about how you need to have written protocols in place that are signed off on by Dr. Allen that says, this is how we do these [00:25:00] different treatments, whatever the different injectables were. And then he needed to make sure that Nurse Kathy was appropriately trained and that he was appropriately trained on these procedures because he was used to doing rhinoplasties.
Brad: Yeah. And I think another thing you can add in that conversation is the supervision requirement. So we’re in this particular story, we’re focused on Texas, so I’ll focus on the Texas supervision rules. And for those that don’t know, in Texas, it’s pretty lenient, meaning that the physician ultimately gets side the type of supervision they need. So we’ve talked about, does it mean on onsite in the room or on site or in this case in Texas or immediately available. And the physician gets to choose that. So again, typically if they’re not on site with them, that means that physician has to be immediately available by phone. In addition to that, when you’re talking about supervision, it’s also like going back after the fact and just double checking how, how are things going? Are you doing some charts reviews, especially if you’re dealing with nurse practitioners or [00:26:00] physician assistants. So if you bring those individuals in, even though they have a lot more leeway on the independent side, you still need to review about five charts a month.
Michael: Back check them. So a question we often get, and Dr. Smith asked this as well is, what’s my risk as a physician and who is responsible for malpractice insurance?
Brad: So yeah, there’s a lot of risk, but I’ll focus on that question about malpractice. Understand that just because you have malpractice insurance doesn’t mean that the moment you “become a medical director,” that that same insurance is going to apply. A lot of times, depending on how it’s written, it may not apply at all. So often the case is, the first thing you need to do is go back to your agent and say, “Hey, I’m going to start supervising this individual who’s been renting these injectables. I want to make sure, based on my training and skillset, does my insurance apply.” And if it doesn’t, a lot of times they say, you need a writer, which means an add-on to do that. So that’s again, another important element − especially for our [00:27:00] physicians that work for hospital systems, nine out of ten times, if you go work somewhere else to become a medical director or something, your malpractice insurance does not carry through.
Michael: Yeah. And this is really important because when you ask that question, what’s my risk? Well, in most states, almost all your risk is solved by good malpractice insurance. And so, that becomes a really important detail to make sure is addressed. So, let’s jump outside of Texas and talk a little bit about considerations across the country when it comes to supervision. As a general rule, you still need the good faith exam in every state. You’re still going to need written protocols and appropriate training. That’s going to be a tried and true approach to good compliant care across the country. The delegation rules do vary by state, and generally, we’ve talked about this [00:28:00] before, there’s kind of two approaches by states. There’s some states that have a general delegation rule like Texas that basically puts it on the doctor to determine who has the appropriate training to meet the standard of care. And then you have specific delegation states like California that say, if you’re an RN or higher, you could be delegated medical treatments. It becomes really important as you are looking at compliant supervision that you understand those nuances depending on your state.
Brad: Yeah. And just because you can delegate to them, to your point, the supervision rules get really weird. Like for Massachusetts as an example, RNs, if you delegate to them in Massachusetts, the state believes that you should be on site when you delegate to them. But Michael, I never were getting short on time. What ended up happened with Dr. Allen and Nurse Kathy?
Michael: Well, they unfortunately did not end up doing the deal. Nurse Kathy did not have the budget to set this up properly. She was used [00:29:00] to doing it non-compliantly, so not in an MSO and for $500 a month. And the financial strain of her medical spa clouded her judgment on taking these steps needed to become compliant. Dr. Allen was nervous about doing this in the first place, as we talked about earlier. So he was not willing to cut corners. They have left to open the possibility of her joining his practice. They did finally talk about it, but she was not quite ready to give up her dream yet.
Brad: Yeah. And this just goes back to the heart of the matter. A lot of times when we have these phone calls, someone said, I want to be compliant, and then you tell them how to be compliant and they say, “Well, is there any way to not be fully compliant?” And so, I feel like that’s where the story is going. Michael, what are your final thoughts?
Michael: The purpose of the supervision rules in any state is for safe treatment of patients. The doctor’s license is what gives that practice [00:30:00] authority to perform the treatments. And so if the doctor’s not doing the treatments, they have laws in place and rules to require some minimum level of oversight. And so the stories that you often hear in the news are ones where practitioners are doing things they should not be doing with little to no supervision.
Brad: Well, Michael, we’re back next week with a show where we have a special guest, Paulina Riedler, the CEO of SpaKinect, will be here to discuss telemedicine in the aesthetic market. Thanks again for joining us today. And remember, if you like this episode, please subscribe, make sure to give us a five star rating and share with your friends.
Michael: You can also sign up for the ByrdAdatto newsletter by going to our website at byrdadatto.com.
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