Asking for help before it’s too late can make or break a business. In this episode, Michael and Brad answer questions from “your friends” submitted during the sold-out 2021 Medical Spa Show presented by the American Med Spa Association. Tune in and see if one of these questions sounds familiar!
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Intro: [00:00:00] Welcome to Legal 123s with ByrdAdatto. Legal issues, simplified through real client stories and real world experiences. Creating simplicity in three, two, one.
Brad: Welcome back to another episode of Legal 123s with ByrdAdatto. I’m your host. Brad Adatto with my cohost Michael Byrd.
Michael: Thanks Brad. As a business and healthcare law firm, a client call is usually a request for help, but sometimes clients don’t recognize they even need help and instead it’s often too late when they finally make the call. Today we have a special episode where we have a lot of questions from friends who stopped to ask for help.
Brad: Thank goodness they did Michael, but before we get into today’s episode, as you know, I like to have little sidebars and I think I might want to see if we can share on another personal aspect with our audience that they might not know about us.
Michael: Can I pre-call TMI?
Brad: Fair enough.
Michael: Very scared to hear what you have to say.
Brad: Over the years, [00:01:00] you and I have taken multiple self-evaluation tests on personality and faith and leadership.
Michael: Okay, where are you going?
Brad: So I was really shocked, I mean, shocked to learn that I tested 30 out of 30 as an extrovert on the Myers-Briggs test.
Michael: Okay, Brad, well, first you are not shocked, nor was anyone who ever stepped within a hundred yards of you shocked. So where are you going with this?
Brad: Well Michael, this first week in May, just a few weeks ago for the first time in over a year, you and I were in front of a live audience speaking on a host of topics and it was great to be back out there on stage and more importantly, interacting with a lot of our clients and friends who we’ve made in the healthcare industry over the years.
Michael: I’m guessing Brad that you were talking about MSS, the Medical Spa Show that was in Las Vegas May 6th-8th. That obviously we were invited to speak by AmSpa. [00:02:00]
Brad: That’s correct. That’s right. You do love context and as an extrovert, I was so charged up to be around so many people. Of course we’re both vaccinated so that did help too. But being back on stage, being out there, educating med spa owners on how to be compliant when opening and operating a med spa. Additionally, we got to spend time on panels with Ben and Jessica of the Skytale Group discussing the financial and legal sides of med spas and on the planning, scaling, and selling of them. You also got to spend time on an MSO panel. I mean, it was great to be out there, but more importantly, several of you came by and in person said how much you liked our podcast. So thank you for being one of our loyal listeners.
Michael: And I would say I’ve had several people, my wife included ask how it was going to a live conference and it was different than pre pandemic. I would say the predominant thought I had when [00:03:00] I left was just how great it was to be with humans again in a live way. No zoom, actually face-to-face with all these people that have been so important to us over the years.
Brad: Totally agree with this statement. Now, Michael today’s episode, it’s going to be great because although it’s not in front of live studio audience, at the MedSpa Show we had on our booth a phone number where attendees could text their questions for us to answer on today’s episode. Originally we had titled this true confessions of a med spa owner and that’s how we thought this would be. But we quickly noticed that everyone’s text questions there asking for friends. So we need to address their friend’s questions, which is great. And it’s still kind of follows our season’s theme of when should you ask for help. So today we’ll be answering their friends’ [00:04:00] questions.
Michael: Yeah. And man there were so many friends out there that are not compliant, it was crazy. Let’s jump in.
Brad: All right. Well, Michael, unlike most episodes where we tell a story first to give all the context, which I know you love, but we’re just going to address their legal issues upfront. So this is going to be more like a speed round, like final jeopardy. We’ll receive a question that has been texted to us. Answer the applicable law on each question. And I feel like maybe we need a drum roll. Cause we’re getting about ready to open up our texts here, Michael. So here we go. Ready?
Michael: I’m ready.
Brad: Here’s the first question. What if the person down the street is noncompliant? Should I report them?
Michael: Hmm. Yeah. We’ve gotten that. In fact, on the MSO panel I was on, one of the people on the panel with me was Nicole Chiaramonte and she has been on our podcast in [00:05:00] this season at the beginning of the season. And she obviously owns a lot of MedSpa as we shared there and she kind of spoke to the audience about this, noticing this as a growing problem of people trying to help from a competition perspective themselves. They believe by turning competitors in to the board when they perceive them to be noncompliant. And her point was, it’s just something that brings the industry down rather than up. So I think the overall idea from her was, yeah, we need to be compliant, but we need to be building each other up. I would say from my perspective, this is a really slippery slope to go down. If you start turning someone in you just want to be really careful because it usually ends up sucking you into the fray and you might [00:06:00] have your business being investigated very quickly.
Brad: Yeah. A hundred percent agree with everything you just said. And I can even remember when I had someone call me once and talk about how they wanted to report someone down the block from literally who was not compliant. I started just saying, well, let’s talk about your business first. And I quickly learned that they also were not compliant. And so it’s the whole concept of being in a glass house and throwing stones. You got to be very careful, but I also agree with Nicole and you, in the sense of, if you keep reporting people what’s going to happen is the state’s going to start looking into this and all of a sudden they’re going to have a reaction that no one’s going to like, and it’s going to be them putting up these giant statutes from individual attorneys who’ve never actually practiced in the med spa industry. So we’ve got to be really careful about reporting on. I think the answer is, if you want them to be compliant and maybe you can report them to an association to help them get a more compliant, but be really careful about going out there unless you truly know that [00:07:00] patient safety is an issue. So that’s my thoughts on that one.
Michael: Okay, Brad, here’s the next text question. My friend is an aesthetician and wants to own a medical spa in Georgia. Is this possible?
Brad: Another good friend question. Michael, you and I could probably talk a thousand different states and maybe we should talk about that in this particular matter, it really does depend. Georgia is one of those grayish states and it’s one of the tougher states to answer. We have a few states that are like that. And the reason why is Georgia has a very clear statutory authority as it relates to restricting who can own a medical practice. So that part is very clear when you read the statute. But the tough part about Georgia is that the way they’re enforcing it, it appears that they don’t really care that much about who actually owns it. Even though that statutorily [00:08:00] against the way it’s written, they’re actually really concerned about patient safety and not about ownership. So it’s just one of these conflicting states where yes, if you’re an aesthetician, you technically are violating the state’s law if you own a medical practice, because it says that basically physicians need to own it. But the way the medical boards kind of this kind of ignoring that the attorney general office is ignoring that. So it’s one of those states that we know is very grayish, but we always talk to clients like, look, here’s the deal if you’re going in the state and you say, I have to be compliant, I don’t want to have any risk. And this goes back to what we talked about in other episodes, which were risk tolerance is. Some people are nervous about stepping out of a shower in the morning and other people will step out a perfectly good airplane like our partner did just yesterday. So that’s the different risk tolerance. And so when we have clients going into Georgia and they want to develop a franchise, we say, look, this is the law and we don’t know if they’ll try to make you an example of that. [00:09:00] And if they are, they decide one day the medical board or the attorney general says, you know, we’re going to start enforcing this law that only physicians can own medical practices. And as we’ve talked about in other episodes, med spas do provide medical services, then you are at risk. Now the risk is lower because most people feel like the medical board is not doing that right now in Georgia.
Michael: I would say Brad too, that if we want to talk about how gray is it in Georgia and we really want to make it more charcoal is there’s another element with this idea of can an LLC just own the business. And there’s this kind of body of law that says, well, yeah, but you can’t employ a physician and okay, well, how do you have a medical director, which you clearly have to have a supervising physician and your non-doctor own. And so there’s all these traps that, and what I agree with from what you just shared is we just have to acknowledge that some [00:10:00] states are really messy. Georgia is a classic example of one and it’s hard to get to the bottom of it. And then you compare it to the enforcement kind of climate and you talked to a healthcare attorney in Georgia and they’re like, oh yeah, well, let’s do an LLC and have a non-doctor own it and go forward with the medical spa. But behind that is this risk that you just alluded to, that you have to deal with to make sure that there’s alignment between your business plan and your risk profile and what you’re trying to accomplish. Other states, just to give some perspective that this is not just some Georgia thing, New Jersey. Oh my goodness, I mean, they have had for what eight years, this potential change in the law that hasn’t been enacted, but they’ve for years, the current [00:11:00] law, as we speak is that use of a laser is considered surgery and can only be done by a doctor. Yet you go anywhere in the state of New Jersey and there’s going to be, obviously non-doctors running lasers, and then you have this law that they’ve been proposing to change it. That would actually solve that and create some new, more restrictive changes on other procedures like injectables. And it’s hard to know how do you counsel someone on how to set this up when you have a law that says one thing and a pending law that would say something different. That’s been somewhat adopted even by the enforcement bodies, but not formally adopted. They just kind of loosely follow it and will refer to it when they’re answering questions. And then to kind of add to this is how the market is proceeding out there [00:12:00] and it does make it really messy. And again, what do we do with it? We try to quantify the risk, understand the business plan of the client. You mentioned a franchise, they would have more risks than a single owner shop. And then of course understand their risks profile.
Brad: I want to add some real quick to that is, you know, not to leave them hanging on this piece and we won’t go very heavy in this issue, but if you are nervous and you’re in Georgia or a state like that, we’ve talked about the management service organization model on a lot of different episodes, but that is definitely something that the franchises that we’re working with in Georgia, that’s what they end up doing. They end up, even though they understand there’s nuances in Georgia they want to be perfectly clean because if they’re selling franchises to outside parties, they’re saying, look, this is the cleanest way we know how to do in Georgia where you have to have a management service organization. You’re entering through a management service agreement with [00:13:00] that professional entity owned by that physician. And we think that’s the cleanest way of dealing with it.
Michael: Great point. I mean, it’s such an easy solution to get rid of all the noise and risks in Georgia, just to go forward with the MSO model. So let’s pause and go to a commercial break and then on the other side, let’s see what the other friends were asking.
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Brad: Welcome back to [00:14:00] Legal 123s with ByrdAdatto. I’m your host, Brad Adatto with my cohost Michael Byrd. And we’re still here reading some great text questions from, friends of friends of friends, probably. And so let’s move on to our next text question, Michael. This next question seems to follow the answer that we kind of just provided in Georgia. So Michael, here we go. My friend wants to know who bills and collects the patient in a MSO model, the MSO or professional entity?
Michael: You just wanted me to answer this question because you knew I couldn’t not provide context. I can’t do it. I have to say, well, what is the MSO? And so here’s the really fast because that wasn’t the real question. But the MSO as alluded to in our last answer is a model that navigates who can own a business in a particular [00:15:00] state. And the idea is you have a non-doctor business owner that forms an entity that we’ll call a management services organization. And you also get your supervising physician to form a compliant medical practice entity, and you bridge the two together through something called a management services agreement. And the whole idea of the model is two things. One in a compliant way, separate the chain of care from the business of the business. And to make sure that if you’ve got patient care attended to and housed all in this medical entity in a compliant way that the agreement sets up the arrangement to model how you want the business to run. And so then we always get the question that a [00:16:00] friend wants to know, which is, well how does the money flow, who bills for it? And it’s a pretty intuitive question when you’re someone’s starting a business and you’re the MSO and you tell them, hey, because the patient’s first encounter is and they’re getting cared for by this medical entity. They actually need to pay the medical entity. And so they say well, how does that work? You’re telling me that in this business that I own, the customers are going and paying money to another entity that’s owned by another person. And how does that work? And it’s a great question and it’s one of the most important things to doing this in a compliant way that you can do, which is always make sure the initial money goes into the medical entity. This is how you could proactively defend yourself before the medical board to say, [00:17:00] hey, you know, we as non-doctors are not practicing medicine. These patients are going to this medical entity. They’re paying the medical entity and the care is happening over here now. From a business perspective, this management agreement is going to dictate what happens to that money and it gives the MSO a power of attorney that gives them both the right and the responsibility to steward that money, according to the agreement. And so in practice, what happens is the MSO is the signer on a bank account that is a medical entity bank account. And they have boundaries on what they’re supposed to do with that money. They’re paying their bills or paying the medical professionals they’re dealing with overhead. And then ultimately there’s a compliant way that you want to get the money out of the medical entity to the MSO so that you capture [00:18:00] the profits into the MSO entity.
Brad: Yeah. And those are all great points. And, you know, for our audience, these are not simple concepts. And so a lot of times I know we’ve talked about in this other episodes, that’s why a lot of times we ended up spending 60 to 90 minutes with someone on our whiteboard, really showing them how the flow of funds have to be done, both in form and substance. And I think another key element of this in general, what the MSO model is if you are going to go that route, you can’t have an absentee physician. The physician typically has to be a part of it in some process, especially in those strong corporate practice of medicine states. And then that means that they’re still making decisions. They’re going to be part of. Who your staff? Do they know what they’re doing? What type of equipment and supplies are you bringing in? All those are key elements into whether or not your MSO model is compliant, not just the flow of funds. So that’s just some of those takeaways, but Michael, let’s just move on our next question.
Michael: We are now going to start entering into [00:19:00] more of a speed round. And so I’m really putting you to the test. And just know before we start that I win. Okay. So this next question, since I want to win, I’m glad is for you first. Because this is not one I want to answer. This friend in particular wants to know, can the pharmacy board control what you do in a med spa?
Brad: Ah, that’s a tough one. So again, this is a really, it’s more complicated than it sounds, but in the medical industry, typically the medical board dictates what happens in a medical entity. And so there’s all this stuff out there that you may hear out there on the FDA and PRP and all the stuff that starts really. You talk about noise, all surrounding it, but let’s start at the very beginning. You’re rendering medical services and of course in certain states you have independent autonomy for the nurse. The nursing board is going to control what you can and cannot do at your facility. But again, keep in mind that’s what we start. We always say, hey, are you compliant with your [00:20:00] proper boards, your medical board, and nursing board. Where the confusion starts to come in as in certain states, especially in the IV treatment world, when you start compounding substances at your facility, sometimes the pharmaceutical board may have authority over what you’re performing there because it’s no longer just providing medical services. You’re actually combining medical drugs. And so if you are compounding in some states, you do have to have a pharmaceutical person on staff or you have to have a certain exception to that rule. So I don’t want to be bogged down in this and since we’re a speed round, but again, a lot of times that the pharmaceutical board is going to be concerned as to what drugs you are storing, how are you storing it? Who has access to it? That you might not have to have a license to do that. So it is state regulated. And there are obviously exceptions to those rules, but again, if you’re [00:21:00] compounding something, you may be subject to those rules.
Michael: And I’ll just echo what you said, except even better.
Brad: Okay. Fact check false. Let’s move forward to our next question. Um, since we’re in our speed round and this is a great one. I think you’ll like this one, Michael. So my friend wants to know, if everyone else is doing it, shouldn’t it be okay? Like how could I get in trouble?
Michael: Oh, that’s an original question. I only get that like five times a week. I actually enjoy this as well because I get it. I mean, it’s the old, you know, if everyone on the highway is driving 80 and I’m driving 80 in a 55, how am I going to get caught? And theirs is from a risk perspective, a certain element of truth to that, right? I mean, your odds of getting in trouble when everyone else is speeding are [00:22:00] lower. Can you get in trouble? Are you breaking the rules? You are breaking the rules. Here’s how we talk about it. To kind of bring it home in context to this question in the medical spa space, there’s three ways you’re going to get in trouble. You’re going to get in trouble from a patient, from an employee who’s turning you in or a competitor.
Brad: Yeah, we talked about that at the beginning.
Michael: And so it starts to get real really fast when you think about I mean, there’s some crazy patients out there and they may have unmet expectations. They may have a perfectly good outcome, but they wanted to look like a movie star and they don’t. And so you’ve got that on your hands and then they aren’t satisfied. And so they turn you into the board. And we know at that moment in time that’s Pandora’s Box. So get [00:23:00] ready. You are now officially the one that got pulled over in that 80 mile an hour traffic.
Brad: Yeah. And I think that’s a perfect example of just because everyone else is doing it doesn’t mean that you can’t get in trouble. I think Michael, with our speed round, I guess we got to move on to the next question.
Michael: All right. Well, Brad, this one’s for you and this friend wants to know, can a dentist administer Botox?
Brad: I think people are saving these questions because they knew these are the hard ones. So thank you for wherever who texted this one. You know, this is a tough one because a lot of dentists want to get into this space and it’s tough because if you go look up their scope of practice, typically a dentist is limited as it relates to what they can do around the body. Because they’re basically trained around the face and jaw and sometimes a little bit the higher, but that’s basically where they leave. And then you have the medical, the boards that say, well, a physician is trained around the entire body on different aspects of it. And so they’re obviously different [00:24:00] ultimately, when we speak to dentists about this and this is the way we feel about anybody who’s trying to enter into this static market is you want to be in the best position to protect your license. And so if you are a dentist and you decide that you want to bring Botox into your dental practice, depending on your state, some states have given guidance as to what you can and can’t do some states say, well, so long as it’s within your scope of practice, you can do it. On the face. Other states are silent, but we do know in states like Texas, we had a dentist who had a med spa as part of her practice and was advertising in that way. The medical board issued a cease and desist, sorry. On her best day at the medical board, she agreed to a cease and desist letter where she had to shut down her med spa because she was running all kinds of services besides Botox. And so you have to be really, really careful as a dentist. If you do try to enter into this arena, even with all the training that you may have elsewhere, because your boards may disagree, that you should be [00:25:00] able to even do the Botox or fillers, because I say that’s not part of the actual scope of what you would do to render whatever, you know, unless you say, oh, it’s because of a treatment I’m rendering versus this for a cosmetic reason. So it’s a tough one and I feel for the dentist because obviously they know the mouth and jaw area, so well, and they want to expand their practices. Like a lot of our dentists who are in this space, often they do go into the MSO route where they form an MSO and have a buddy of theirs actually help them who’s a MD or who actually owns the actual med spa. But I think that’s all I have time I have right now for the answering that question.
Michael: Excellent way to go. Well, Brad, why don’t you tell me, do you have any more friends questions for me?
Brad: Well let’s see, I’m going through. Wait yes. Wait, Michael, it appears as one more text that came in over the Legal 123s hotline with ByrdAdatto. Michael. This is asking for a friend. Why is Brad so, so much better than Michael? [00:26:00]
Michael: That’s so weird. I saw you writing something on your pad over there right before, and did not see that come through the hotline. Well clearly some of the friends are crazy as well. And so you can’t trust all these questions and I don’t know how that managed to see through. I can’t fathom how you got ahold of that question.
Brad: Well today hopefully this special episode demonstrates how like many other things in healthcare, there is no uniform rule by state, by profession, or even by service. You know, every state is going to be different and have their own ways in which they going to look at it. Some states are more lenient than others so you have to be very careful when practicing in this space, as we said many times, just because it works in one state doesn’t necessarily mean it will work in your state. So, Michael, before we wrap up this episode, let’s go back to our theme. When should I ask for help?
Michael: I think the biggest thing, even [00:27:00] if you need to ask for a friend, wink, wink is to do it on the front end. There really is an intimidation element to it so if asking for a friend helps you get there, then do it because there really aren’t dumb questions when you are on that side. And this stuff is not intuitive. And like we’ve said so much of the season there’s times that we can quickly point a client in the right direction on the front end.
Brad: Yep. All great points, Michael. Well, our loyal listeners and you know, those of you who want to keep bringing on just tune in next Wednesday as we examine the downside of the DIY movement in the medical industry.
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