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    Understanding MSOs for med spas: A detailed guide

    MSO for med spas

    “Do what you love, and you’ll never have to work another day in your life.” 

    Some physicians, unfortunately, may not feel this way when they achieve their dream of opening their own medical spa. 

    They find themselves preoccupied with the business side of the med spa — having to juggle managing accounts and finances, staff rotas, and marketing — and having less and less time to provide treatments to patients and do what they truly love.

    But there is a solution — a Management Service Organization (MSO). 

    An MSO will take care of the non-medical responsibilities in your med spa, allowing physicians to focus on delivering medical services.

    But that’s not the only benefit the MSO will provide for your med spa. There’s plenty more, and if you want to learn about it, keep on reading.   

    What is an MSO (Management Service Organization)?

    Management Service Organizations (MSOs) are organizations that specialize in offering operational and administrative support to medical practices, including medical spas.

    They assist in managing the business aspect of the medical spa, which therefore frees up medical practitioners to concentrate on patient care and treatments.

    From administrative support to regulatory compliance and financial management, MSOs cover a wide range of services.

    MSO

    Essentially, an MSO divides the medical spa into two distinct institutions:

    • One part is the medical spa. This part is responsible for patient care, employing medical professionals like physicians, physician assistants (PAs), injectors, registered nurses (RNs), and other medical staff, and housing medical equipment.
    • The other institution is a management company that is responsible for the non-medical aspects of the business, such as payroll, staffing, scheduling, marketing, accounting, and other administrative functions.
    Ryan Peterson, Medical Director at NuView Treatment Center

    Ryan Peterson, Medical Director at NuView Treatment Center

    Board-certified in anesthesiology, addiction, and pain medicine.

    Based on our experience at NuView, MSOs are the backbone of operational
    efficiency as they assist us with appointment scheduling and refined
    patient flow. Our patient flow is more coordinated and responsible. The
    moment they walk in the door, clinicians in our center do not have to worry
    about them as we can focus on treating the patient. Our MSO works behind
    the scenes so that every patient feels supported and cared for.

    What is an MSA (Managed Service Agreement)?

    The MSA functions as the contract between the MSO and the medical spa.

    This agreement outlines the responsibilities and tasks of the MSO, clarifying what the MSO is permitted to undertake on behalf of the med spa.

    Additionally, the MSA should also cover financial matters related to leasing arrangements for any offices owned or managed by the MSO.

    Why do I need MSO for my Medspa?

    When a physician launches a medical spa, they usually do it because they want to use their skills and for their patients to receive exceptional care.

    However, once the med spa is opened, the practical demands of the business become apparent, involving various essential tasks such as staffing, accounting, marketing, and more.

    This additional workload might diminish the initial passion physicians have for their newly opened businesses as they struggle to find time for what they truly love and where they feel they add the most value — delivering medical services.

    And let’s be real, not everyone has a head for business, and that’s OK, One of the best things you can do is to recognize your strengths — and outsource the rest.

    This is where the MSO comes in. The MSO is designed to handle non-medical duties, allowing physicians the freedom to concentrate on delivering medical services without being over-burdened by administrative responsibilities.

    MSO also helps non-physicians open a medical spa

    In certain states where only licensed physicians can own and operate medical practices, a Management Service Organization (MSO), often structured as a Limited Liability Company (LLC), steps in as a complementary organization.

    This arrangement enables non-physicians, including physician assistants (PA) and registered nurses (RN) to own and operate a medical spa while still adhering to state regulations.

    Planning to open a medical spa? Check out the ultimate compliance checklist for medical spas.

    How does my medical spa benefit from an MSO?

    MSOs provide huge support for your medical spa and also offer staff training, ensuring your team is well-prepared to deliver exceptional service to clients.

    By utilizing the expertise of MSOs, your med spa can operate seamlessly, ultimately maximizing client satisfaction and nurturing loyalty.

    1. MSOs help you adhere to state regulations

    Running a med spa means dealing with a complex set of rules and regulations, and strictly following these laws and guidelines is crucial.

    Thankfully, MSOs have vast knowledge and experience in navigating these regulations, making sure your med spa complies with all the necessary rules.

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    They play an active role in creating and enforcing policies and procedures that meet legal demands, such as keeping accurate records, safeguarding privacy, and maintaining healthcare standards.

    Trusting an experienced MSO for regulatory compliance helps minimize risks and upholds top-notch professional standards.

    2. MSOs help you smoothly run the operations in your med spa by taking care of the admin work

    Collaborating with an MSO provides access to extensive expertise and resources that can contribute significantly to the smooth functioning of administrative tasks in your med spa.

    This involves overseeing regulatory compliance, managing payroll and human resources, establishing effective scheduling systems, and offering support in financial management.

    By delegating these fundamental responsibilities to the MSO, you can concentrate on delivering excellent services and nurturing the expansion of your med spa.

    3. MSOs help you scale your med spa

    Picture managing several medical spa practices in different locations, including staffing, marketing, payroll, and even customer service.

    We know, it’s a LOT.

    However, a well-managed MSO can cater to the business and operational requirements of your multiple-location business, which will take a lot of responsibilities off of your shoulders.

    Every task will be centralized within one MSO, which will help the MSO attract skilled professionals in finance, management, marketing, customer service, and operations, to help you grow your business.

    If you have med spas in multiple locations or plan to expand, cloud-based software that supports managing multiple sites can also be of big help to you.

    With Pabau, you’ll have one platform across every med spa, and you can keep an eye on every activity whenever and wherever you want.

    You’ll be able to manage and coordinate rooms, rotas, equipment, and staff schedules across multiple sites with only one click.

    And you’ll have access to location-specific ready-made reports.

    4. MSOs can help you improve the financial performance of your med spa

    Successful financial management is a crucial element for any business, and med spas are no exception.

    MSOs offer valuable financial expertise and can help you enhance revenue and manage costs effectively. They will manage billing, handle insurance contracts, and provide detailed financial reports.

    Additionally, as MSOs have huge purchasing power, they can use this to negotiate pricing with suppliers, giving your med spa access to top-notch products at reasonable prices.

    5. MSOs offer advanced technology solutions

    MSOs offer access to practice management software, electronic health records (EHR) systems, and various tools that boost productivity and elevate client care standards.

    While it’s a good thing that MSOs provide access to different tools that will make your day-to-day work easier, it can be challenging hopping on and off of so many tools at once.

    Having practice management software that has everything in one place can be a smarter solution for you.

    Pabau’s All-in-one solution will grant you access to tools to help you:

    What activities can the MSO perform for my medical spa?

    An MSO can perform many activities and tasks for your medical spa. And here’s some of them.

    • Making sure you are compliant with various state and federal laws — This means that the MSO will ensure your medical spa follows all relevant laws and regulations such as HIPAA, OSHA, FMLA, CLIA, and state-specific laws. Compliance with these regulations is critical for patient privacy, safety, and the overall legality of the operations.
    • Medical coding, billing, and collection activities — This involves managing the financial aspects of the medical spa’s services. It includes invoicing, assigning specific codes to services provided for insurance billing, and handling the collection of payments from patients and insurance companies.
    • Providing and managing office space — MSOs may assist in choosing the physical location for your medical spa, negotiating office leases, and managing the day-to-day functioning.
    • Training and educating medical staff — MSOs ensure that medical staff are aware of and go through robust training in regards to legal regulations and industry standards. Such as training staff on various laws and protocols to ensure they operate within legal boundaries and maintain quality patient care.
    • Hiring administrative and clinical staff, reviewing the credentials of the staff, and managing enrollment — MSOs handle staff recruitment, reviewing qualifications, and ensuring proper enrollment procedures are followed for new employees.
    • Buying medications and supplies — This involves obtaining necessary medical supplies, equipment, and medications for the medical spa’s operations.
    • Addressing technology issues — This includes managing the technological infrastructure of the medical spa. It involves tasks such as managing databases and documents and obtaining the necessary software and hardware to support the operations.
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    Having robust security measures in place when working with software is a must. After all, you are responsible for keeping all your patient data safe and sound.

    That’s why employing a practice management software that will take care for the security measures for you is a smart thing to do.

    Learn how Pabau’s security feature keep your patient data safe.

    • Offering accounting services — MSOs manage the financial records, budgeting, and financial reporting for the medical spa.
    • Handling other business activities — MSOs can help with marketing your med spa, sales, hazard management, quality assurance, insurance, maintenance of electronic health records, managing the inventory, and many others.

    How MSOs help you with legal compliance

    Besides helping non-physicians to own and operate medical spas, the MSO can also help with other legal compliance issues your med spa can encounter, such as:

    1. Stark Law — The Stark Law guarantees that physicians make patient referrals for services and medical products, such as medication and lab tests, based on the patient’s best medical interests rather than the physician’s financial interests.
    2. The Anti-Kickback Statute — This statute prohibits paying, offering, soliciting, or receiving any form of payment in exchange for patient referrals.
    3. Fee-Splitting — Fee-splitting is when a med spa owner pays its employees a commission for the services they perform, which is typically prohibited by state laws.
    4. Laws governing marketing and advertising — Medical practices must follow ethical standards when they advertise their services to the public.
    5. Law of unfair business practices and unfair competition — This law prevents med spas from using deceptive marketing tactics to ensure fair competition.
    6. Informed Consent Practices — Healthcare providers are required to inform patients of the potential risks, benefits, and alternatives to a particular treatment before obtaining consent for the procedure.

    A robust practice management software, such as Pabau, ensures that your clients complete consent forms (also known as release forms) prior to their appointments.

    Here’s how it works:

    Pabau automatically sends the consent forms to the patient immediately after they schedule an appointment with your practice.

    Upon the patient’s arrival at your med spa for their treatment, the system will alert you about the completion status of their form. If the form remains incomplete, the patient will be prompted to fill it out before the treatment begins.

    This process guarantees that the needed paperwork for the patient is submitted before you start the treatment.

    7. Negligence (Malpractice) — This covers the legal standards healthcare providers must follow and the consequences of breaching that duty.

    8. Laws relating to the use of lasers — These regulations control the safe and appropriate use of lasers in medical procedures, ensuring patient safety.

    9. Regulations for prescriptive devices — These regulations are a set of guidelines that show the appropriate use of medical devices in accordance with safety standards and patient health.

    10. The ‘good faith exam’ — This mandates healthcare providers to perform a reasonable and appropriate examination before diagnosing or prescribing treatments, ensuring quality care and accurate diagnoses.

    11. Legal rules of the prescription of controlled substances — Healthcare providers must follow specific guidelines and restrictions when prescribing drugs with potential for abuse, which will ensure patient safety and proper use of these medications.

    12. Physician assistant scope of practice — Determining the tasks and responsibilities delegated to physician assistants, specifying the limits of their roles in medical settings.

    13. Delegation and supervision of procedures to allied health professionals — Defining the extent to which non-physician healthcare professionals can perform certain medical procedures under supervision by licensed physicians.

    14. Regulatory requirements and standardized procedures — Establishing uniform protocols and criteria for maintaining patient records, ensuring consistent, high-quality documentation for patient care.

    Am I required to set up an MSO for a medical spa in my state?

    Although setting up an MSO can yield a lot of benefits for your medical spa, if you are a licensed physician, you don’t need to establish an MSO to operate a medical spa.

    However, if you are a registered nurse (RN), nurse practitioner (NR), physician assistant (PA), or simply an entrepreneur without any background in medicine, some states mandate the setup of an MSO to run a medical spa.

    For example, in states like Washington, Michigan, Texas, Pennsylvania, California, and Arizona, having an MSO is a requirement for running a medical spa.

    In Illinois, on the other hand, practitioner assistants and nurse practitioners don’t need an MSO to run a medical spa, but registered nurses do. The same applies in North Carolina.

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    In Ohio, though, for registered nurses, MSO is not required. For physician assistants, MSO is also not required, but they need to have a supervision agreement with a medical doctor. Nurse practitioners can also run a medical spa without having to set up an MSO, but they need to have a collaboration agreement with a medical doctor.

    These rules are different in all states. That’s why if you are not a licensed physician but plan to open a medical spa, it’s crucial to check your state’s specific requirements first.

    What the MSO cannot do?

    The primary activity the MSO cannot engage in is providing any form of medical service.

    Generally, the physician or physician-owned med spa takes responsibility for medical malpractice complaints or any other medical-related issues and must make the medical decisions.

    The MSO, on the other hand, takes responsibility for business-related risks.

    Dr. Mo Janson

    MD and General Practitioner

    Here’s what Dr. Mo Janson has to say about the benefits and limitations of MSOs:

    MSOs (Management Services Organizations) play an increasingly significant
    role in supporting medical practices, including med spas, by offering a
    range of non-clinical business services. Here’s a nuanced look at their
    benefits and limitations:

    Benefits of MSOs:
    Economies of Scale: MSOs provide med spas with access to bulk purchasing
    for supplies and equipment, which can result in substantial cost savings.

    Regulatory Compliance: They stay abreast of healthcare regulations, helping
    med spas maintain compliance with HIPAA, OSHA, and other regulatory bodies.

    Administrative Efficiency: MSOs excel in handling administrative tasks such
    as billing, coding, payroll, and human resources, freeing up medical
    professionals to focus on patient care.

    Marketing and Expansion: They often have robust marketing teams and
    strategies that can be leveraged to grow the med spa’s brand and attract
    new clients.

    Technology Integration: MSOs can provide advanced IT support, including
    Electronic Health Records (EHR) systems, which streamline operations.

    Financial Management: Expertise in financial planning, analysis, and
    management helps med spas optimize their profitability.

    Limitations of MSOs:

    Generic Services: Some MSOs may offer a one-size-fits-all approach that
    doesn’t account for the unique needs of individual med spas, such as
    specialized treatments or customer service nuances.

    Cost: While MSOs can save money in some areas, their fees need to be
    carefully considered against the potential ROI for the med spa.

    Control and Autonomy: Physicians and spa owners might find that partnering
    with an MSO can lead to reduced control over certain business aspects.

    Cultural Fit: An MSO’s corporate culture may not always align with the
    methods of a boutique med spa, potentially impacting staff morale and client
    satisfaction.

    Is Establishing an MSO Worthwhile?

    The decision to establish or partner with an MSO should be based on a
    careful assessment of the med spa’s specific needs, growth goals, and
    financial health. For many med spas, the benefits of reduced administrative
    burden, cost savings, and improved compliance can be quite significant.
    However, it is crucial to ensure that any MSO partnership allows for
    flexibility to accommodate the personalized nature of the med spa
    experience.

    Med spas considering an MSO should perform due diligence to ensure that the
    organization they partner with has a track record of success within the
    aesthetic medicine industry and can provide tailored services. Moreover, a
    detailed contract outlining the scope of services, expectations, and exit
    clauses can help mitigate potential drawbacks.

    In conclusion, while MSOs can offer substantial support to med spas, it’s
    not a universally ideal solution. Each med spa needs to weigh the pros and
    cons in the context of its unique business model, clientele, and long-term
    strategy.

    MSOs serve as a support structure for medical spas

    MSOs facilitate seamless operations and administrative efficiency. These organizations allow practitioners to concentrate on patient care while they handle the non-medical aspects of the business.

    From regulatory compliance to enhancing financial performance and operational efficiency, MSOs play a pivotal role in the success of a medical spa.

    MSOs not only aid in legal compliance and operational streamlining but also serve as a crucial element in scaling and improving the financial performance of your med spa.

    Ultimately, the support offered by MSOs helps optimize and maintain a successful medical spa.

    If you need help to better organize your workflow and all the operations run smoothly in your medical spa, but you don’t want to set up an MSO, then a robust practice management software such as Pabau can help you do that!

    What you should do now

    1. Schedule a Demo to see how Pabau can help your team.
    2. Read more clinic management articles in our blog.
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