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Can a Non-Physician Own a Med Spa?

Can a Non-Physician Own a Med Spa?

Trey Hendershot

Trey Hendershot

August 5, 2021 04:45 PM

The short answer is "no". But don't be discouraged. In Texas, nurse practitioners, estheticians, and other non-physicians cannot own a med spa, also known as a medi-spa or medical spa. Nevertheless, a non-doctor may be involved in the day-to-day operations of a med spa via a management services organization (MSO).

Unfortunately, MSOs are not simple. Failure to operate a med spa or MSO correctly could result in civil liability, administrative penalties, and even criminal charges. To work in the med spa industry, there are a few things you must understand:

What Is a Med Spa?

A med spa is a hybrid between a day spa and an aesthetic medical center. Licensed medical professionals may offer non-invasive medical services like Botox injections, and licensed estheticians may provide day spa services, like skincare, body scrubs, and massages.

In Texas, certain cosmetic procedures offered by med spas are considered the practice of medicine, which means med spas must adhere to specific rules and regulations. For example, not everyone can own and operate a med spa.

Who Can Own a Med Spa in Texas?

Only physicians can own med spas. While a physician assistant can own minority shares in a med spa or serve as a minority partner with a physician or physicians, other health care providers such as nurse practitioners and non-medical professionals cannot.

Fortunately, the MSO model allows anyone to achieve their goals of operating a med spa. Through an MSO, non-medical professionals can help physicians and other health care providers with the administrative and non-clinical aspects of the medical practice.

What Is an MSO?

An MSO is a management services organization, defined as a management entity that helps physicians handle a range of operational issues. MSOs might handle education and training, billing, office space, equipment, regulatory compliance, IT, HR, marketing, and more.

Although non-physicians cannot own med spa practices, they can own the office space and equipment a physician may need to operate his or her practice. Another way to think about this is to imagine the MSO as a landlord and the physician as the tenant. The MSO is compensated for its services, while the physician provides care that complies with Texas law.

Who Regulates Medical Spas in Texas?

Because they are so profitable, the Texas Medical Board keeps a careful eye on med spas and is quick to punish any facility that violates the Corporate Practice of Medicine doctrine. Non-physician owners of med spas risk criminal penalties for the unlicensed practice of medicine. Physicians are similarly prohibited from allowing non-physicians to commercialize their medical license.

The Corporate Practice of Medicine doctrine generally prohibits corporations, private entities, and non-physicians from practicing medicine in Texas. Under this law, non-medical professionals may not own a medical practice nor employ physicians for private gain. The doctrine is meant to provide patients with ethically driven care instead of profit-driven care influenced by someone without medical training.

To avoid pitfalls, please read “Three Ways your MSO May Be Violating the Prohibition against the Corporate Practice of Medicine.”

MSOs may also be responsible for keeping med spas compliant with the Stark Law, the Anti-Kickback Statute, the False Claims Act, and HIPPA.

At the same time, the management service organization must abide by regulatory requirements of its own.

In summary, the physician, their med spa practice, and the MSO they hire must all adhere to a complex web of rules and regulations.

What Are the Penalties of Violating the Corporate Practice of Medicine Doctrine?

The consequences of violating the Corporate Practice of Medicine Doctrine include civil liability, administrative penalties, and even criminal penalties. The Texas Medical Board’s administrative rules governing the corporate practice of medicine include penalties ranging from fines to suspension to revocation of a physician’s license.

Getting involved in a med spa is lucrative, but it is not without risk.

If you want to rent office space or equipment to a med spa practice or provide any other services to a med spa physician, you should first talk to an attorney with experience in med spa set-up and compliance.

Hendershot Cowart P.C. has national recognition in health and medical law issues like yours, and we have over 100 collective years of experience keeping businesses compliant. Whether you’re just getting started or need help with a health care investigation, our team is here to provide you with legal services that exceed your expectations.

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