MAY-JUN 2017

MedEsthetics—business education for medical practitioners—provides the latest noninvasive cosmetic procedures, treatment trends, product and equipment reviews, legal issues and medical aesthetics industry news.

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renegotiated throughout the year to allow for fl uctuations in business. This helps to create a strong bond between the medical side of the business and the MSO—if one succeeds, they both succeed. "Clearly, the MSO is structured to assist nonphysician owners to work with physician-owned entities. However, some less obvious advantages have to do with separation of risk between two different entities, as well as the clear separation of medical services and business services," says Adatto. "This is crucial in several states that have strict rules on the corporate practice of medicine." For example, the physician incurs very little risk when it comes to setting up the business. If the practice fails, he or she is probably going to be fi ne—after all, the physician is not on the hook for the facility, its contents or the land on which it is located. That's on the MSO. Additionally, the creation of a separate company for the physician helps prevent any liability issues incurred at the medspa from bleeding over into any of the physician's other medical pursuits. Conversely, should the physician incur any sort of liability claim, the MSO side of the business is protected. The MSO also typically pays for the physician's liability insurance. This arrangement might seem to be heavily weighted in the physician's favor, but that is why the physician pays the MSO. Of course, all this is predicated on the assumption that the MSA is set up and executed properly. If so, everyone stands to benefi t; if not, both sides open themselves up to signifi cant consequences. DANGER ZONES When entering into these types of contracts, there are a few pitfalls that you must be certain to avoid. Foremost, the doc- tor must be in control of all medical decisions, including the hiring of medical personnel. Second, all payment for medical services must be made directly to the physician or physician- owned corporation. The MSO submits an invoice to the physician or physician-owned corporation for management services and is typically paid from that company's account at the end of each pay period. It is important to note that, although it may seem that a properly set up MSO is in charge of the medspa or practice, the doctor must be in charge of all medical and clinical deci- sions. This is necessary for both legal compliance and patient safety. He or she cannot be an absentee medical director. The easiest way for an MSO to get in trouble is for it to not actually treat the aesthetic practice as a medical company. If the doctor is not managing the medical aspects of the medspa, he or she may be subject to severe punishments— including license forfeiture and large fi nes—and the MSO would be subject to repercussions for practicing medicine without a license. Therefore, it is vital that all parties under- stand their roles and obligations. MSOs have been around for a long time. They have been used by entrepreneurs to form management companies for medical organizations as large as hospitals and managed care facilities, so it stands to reason that creating an MSO for a medspa would be comparatively simple. However, this is not the sort of thing that can be properly executed using forms downloaded off the internet. If you are considering entering into this sort of arrangement, you need to consult a health- care attorney who has experience in successfully setting up MSOs to ensure compliance and patient safety. Alex R. Thiersch, JD, is a Chicago-based healthcare attorney who represents medspas, plastic surgeons and other aesthetic medical professionals. He is a partner at ByrdAdatto Law Firm and the founder and director of the American Med Spa Association (AmSpa). Contact him at 20 MAY/JUNE 2017 | Med Esthetics © GETTY IMAGES LEGAL ISSUES The terms of the Management Services Agreement must be carried out in both form and function, or both entities can face signifi cant consequences.

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