10 Steps to Developing Your Medical Spa … Avoid the Pitfalls!
by Alexis Ufland
As Medical Spas move from a trend to a staple in the industry, many doctors would like to create their own unique, profitable business. Taking the correct and necessary steps during the development stage is essential to a Medical Spa’s success. During the development of a Spa project, your money and time need to be managed efficiently. Even the seemingly smallest of errors can cause major financial setbacks if not implemented correctly from the inception. However, when strategically executed, a Medical Spa can lead to satisfied patients and huge financial gains. Here are the ten steps to developing your Medical Spa and how to avoid the common mistakes and pitfalls.
Step One: Secure a Solid Concept
Pitfall: Trying to be everything to everybody
Secure a solid concept. Your ‘concept’ is not just a ‘Medical Spa’. Even though Medical Spas are relatively new, they are rapidly evolving. Like Day Spas, Medical Spas are now specializing. Initially, Day Spas tried to be everything to everybody. Offering a wide spectrum of Spa services under one roof, some Day Spas offered Face Treatments, Body Treatments, Hair, Nails, Nutrition, Yoga, Alternative Healing, Pilates, Chinese Medicine, Tanning, etc. Anything that was Spa-oriented was stuffed into a 2,000 square foot space with a fifteen-page menu of service and sometimes up to 65 different facials! The result was that everything fought each other and nothing was profitable. The Aesthetician didn’t promote the tanning bed. The Nutritionist didn’t like the Chinese Herbal Supplements. The Alternative Healers didn’t like the chemicals in the Hair Treatments, etc. Today, you will see Day Spas and Medical Spas that specialize; they do one thing and they do it well. For example, The Skinklinic, NY, NY, focuses on clinical cosmetic treatments, Yanna, NY, NY, specializes in herbal face and body treatments and Sundari Spas concentrate on Ayurvedic Spa services and products, combined with Yoga.
Western Medicine is joining forces with Spa services, forming three main specialized concepts. Cosmetic Spas have taken the lead by joining Western Medicine with Aestheticians for complete cosmetic skincare. Other Medical Spas join the forces of Western Medicine with Alternative Healers such as Chiropractors, Acupuncturists, Massage Therapists and Ayurveda for different approaches to healing. The newest concept is a Patient Specific Spa where Western medicine is aligning with a mix of Cosmetic and Alternative Healers to create a Medical Spa experience for a specific patient, i.e. an Oncologist, OB-GYN, and even Dentists!
On the flip side of offering everything, a common mistake is offering too little or nothing related to your practice. There is a fine line between being a Medical Spa and ‘sharing office space’. Prior to joining with another practitioner, you need to ask yourself a few questions. How does this practitioner complement your practice? How are these treatments going to help enhance your practice? Will it generate traffic and/or revenue? How can you package your services combined with these treatments? Your ultimate goal is to secure a solid concept that complements your practice, does not compromise your integrity, but most importantly is marketable and will generate revenue.
Step Two: Creating your Business Plan & Numbers
Pitfall: Starting the project without a Plan of Action
Whether you are financing the project yourself or you are looking for investors, you need to write a Business Plan. Your Business Plan is the skeleton of your project. It is the first tangible object that represents your entire endeavor. It is what all potential investors need to review to decide if they are interested in investing their money into your venture. Even if you’re not looking for investors, it puts everyone who reads it on the same page as you. Your Architect and Designer will review this plan and get a visual image of your goal. Your Consultant will read this and understand how to program and market your project. Your Spa Manager will review it and know whom she/he needs to hire and how she will lead them. It also acts as a source to refer to during development to keep you on target and, upon opening; it acts as a monthly revenue target for you and your spa manager to strive for.
The four most important sections to your business plan are the Executive Summary, Financial Forecasts, Management Team and Marketing.
Executive Summary / Concept
This is the section in which you take all your ideas, put them on paper and verbalize your overall theme, concept and goals. It is the first page of your Plan and needs to be captivating if you want the reader to move on to the next page.
Financial Forecasts and the Capital Expenditure List
The Capital Expenditure List is your overall budget breakdown which includes everything from build out, equipment, product, consultants, etc. A comprehensive Profit and Loss Statement needs to be created to prove the feasibility and profitability of the business. Investors want to see your goals and how quickly they will get a return on their investment. It is advisable to hire someone who has created Spa financials before or bring in a consultant to work with your Accountant, as there are specific industry standards that can help the accuracy of your numbers.
All potential investors know that Doctors work extremely long hours and extremely hard, so they do not want to see that you will also be managing the business. Therefore, you need to have in place a strong Management Team that has experience, a proven track record and loyalty.
Investors want to see that you are not just relying on walk-ins and your own personal patients. You need to have a Marketing Plan that proves you understand that you need to generate traffic specifically for the Spa to produce revenue.
Step Three: Hiring Your Development Team
Pitfall: Not Having In Place The Correct People Prior to Opening
The build out is the most expensive part of your project, your most time consuming and usually the area in which you know least about. The people in your Development Team are extremely important. You cannot offer a flawless service if your facility is flawed. Here is a breakdown of the people you need to hire and why you need them.
This is your right hand person, from beginning to end of the project. They complete your Spa Financials (Business Plan, Capital Expenditure List and Financial Forecast). They fine tune your concept, create menus, and recommend products and equipment accordingly. They work closely with your Architect and your Designer to make sure the facility is functional and the concept shows throughout the design. They implement your business infrastructure, recruit, hire and train your staff and help you open the doors and generate revenue.
Architect and Designer
Creates a layout of your facility that is functional, beautiful and in conjunction with the concept.
Determines if the facility has the capacity to bear heavy loads. For example, can the floor bear the weight of hydrotherapy tubs, tanning beds, flotation tanks, whirlpools, and heavy laser equipment? (Note: It is your duty to get the weight of the equipment for your Stru ctural Engineer.)
Reviews whether your facility can meet a Spa’s plumbing requirements. Wet rooms, Multi-Purpose rooms and Locker rooms need showers, steam units, toilets etc. Your Hydraulic Engineer will ensure the facility’s water pipes can take both inflowing and out-going waste, that pressure is strong enough to remove materials such as clumpy, clay-like seaweed, that pipes are large enough and unable to erode from certain materials, and their location is inconspicuous so that clients are not disturbed by the noise.
Determines if your facility can meet a Spa’s electrical needs. Most Spa equipment requires a singular phase power source; however, your lasers require three times this. Check to see if your site can handle this. Wax Pots, Sterilizers, Hot Cabby’s, Steam Units, Facial Units, and Beds all utilize electricity. The Electrical Engineer makes sure there are enough outlets, that they are located in the most discreet places and that it is functional for the staff. You do not want patients tripping over chords nor staff walking back and forth from bed to equipment.
Can the location meet a Spa’s heating and air-conditioning needs? There is nothing worse than sweating during your massage for both the patient and the therapist! Steam rooms, Wet rooms, Laser rooms, and Locker rooms get very hot and very muggy. You need to be able to ventilate these rooms properly. These rooms require different ventilation and temperature from the Manager’s office, the refreshment area, and reception area. Temperature controls and ventilation must be planned accordingly!
The build out of your facility is crucial to the smoothness of the operation. Even the cleverest of concepts can backfire if the facility is designed incorrectly. For example, a combination of an Oncologist, Plastic Surgeon and Spa is a fantastic idea to help a suffering breast cancer patient who has recently had a mastectomy. Under one roof she can have her reconstructive surgery, energy work, scar management and be fitted for a wig. However, this scenario drastically changes if she has to walk through the main lobby to get to the location where she tries on wigs, or she needs to undress in a locker room that doesn’t have the privacy she needs at this difficult time. With a strong development team on board, they can foresee these problems and, in advance, create a separate entrance for women who need discretion or create a separate waiting room that is patient specific. An experienced development team builds a facility that enhances your concept, not spoils it.
Step Four: Finding Your Location
Pitfall: Underestimating the synergy between your target market and your location
A Doctor’s office is considered a destination. It does not rely being in the hippest area of town. Patients will travel to see the their doctor. A Day Spa is different as its success relies on location. As a combination of the two, where do you go? A Market Feasibility and Competition Analysis is recommended prior to choosing a location. Many factors effect the selection of your location depending on your concept.
Who is your patient? If you plan to offer expensive cosmetic treatments, you better make sure your surrounding towns can afford it. If you are an Alternative Healing Center with a spiritual flair, you probably don’t want a location down on Wall Street.
If you are a cosmetically driven Spa, you need a great location. Other factors can now affect your success. If you have a high visibility, Storefront space, you can rely on walk-in traffic. In addition, your retail area will entice the passerby to come into your Spa.
You will want to make sure that city/town zoning allows for a Medical Spa. This is a new business and many zoning boards do not understand what a Medical Spa is, so you may have difficulties even getting your zoning issues passed. Do this upfront. A good way around this is to collect zoning data from other existing Medical Spas.
Patients may spend, hopefully, 3 to 5 hours in the Spa. A massage seems to lose its relaxation qualities if the client needs to step outside to put another quarter in the meter.
Step Five: Menu Creation and Product Selection
Pitfall: The Doctor Not Supporting Your Product and Services
The Doctor’s support of all Spa services and products is crucial to the Medical Spa’s success. The difficulty lies in creating a menu of service that does not compromise the Doctor’s integrity and yet is still a marketable product. Doctors often feel divided with regard to the benefits of certain Spa services. You have a couple options when creating your menu and choosing your product.
When selecting a skin care range for your spa, one choice may be purchasing an existing Spa skin care line. These products are designed specifically for use during Face and Body Treatments at a Spa or Medi-Spa. They come with step-by-step instructions on ‘how to’ perform the treatment, (which ensures that all staff are practicing the same standard service). They are sold in professional sizes, which means you buy larger economy sizes to be used in the rooms during the service. And, most of these lines have excellent marketing literature that helps your staff sell the product. Do your homework to find a range that has sound scientific background and is synergistic with your beliefs and concept.
If the Doctor is having trouble finding a Spa range of products, there are many pharmaceutical companies that are expanding their ranges to suit the Medical Spa. There are advantages and disadvantages with this approach. Working with a pharmaceutical range gives you flexibility when designing your menu, it allows you to create a menu specific to your vision which helps bring office and Spa together. However, this approach involves more work. Pharmaceutical companies do not impart technique (on which many Spa Managers and Aestheticians rely). You will have to design your own customized treatments, train the staff to perform these treatments, create your own private label/logo and sometimes purchase in larger quantities. If you are creatively inclined, choosing a pharmaceutical range allows you to develop a menu of service that is a perfect balance between clinical and luxury.
Step Six: Creating and Implementing your Business Infrastructure
Pitfall: Hiring a Manager and Staff, Then Immediately Opening The Doors
The main goal of a Medi-Spa is to create a caring environment. Your staff cannot focus on patient care or selling services and products when the operation is not a well-oiled machine. The merge of form and function begins at the foundation. The most important step of your entire project is having your business systems in place prior to your staff coming on board. It does not matter how beautiful the facility is, how nice your staff is, how clever your logo is or how strong your marketing plan is, if when the client enters the Spa, the operation is chaotic.
The systems and flow of your operation is what makes or breaks your business. On average, 75% of complaints in a Spa setting relate to what happens outside the Spa rooms, which includes your reception area, your taking appointments, your flow, your check out, etc. You are hiring a team of perhaps 15 people who need to come on board with policies and procedures in place. Without these systems in place, your staff will quickly take advantage of you, your Spa’s reputation will nose-dive and your business will not produce its potential income. If there is not a policy in place that indicates to the staff how many times they can be late to work, do not be surprised if they are late three times a week. Allot the correct time prior to opening to implement your Business Infrastructure. Hire your consultant and find an experienced Spa Director to put the following systems and processes in place before the staff comes on board.
Develop an Operations Manual and Front Desk Manual
Develop Service Technique and Product Knowledge Manuals
Prepare Spa Menu and Medical Treatment Packages
Flow - i.e. Check In, Pick-up Robe, Have Treatment, Check Out
Policies, and Procedures – How many times is it acceptable for a staff member to be late?
Input data into Computer Software - this system comes in the form of a blank template
Set up system of integrating Medical and Spa patient records
Schedule pre-opening staff training in Sales, Customer Service, Products
Create Staff work schedules
Develop compensation packages, incentives and payroll
Point of Sale Reporting - How do you close the register at the end of the workday?
Establish inventory and purchasing strategies
Offer front house collaterals: Menu, Gift Vouchers, Appointment Cards, etc.
Have back of house collaterals – Sick Forms, Vacation Forms, Appraisal Forms
Step Seven: Integrate the Doctor with the Spa services
Pitfall: One-stop Shopping
The backbone to a Medical Spa is the integration between the Doctor’s office and the Spa. This integration comes from programming and communication. There are several approaches you can take to integrate your operation. One style is to create a ‘panel of experts’, to include both doctors and practitioners. The diagnosis of the patient is discussed with the panel to create a comprehensive treatment program for healing the patient with Western, Eastern and/or Alternative philosophies. Another method is to have each patient undergo a thorough consultation prior to making his or her appointments. In this consultation, the patient can describe any problems, needs and goals they wish to achieve. With this information and utilizing the services offered within the Spa, a long-term program can be formed to target the patient’s needs. This one-on-one consultation gives the patient not only time to discuss what they want to achieve, but at the same time learn about the services your Medical Spa offers. A third approach, and one that is more specific to a Spa that is cosmetically driven, is to design your ‘menu of services’ inclusive of all treatments offered, whether by both Doctor or Spa. However, the doctor-spa arrangement needs to be strictly adhered to for who performs which services. For example, if you are offering Glycolic Peels in both the Spa and in the Doctor’s office, then separate the services, allowing the Spa to perform below 30% peels and the Doctor to perform above 30%.
Communication between Doctor and staff is critical. Spa staff needs to have a full understanding of a patient’s health history and current medications patients are using so as to avoid performing contra-indicated services or using contra-indicated products. Your patients are going to assume that everyone in the Office and Spa is aware of his/her health history and therefore may be lax about reminding your Spa staff of current health issues, medications etc. It is necessary to create a system that allows the staff access to understanding specific information about the patient that could negatively affect his/her experience in the Spa.
Step Eight: Medical Insurance
Pitfall: Not protecting yourself from others’ mistakes
In a Medical Spa, all practices and therapies are offered under one roof, whether acting as a separate entity or creating a panel to treat patients - the reality is that everyone needs to protect themselves. There are some Medical Coverage firms that now have policies for Spa services and there are Spa Coverage firms that now have policies for Clinical treatments.
Similar to Medical Coverage, you are still going to need the basics of protection, which areMalpractice, General Liability and Property Coverage.
Other ways of protecting yourself are to include a No Holds Harmless Clause in contracts with all Independent Contractors and renters. Make sure all Independent Contractors have their own insurance before allowing them to be a part of your team, and have all patients sign Release Forms prior to technical treatments such as Laser. You need to see a licensed Insurance agent to create a plan specific for your facility. Regulations differ from state to state, and each facility has their own individual needs.
Step Nine: Hiring and Staffing
Pitfall: High Turnover
Staffing is an essential element of a successful operation. The most successful Medi-Spas are staffed with professionals that have prior experience in a medical setting combined with a healing touch. Examples are Aestheticians with continued education certifications, Dermatologist’s Assistants and Registered Nurses.
This is a high-turnover industry. In conjunction with treating your staff fairly, with respect, and creating an environment that is positive and friendly, there are other ways to retain your staff.
Aestheticians are extremely motivated by learning. As a Doctor, you have a pool of knowledge to share with them. On-site education and training is invaluable and lacking in the Spa world, so if you want to hold onto your staff, educate them. This benefits both you and them. Set up monthly lectures with the staff to keep them updated on the latest trends, cosmetic ingredients, products, new lasers, etc. Allow a staff member to spend a morning with you in surgery or assist you on a busy day of patients. They learn and gain respect by watching you diagnose and speak to patients. Also, give staff discounts on your services, so they can see first-hand what is involved in your treatments, how the service feels and in turn promote you; for example Bone Density Test, Eye Exam, discounts on Botox, etc.
Aestheticians are extremely motivated by money. Capitalize on this to get the highest productivity from your staff. Set sliding scale commission structures, weekly product sale targets, incentives for rebooking and up-selling, and promote teamwork by setting monthly overall Spa goals and rewards when they meet your financial goals.
Step Ten: Generating Revenue Through Marketing and Retail Sales
Pitfall: Thinking Your Spa Will Survive Off of Your
Many Doctors have the mentality like the old Charlie Brown cartoon where Lucy walks over to her booth, flips the sign over that says, “The Doctor is in”, and waits for patients to miraculously arrive. A Medical Spa is not a doctor’s office. This is a business, and in some cases you may have six to ten, to perhaps fifteen staff members’ livelihood relying on you and your ability to book them services. The Spa can either hemorrhage on Payroll or execute a strong Marketing Plan that generates traffic, promotes services and sells products.
A forward thinking marketing plan takes a pro-active approach to creating client traffic. Unlike other small businesses, you own the greatest tool for marketing; a list of Spa clients names, addresses, phone numbers and e-mail. This list must be utilized in order to make clients aware of happenings in the Spa. The three steps to marketing Spa services are communication, follow-up and commitment. Using your mailing list, communicate with your clients by sending out a Postcard or Mailer informing them of upcoming promotions and events. Follow-Up your mailers with a phone call to get a commitment to attend. Keep walk-ins and passer-bys aware of your promotions and events through in-house signage and hand out flyers.
Weekly/monthly events and lectures on wellness issues act as a vehicle to sell services and products. Hold a lecture on ‘The Pros and Cons of Botox’ and invite guests that you feel would be interested in this service. Discounts should be given for those who book an appointment that night.
Staff Rebooking and Follow-Up
At the end of each treatment, staff must be trained to re-book clients’ next appointment. Thank you cards should be sent to all new clients. Check-up phone calls should be placed three days after client’s service and reminder calls should be placed six weeks after a guests visit if they haven’t already re-booked.
The Appointment Taker or Booker is a virtual Tele-marketer. Every phone call is a lead. Ensure that the Booker is taking names and addresses to place on the mailing list. Each person that calls to make an appointment should be recommended ‘add-on’ treatments advised of monthly promotions and upcoming events.
Join with companies, politicians or artists that do not have their own venue and allow them to use your location on a rental basis for parties/events. An artist who is having his/her first show can hold an art exhibit in your facility after hours, for a fee or percentage. As a result, 50 people walk through the door that you never knew could be clients.
There is no limit to how much money you can generate with product sales. Product sales can be as healthy as 30-50% of your total gross revenue. The Product has to move off the shelf. Prior to being hired, the staff must be informed that they will have a product sales target. Various tools should be in place to motivate and measure those targets, such as Weekly Sales Targets, Team meetings, Individual incentives and Team Incentives. The entire staff and team should be motivated and working towards reaching a weekly or monthly revenue goal. Product knowledge and selling techniques should be taught at weekly team meetings.
Once developed correctly, a medical Spa is an extremely rewarding and lucrative business. The possibilities are endless of adding healing services to Western medicine. By keeping your mind open and your focus on client care, spa services will be an inevitable addition to all medical environments of the future.