Case Study: Branding Your Medical Spa or Anti-Aging Clinic—Legal Considerations—Part 2 (Branding & Marketing)

Branding your medical spa, longevity center, or anti-aging clinic raises legal and regulatory challenges that a skilled healthcare attorney can help you navigate.Branding and Marketing Issues

Elsewhere we discuss self-referral, anti-kickback, patient exploitation, and fee-splitting legal issues in structuring the multidisciplinary clinic, practice, medi-spa, anti-aging center, or integrative care operation.

Use of Name by General Corporation or LLC

One of the issues with branding the name of the clinic is that if the name belongs to a layperson or general corporation (for example, David’s Anti-Aging Longevity LLC), the Board will not allow the physician to use that name.

If the physician tries to use the name, the MD or DO may open himself or herself up to a charge of unprofessional practice and aiding and abetting unlicensed practice, because the Board may suspect that the LLC or general corporation is simply a cover for illegal corporate practice of medicine. Upon investigator, the Board may ask for documents to show physician actually owns and operates a practice. Other physicians can “tattle” and file a complaint, and this goes to the enforcement division right away.

One way to help minimize this risk is to distinguish, in the names, between the management entity and the clinical entity. For example, if the MSO is named, XYZ Management Group, Inc., and the practice is named XYZ Medical Center (with an appropriately filed fictitious name permit), both can argue that there is a clear distinction to the public between the two entities. Of course, duplicating the name “XYZ” may still trigger investigation, and it will be important to have all the documentation described above to help bolster the claim that clinical practice is not being relegated to an administrative and management company.

Use of Name by Physician-Owned Professional Medical Corporation

The corporate practice of medicine issue presented by a layperson’s ownership goes away when the overarching entity is physician-owned.

In California, a fictitious name permit (FNP) can only be given to one physician practice at a time. If the practice opens in multiple locations (for example: Los Angeles; Sacramento; Berkeley; Davis; San Diego; Riverside; San Francisco), then the medical director can be head of the medical group, and apply to use the same FNP in multiple locations (for example, Longevity Medical Center—San Diego; Longevity Medical Center—Los Angeles). In this case, the name brand (Longevity Medical Center in our example) is owned by a professional medical corporation, which is 51% owned by physician shareholders. The PMC can license the name to other physicians.

If that medical group decides to go national, it will have to apply for an FNP in every state. The medical group may choose to have a new professional corporation in each state, and a main PMC that licenses the name across states.

Use of Term “Medical Director” In Management Company

Using the term “medical director” can cause legal problems for a physician affiliated with a management company. The management company’s role is non-clinical and administrative; therefore, there is nothing to “direct,” medically speaking. The Board may well interpret this title as indicating an illegal “rent-a-license” scheme.

A Possible Branding Route

One possible route is for the management company to use its name as a tag-line, that gets appended to the fictitious name of the medical practice. For example:

  • John Smith, MD files Articles of Incorporation to incorporate “John Smith, MD, Inc., a Professional Medical Corporation.”
  • John Smith, MD, Inc., a Professional Medical Corporation, applies for an obtains a fictitious name permit to use the name, “Los Angeles Life Extension Medical Center.”
  • Reed Jones, a non-physician investor, is the sole Member-Manager of Alpha Anti-Aging Management, LLC
  • Alpha Anti-Aging Management, LLC licenses certain protocols and other technology, leases space and equipment, and contracts to provide administrative and management services to two physician practices.
  • The LLC also has a marketing agreement with Smith’s PMC. Under this agreement, Smith advertises as: “Los Angeles Life Extension Medical Center, an Alpha Anti-Aging clinic.”
  • The LLC has a twin agreement for Jane Tweed, DO’s San Diego practice, which obtains an FNP and opens as, “San Diego Anti-Aging Center, an Alpha Anti-Aging clinic.”

The above strategy presumes that regulatory boards will recognize a distinction between a physician-owned medical practice, which respects the corporate practice of medicine doctrine and naming conventions related to fictitious name permits, and marketing efforts that delineate a role for management and administrative functions.

If called on to defend these practices before a regulatory board, it will be important to have in place all the compliance documents identified earlier. As well, whenever licensing a name as well as offering marketing training, it is important to consult with franchise counsel to ensure that the proposed business structure does not run afoul of franchise legal rules. Our skilled healthcare attorneys can help craft suitable legal and regulatory solutions. Contact us today.

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