In today’s video, we discuss three top legal strategies for medical spa compliance.

I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry clients navigate healthcare and FDA legal issues and launch, or continue to scale, their health and wellness product success.

Let’s say a registered nurse and an orthopedic surgeon came together to talk about having the orthopedic surgeon come aboard as medical director for the RN’s existing medical spa.  They wanted to do Botox parties and had an informal arrangement where the surgeon would rent a room in the spa and have some business cards printed up that said, “medical director” for the surgeon.  Does this kind of arrangement sound like one that you might take, or be contemplating because it entails legal risks?

We have three tips for you today, legal strategies that potentially can pay off in terms of lowering your overall compliance risk.

First of all, the term “medical director” is used a lot; yet, the California Medical Board has pointed out that if a registered nurse, physician assistant, or someone like a business person – say an entrepreneur, tries to hire a medical doctor and call them “medical director,” this is an arrangement that is essentially “rent a license,” the Board might cry, “Corporate Practice of Medicine” and find the arrangement unlawful.

We actually discourage the notion of a “medical director,” because a medical director should not be directing anything or anyone other than his or her own clinical staff.  And in the arrangement we describe, the registered nurse is really meant to be calling the shots, getting the patients, and creating a scenario where the orthopedic surgeon is really there in name only, collecting a check for letting them attach their credentials to the enterprise, at least the way we’re conceptualizing it here.

The second tip, when a healthcare licensee like a medical doctor rents space, the arrangement should be a fair market value, and must not fluctuate by the value or volume of “referrals.”  In practice, this means that hourly rentals suggest a payment that does go up and down with the number of patients, and thus violate state law prohibitions against kickbacks and fee-splitting.  We have a lot more detail on this argument, this concept on our blog, cohenhealthcarelaw.com/blog; so the video is a quick lightning round.

Third, in this scenario the registered nurse could create an MSO that runs the medical spa business—it might do administration or management, and marketing.  The MSO can charge the orthopedic surgeon or their professional corporation, at fair market value, for services involving management and marketing.  This requires creating an MSO, having an agreement between the MSO and the surgeon or their Professional Corporation or PLLC.  And then doing what MSOs do and getting paid for services in this rational way.

This is different than having the nurse call the shots, hire the doctor.  And, it’s not a “partnership” between two clinicians.

There are lots of variations, lots of issues. For example, do you need a good faith exam; who does the good faith exam if you need one; what about doctor supervision of a nurse; is a collaborative agreement necessary, and is it enough?

If you’re interested in an early read on your business, that gets deeper into the issues than we can in a short lightning video, we encourage you to book a Legal Strategy Session with a member of our Legal Team. And we describe our Legal Strategy Session on our website, cohenhealthcarelaw.com.

Thanks for watching. If you still have questions, click on the link below, cohenhealthcarelaw.com/contact, to send us a message or book an appointment. Here’s to the success of your healthcare venture, we look forward to speaking with you soon.