Five Leading Medspa Risks, and How Operators Can Manage Them

The appeal to the medical spa business is no surprise to anyone who has examined the numbers that underscore the industry’s impressive growth.

With a menu of services spanning massages, facials and Botox treatments to IV hydration and fat-burning injections, medspas have become a $15 billion industry. Average annual medspa revenues in 2023 hit $1,398,833, up from $1,307,587 in 2022.

But it’s hard to miss the risk side of the coin. The U.S. Food and Drug Administration, for example, rang out 2023 with a series of warnings: against unlicensed medspas using unlicensed, non-medical staff for treatments, and some treatment practices themselves, like mixing products without sterilization and using unapproved fat-dissolving ingredients. These were after earlier warning for consumers against use of off brand versions of diabetes weight loss drugs Ozempic and Wegovy that some medspas dispense. 

Not only are these risks to the public, but they are among the many risks that operators anticipate and avoid. Lax patient safety practices, for example, can exact a high cost in an era of nuclear verdicts. But non-compliance with the confusing welter of state and federal regulations over the industry might also cause a medspa to shutter.

Whether a medspa is just opening or has a long track record of success, it’s well advised to partner with an insurance broker that has deep experience with medical spas and aligned businesses, and insurers that are comfortable with the sector’s risks. Not only will operators get the optimal insurance coverage for their needs, but they will be in a good position to identify and manage risks ahead.  

Here are the five leading categories of medspa risks, and ways to manage them.

1. Patient safety: The most in-demand treatments often involve medical procedures with serious consequences if not performed correctly. With Botox treatments, it’s possible to hit a nerve. With laser procedures come burn risks. Unsanitary equipment and allergic reactions are also risks.

Manage the risks through:

• Staff training: Comprehensive onboarding, staff training, and certification programs are must-have investments for maintaining a safe, sterile environment.
• Review patient medical history: Thorough patient consultations are essential for gathering detailed medical histories, including any allergies or previous adverse reactions to treatments. Histories should be checked regularly for potential changes.
• Standardized protocols: Develop and document standardized protocols for all procedures. Mandate checklists so that every step is followed correctly and consistently.

2. Regulatory compliance: Medspas must adhere to many federal and state regulations, that are complex and frequently updated. Non-compliance with federal rules on patient privacy or safety standards or state requirements for ownership or licensing can result in fines, legal action and even closure.

How to manage the risks

• Stay informed: Regularly check local, state and federal regulations for medspas, including licensing requirements, treatment protocols and billing practices.
• Legal partnerships: New operators may balk at a business attorney’s fees, but a legal error can be far more costly. Look for healthcare attorneys who understand medspa regulations for valuable guidance in case of a claim.
• Internal audits: Avoid regulatory breaches by being proactive. Conduct regular internal audits to identify and quickly address compliance issues.

3. Employee risk: Employees are crucial to helping a medspa grow. They’re also a significant risk if they’re unqualified staff, mishandle patient information or worse. Know your hires and ensure patient information is handled with highest integrity.

Manage the risks through:

• Background checks: These should be mandatory, ensuring employees are qualified, have presented a complete/accurate work history, are properly credentialled and show a history of integrity.
• Track licensure expiration: Employees’ licenses always must be up to date, especially as the med spa grows.
• Cyber security training: Do this with all staff regularly to ensure the safe handling of patient information and prevent data breaches.

4. Treatment risk: The medspa industry continuously introduces new and innovative treatments. But these can be risky if incorrectly performed or if they have unforeseen side effects.

How to manage the risks:

• Certifications and training: All staff members should receive proper training (including hands-on) and certification for new treatments.
• Monitor outcomes: Treatment outcomes should be monitored, and detailed records kept. Identify recurring issues and adjust practices accordingly.

5. Unreasonable patient expectations: Patients often have high expectations for aesthetic treatments. If they’re not met, it can lead to dissatisfaction, negative reviews and even legal action.

How to manage the risks:

• Set realistic expectations: During the initial consultations, be explicit in telling what treatments can and cannot achieve.
• Patient communication: Potential risks and side effects should be explained clearly before administering treatments. Informed consent forms must be used to document patients’ understanding and acceptance of the risks.
• Follow-up care: Recommend follow-up appointments to assess results, address concerns – and also improve patient satisfaction and loyalty.

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