The anti-aging and medi-spa revolution is here to stay some experts say. Just look at celebrities such as 70-year-old actress Jane Fonda or 68-year-old singer Tina Turner to see what transformations can be achieved through anti-aging techniques.
What exactly is driving the anti-aging and medi-spa train? Is it Baby Boomers searching for the fountain of youth or just a pop culture revolution that believes the perfect image can be easily bought in a one-stop shopping experience?
Edward Kuhn of Liability Insurance Solutions and Professional Liability Solutions said that the medi-spa industry has grown 20 percent and shows no sign of slowing down.
“There is this element or movement to anti-aging. People want to feel good from the inside out … not just look good on the outside. And then you introduce things like wellness, nutrition, exercise and hormones,” Kuhn said.
That wellness “inside and out” philosophy drives the types of professionals now entering the medi-spa industry, Kuhn said. Physicians practicing in general practice, internal medicine, or even Ob-gyns are now leaving lucrative practices to become part of the growing medi-spa industry, he said.
“Ob-gyns who may want to use aesthetic skin practices and procedures to rejuvenate a woman who has just had a delivery can offer that in a medi-spa environment. There are many specialty areas where they are taking these procedures but mainly its skin work, lasers, (and) overall cosmetics,” Kuhn said.
Under the Knife, What’s Included?
Just what types of procedures are included at a medi-spa?
“Medi-spas offer a combination of medical procedures such as laser hair removal, microdermabrasion and Botox injections in the medi-spa environment,” explained Kathleen Johnson from Chicago-based Shand Morahan and Co. “You can still get spa services, like manicures and pedicures and facials and massages, but you can also get more aggressive anti-aging treatments, such as microdermabrasion and chemical peels and Botox, things like that.”
Johnson explained that what isn’t included is plastic surgery, like liposuction or nose surgery that is the domain of the plastic surgeon’s office.
According to Johnson there are three basic types of medi-spas.
“You have the medi-spas that just do cosmetic aesthetic sort of products, such as Botox and laser hair removal. You also have medi-spas that do wellness, which is stress management or weight loss or smoking cessation. And finally there is the medi-spas that provide alternative medicine and alternative treatment and alternative health care,” Johnson said.
Johnson believes that Baby Boomers have significantly fueled the growth of the industry since 2000 when medi-spas began to spring up around the country.
“As Baby Boomers start to age, they’re looking for the fountain of youth and they have more disposable income. The price point has dropped such that a lot of these services are available to the general public,” Johnson said.
Growth in this industry has jumped dramatically in the last eight years, she said. In 2000, there were approximately 200 medi-spas nationwide. Now there are 2,000.
“To go from 200 to 2,000 in seven years just shows you what a burgeoning area of the market this is,” Johnson said.
Insurance Needs
As the market grows, the need for adequate and appropriate insurance coverage becomes even more important. Kuhn said there are three basic coverages needed: professional, general ancillary, and defense of license.
“Medical professional liability is needed to cover the procedures and to cover the exposures that are inherent with a medi-spa: injectables, hormone delivery, nutrition and wellness are all important,” he said. “These are risky but it’s not highly invasive types of procedures.”
Kuhn said that there are coverages needed that are purely medical professional liability, but there are also some ancillary coverages such as general liability for the expensive laser machines used.
Defense of license coverage is emerging as another needed coverage. “Because of the state medical board scrutiny of some of these procedures, the physicians are worried about the protection of their licenses,” Kuhn added.
Changing Markets
Kuhn said that since 1999, when he began working with the medi-spa industry, he has seen a number of new carriers enter the market.
“Certainly a softening of the market is happening now, which is characterized by more insurance companies getting in and providing capacity,” Kuhn noted.
“I was speaking with an associate of mine and we concluded that there are now 15 markets that are in the medi-spa specialty. A couple of years ago we maybe only had three or four,” he said.
From his perspective, Kuhn thinks insurance markets have become wiser at their approach to the medi-spa industry. “There’s definitely a confluence of markets that are becoming more uniform in their approach and in the types of specialties that they want to write,” he said. “Certainly insurers see two things: a market that is growing very fast and one that is safe. … It’s something that they can get their arms around,” Kuhn added.
Claims Run the Gamut
Shand Morahan’s Johnson says that because the medi-spa industry is still a relatively new industry, insurance coverage is still primarily in the surplus lines market and claims run the gamut.
“The reason for the surplus lines industry to offer their services is that there are more cutting edge procedures that make the risk not palatable for a standard lines company. So, basically this has been a segment of the market that has been traditionally serviced by surplus lines insurance carriers,” Johnson said.
“Even though this is a great market segment, and it’s booming, and a lot of people are going into it — it’s not without its risks,” she noted. “People cannot lose sight that of the fact that you’re injecting people’s faces with a paralytic like Botox — a poison. You are chemically and mechanically abrading the epidural layer of skin, which is through microdermabrasion or chemical peels. You are taking lasers to people’s body to remove hair,” she said. “When you’re doing those types of procedures, of course claims will follow when the procedures are not done correctly. These claims sometimes can be catastrophic. But often times, the biggest claim that we get, or the biggest percentage of claims that we get, are minor burns from laser hair removal that fortunately resolve fairly rapidly without permanent disfigurement or scarring.”
Availability and Affordability
With the unique types of claims and the industry’s cutting edge procedures — some risks remain hard to place.
Experts say that it can be difficult to place physicians in transition such as a doctor who, perhaps, already has his own standard practice.
“We aren’t talking about dermatologists that are opening medi-spas. Oftentimes, these are emergency room physicians or they’re Ob-gyns that have established their traditional practice for which they usually have insurance coverage in the standard market,” Johnson explained. “Suddenly these doctors want to branch out and want to do a medi-spa. These physicians often want to start doing Botox and Restylane, and then that’s where they have the problem. When you have to split coverage between the traditional and then going to surplus lines for some selected procedures, things can get complicated,” Johnson said.
Even so, there is more and more competition entering the surplus lines market willing to write this risk, Johnson said. According to Johnson, currently there are about 14 carriers that are now writing the business.
“It used to be just one or two carriers. The market is growing with more competitors and more capacity to write this type of risk,” Johnson said.
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