Medical spas may require additional thinking about liability insurance and other coverage, since they add medical complexity to the regular spa approach.
To learn more, I spoke with Gina K. Meyer an medical spa insurance broker and expert in the medical spa insurance field.
According to Gina: “Medical spas usually need to have an MD as medical director because of the corporate practice of medicine doctrine, ubiquitous in most states.” (Prohibitions against the corporate practice of medicine are at the top of the checklist of legal issues that covers complementary, alternative, and integrative medical therapies both in integrative medicine clinics and medical spas).
Gina added: “An MD who is a plastic surgeon or dermatologist may be able to obtain a rider to his or her existing medical malpractice liability insurance that will specifically cover designated spa procedures.” Gina noted that the cost of medical spa liability insurance is determined by the spa’s revenue, the number of patient visits, the type of procedure, and which provider (e.g., MD; RN; other) is performing the procedure. “As the medical spa’s revenues and procedures increase, the insurance premium does also.” Gina added that a medical spa with a medical services organization (MSO) or managed care organization (MCO) probably would need miscellaneous errors & omissions (E&O) insurance.
“Medical Professional Liability insurance is a must for any medical spa,” says Gina. She continues, “The policies we offer at Scanlon, Guerra, Jacobsen & Burke cover: the medical spa, the ancillary staff and the Medical Director. If the Medical Director is involved in direct patient care, the policy can be amended to include this coverage as well.” Most states require a minimum amount of professional liability insurance to be in place before patients are seen; typical limits are $1,000,000 per claim with a $3,000,000 policy aggregate. When asked about the premiums associated with a medical spa’s Medical Professional Liability insurance, Gina commented, “Some insurance companies have minimum premiums as low as $7,500, however, the normal medical spa should expect a premium of $15,000 – $25,000 annually.”
According to Gina, the complete list of insurance needs for the medical spa includes:
coverage for medical professional liability (claims arising from direct patient treatment, such as making diagnoses, rendering opinions, providing advise or referral to another physician; and–for physicians on staff at a hospital–professional committee activities as a member of an accredited hospital staff or any professional medical association/society committee);
medical spa (or medical partnership or corporation) liability (claims against medical partnerships or corporations and covered salaried employees for professional or business exposures);
general business liability (bodily injury, property damage, personal injury or advertising injury arising from the operation of the practice), which runs from $500-$1,000 annually;
employee benefits liability (claims for errors arising from the administration of employee benefits programs);
group health insurance (coverage for work-related injuries and illnesses suffered by employees).
healthcare biling errors and omissions(False Claims Act issues);
directors and officers (claims arising from errors in judgement, breaches of duty, and wrongful acts related to organizational activities);
employment practices (claims arising from discrimination in employment, wrongful discharge and sexual harassment);
workers compensation (work-related injuries and illnesses suffered by your employees).
“The absolute top ones are Medical Malpractice, General Liability (or Business Owners Package), Workers Compensation and any type of Group Health if they told their employees they would provide this.” I appreciate Gina’s assistance with this introduction to medical spa liability insurance and other medical spa and medical partnership or corporation insurance coverage. Read also about spa business models and how liability and other legal and risk management issues in medical spas compare with those in integrative medicine clinics and wellness centers.
Gina K. Meyer has also served on the board of the International Medical Spa Association.
Please note that since this 2005 interview, there have been additional updates and coverages and rates have changed a great deal for medical spas. Look for an updated piece later on in this blog.