New Profit Center Opportunities – 2014 and Beyond

This blog is adapted from the book, Beautifully Profitable / Forever Profitable, © 2014, by Cheryl Whitman

The year 2014 will see the introduction or enhancement of the following profit centers; these will become more significant both this year and in the years to come.   After this introductory blog on the issues that must be addressed when adding products lines or services, the following series of blogs will focus on individual products and services which are trending up for 2014 and beyond.

These new profit centers can bring new revenue and new profits to your medical practice, especially if you first confirm that there is a market for those new services in your geographic and demographic market. You also need to make sure that your practice can capitalize on these.  Finally, you may need to also make contact with experts who can smooth the path to integrating new and profitable services into your practice. With those steps, profits are just ahead.

Before getting to the profit centers, however, it might be useful to consider some trends identified by the American Society of Plastic Surgeons in their 2012 Plastic Surgery Statistics Support, available on their website.

In a one-year trend, from 2011 to 2012

Number

Procedures

Trend

14.6 mil.

Cosmetic procedures

Up 5%

1.5 mil.

Cosmetic surgical procedures

Down 2%

13 mil.

Cosmetic minimally-invasive procedures

Up 6%

5.6 mil.

Reconstructive procedures

Up 1%

 

The Top Five Cosmetic Surgical Procedures of 2012 vs. 2011

 

Number

Procedures

Trend

286,000

Breast Augmentation

Down 7%

243,000

Nose Reshaping

No Change

204,000

Eyelid Surgery

Up 4%

202,000

Liposuction

Down 1%

126,000

Facelift

Up 6%

Other trending surgeries include Male breast reduction (up 5%), Hair Transplantation (up 4%) and Upper Arm Lifts (up 3%).

 

2012 Top Five Cosmetic Minimally-Invasive Procedures vs. 2011

 

Number

Procedures

Trend

6.1 mil.

Botulinum toxin

Up 8%

2 mil.

Soft Tissue Filler

Up 5%

1.1 mil.

Chemical Peel

Up 2%

1.1 mil.

Laser Hair Removal

Up 4%

974,000

Microdermabrasion

Up 8%

2012 Top Five Reconstructive Procedures vs. 2011

 

 

Number

Procedures

Trend

4.2 mil.

Tumor Removal

Up 1%

291,000

Laceration Repair

Down 4%

209,000

Maxillofacial Surgery

Up 7%

171,000

Scar Revision

Down 2%

123,000

Hand Surgery

Up 3%

Those are the major one-year trends in plastic surgery in 2012, the last year for which statistics are available.

What isn’t noted in this study is the dramatic increase in the number of medical doctors, such as OB/GYN and ENT physicians, who are adding cosmetic treatments to their services, even though they specialize in some other kinds of procedures.

This is part of a larger trend of physicians “fleeing” from insurance-covered and Medicare/Medicaid-covered patient care services because of the continued trend toward down-sizing reimbursement and up-sizing paperwork and regulations.  That overall trend of more work for less pay is expected to accelerate, making the elective/cash-pay patient care market far more competitive and crowded for cosmetic physicians and surgeons.
This trend makes creating and promoting profitable programs all the more important for your practice, and for your future.

Faced with this and other competitive trends, physician practices and physician-run medical spas are increasingly taking a combined qualitative and quantitative approach to their marketing programs. Their goal involves developing an efficient and effective marketing plan that comprises a reasonable percent of your revenue, and has ROI measurements so it more than pays for itself.  Any new service or product should be measured against this standard.

Before expanding your product and service mix, there are answers to some fundamental questions can be enlightening. They can also provide the point of departure as you take your Medical Practice to the next level, by adding new profit centers. For instance:

  • Are my employees properly trained on all procedures and equipment?
  • Am I in compliance with all appropriate state laws and regulations?
  • Does my information technology system adequately support the Medical Practice, including HIPAA compliance?
  • Is my practice website up to date?
  • Does it include blogs, patient testimonials and patient video testimonials?
  • Does it incorporate response and tracking mechanisms?
  • Does it have a shopping cart for skin care products?
  • Does it have a built-in appointment scheduling function?
  • Are the before-and-after photo gallery pictures attractive and inviting, or clinical and off-putting?
  • Is there an “ask the doctor” forum and a FAQ section?
  • Does it include financing information?
  • Does it have a website press room?
  • Are your strategic business and marketing plans current?
  • Have you updated your staff compensation plan and budget to reflect new marketing realities, including commissions and incentives?

If you are considering adding new aesthetic services, either commercial or Private Label skincare products, or any other products or services, you will also need to answer a series of operational questions in order to form your plan.  It’s not just about marketing – somebody’s got to keep the lights on and the equipment running in top form.

For example:

  • Which product and service offerings are most needed in my service area?
  • Which services will bring the most clients through my door—and keep them coming back?
  • Which products and services will be most profitable for me to deliver?
  • What is the level of investment I need to get started?
  • What equipment do I need for the procedures?
  • How do I choose which product and vendors to use?
  • When it comes to big-ticket technology, should I buy or lease?
  • Are my current state licenses and malpractice insurance coverage sufficient to allow me to offer the new products and services?
  • Will I need to hire new staff or provide training for the new products and services?  If so, how will this be handled, and by whom?
  • Will staff compensation plans change?  Will incentives, bonuses and commissions be used to motivate employees to “sell?”
  • How do I establish a pricing structure for my new products and services? Will new financing options be needed for my clients?

In taking advantage of many of these new profit-center opportunities, there is an easy way and a hard way – a way that capitalizes on your existing practical experience, and a way that forces you to gain that practical experience.

If you or a staff member has expertise in a given area – as well as the spare time to make use of that expertise – you can probably manage adding these new services yourself.

However, if time is short or expertise is lacking, it is both prudent and profitable to capitalize on the knowledge of existing experts, rather than becoming an expert yourself.

Bottom Line:  The aesthetics market is booming – not only are more Americans using these services than ever before, but more physicians are entering the field as they attempt to flee from their insurance-driven and often profitless traditional medical practice, moving instead into a field of elective and often cash-pay services.

This means both more customers and much more competition.

Those who succeed in the face of this competition will be those who prepare for the battle of the marketplace.

Marketing is a kind of economic warfare – for any given patient, there is only one winner, but there could be several losers.  Its zero-sum competition – patients do not “spread it around” to several practitioners.  They find the practitioner who delivers the right set of services, prices, financing, amenities for their particular needs and pocket-books.
There remains a carriage trade market that will pay higher prices for location, image and superior patient care services.  There is a huge and growing middle-class market that is price-sensitive, interested in financing, and willing to put up with less than white-glove personal treatment if they receive the medical treatments they are seeking.  Your practice cannot logically serve both – define your market, and make it work for you.
This series of blogs on profit centers – and how to capitalize on them – will show you how to master many of the most important marketing warfare techniques and tactics. This will help you make sure that you – and not your competitor down the hall or across the street – will get that patient’s business.

In the following series of blogs, we’ll focus on emerging profit centers, and on how to attract patients to those services.


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