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Balancing Medical and Esthetic Services

By: Adam Dinkes
Posted: January 29, 2010, from the January 2010 issue of
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As a benchmark, if your practice and spa services are located at the same site, you should strive for a 50/50 split. The range can go as high as a 75/25 split between esthetic services and medical procedures. The goal is to not put all of your eggs in the esthetic basket and to maintain some medical component for stability and business sustainability.

Although this may not be realistic for your business, there is clear rational behind this concept. Even though esthetic services are exciting, they can be subject to fads, bubbles and pricing-pressure from competitors. It is best to stick with what you know, and if you are a physician, as a rule, you should avoid veering too far from your core capabilities.

In the current economic environment, patients have pulled back on elective cosmetic treatments—this includes everything from cosmetic surgery procedures, laser treatments, fillers, toxins, and even facials and microdermabrasion. Practices that were 100% aesthetic surgery-only are having great difficulty surviving, and many are going out of business.

On the other hand, practices that have some medical component, including insurance revenue streams and reconstructive cases, have been able to weather the economy and in many cases, refocus efforts to increase the medical business. Medical should always be the bread and butter of the practice.

To determine your current split and figure out what you need to do to help balance it, analyze the revenue streams by procedure/treatment in your office.

  1. Break down your services between medical and esthetic.
  2. Complete further analysis to identify which procedures generate the most revenue and which ones are the most profitable for your business.
  3. Assess the number of procedures by comparing one year to the next. This can provide clarity about which services to eliminate, and where opportunities may lie for adding new treatments.
  4. Consider other metrics, as well, including revenue per procedure and revenue per hour.
  5. Focus on the profitable and growing services, and eliminate those that are trending down or those that are not profitable.

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