What is the most important aspect of owning a business? Profitability.
Strong profit margins make or break businesses, but how can you maintain a strong profit margin while accepting insurance? Maybe you’ve just opened your practice and you’re looking for ways to bring in more patients. Perhaps you have noticed that a lot of local medical spas near you are accepting insurance. Can you afford not to join? This is a very legitimate question we hear all the time so want to walk you through the questions we would ask to help you determine the right path for you. Let’s weigh the pros and cons of accepting medical insurance for medical spas.
First and foremost: Do medspas typically accept insurance?
Because a medspa is a medical facility, many believe they need an insurance provider in place to operate. While it is true that some medical spas do accept insurance, it is not necessarily common (or necessary) to accept insurance to grow.
Now it is true that some services your medical spa offers might be reimbursable by insurance carriers. These can include options such as Botox, dermabrasions, chemical peels, and acne treatments. Any of these could provide preemptive care against serious medical issues and therefore, could be covered under medical insurance.
With that being said, most medical spa treatments are considered “elective procedures” by insurance carriers, meaning they will not reimburse for these services. Not to mention, the process of incorporating insurance into your practice is not always worth the hassle. Dealing with insurance credentialing, pre-authorizations, co-pays, and claims are all time and financial requirements that result in more administrative complexity and oftentimes create a subpar patient experience
OK, but do your target patients want insurance?
This is an important question that will most be impacted by your location, the patient makeup of your practice, and your overall brand. If you are in a largely suburban area with lower disposable income, chances are you will have more patients with insurance looking for treatment.
From our experience, patients who are primarily seeking insurance-based procedures will traditionally avoid any cosmetic treatments as well. Relying on non-elective-procedure clients is a slippery slope since the margins are considerably thinner making this a less-than-ideal target audience. Most patients who are loyal to medspas know that they are going to pay out of pocket for treatments and procedures and put an inherent value on the service aspect of their procedures as well. For them, this is an investment in their health and well-being. Those that frequent medspas aren’t looking for a deal or a bargain on their treatment, they are looking for quality service and consistently successful results.
At the end of the day, we would not often recommend that your medical spa accept insurance. In some instances, it may make sense to accept insurance, but more often than not you are better off staying purely Fee-For-Service. The fact of the matter is, insurance will only pay for a very small portion of the treatments offered at Medspas, so when everything is said and done, you will see smaller profit margins by accepting insurance.
If you are unsure about adding insurance or removing insurance from your practice, contact us here at Maven and we’ll determine which route will suit your financial goals best.