Consolidation in Aesthetic Medicine: we've covered this a lot recently as a fresh new wave of consolidation companies enters the field. What does this mean for you and how do you choose the right one? Check out some stats: "12.7% the 1,362 practices operated more than one location. However, only 5.6% operated more than two and 3.4% operated more than three. If we take this out further the percentage drops significantly. What this data may imply is that aesthetic practice owners struggle to get beyond one location and those who do find it very difficult to expand beyond three." (https://www.renaissanceleadershipgroup.com/post/why-the-medical-aesthetics-industry-is-ripe-for-consolidation)
Consolidation may be a very heady topic in Aesthetic Medicine, with many practice owners lamenting their frustrations to us about the process. However the reality is, almost every practice I've been connected with in the last 20+yrs in the business has consolidated!!! Some at the 3 year mark, some after 5 years in business and some managing to remain independent for almost 20 years prior to succumbing to consolidation. But is it really all that bad?! Not if its done right! Consolidation can provide economies of scale, enable a business to expand rapidly and assist with critical business requirements like marketing & advertising, accounting, legal compliance and HR.
Things to consider when contemplating joining a consolidator are:
1. How long has the consolidator company been in business?
2. What in-depth understanding of the field of Aesthetic Medicine do they posses? Have they previously owned medspas? Plastic surgery practices? Dermatology clinics? Or do the primaries have a background in funeral parlors or pizza chains? The later may not have the requisite skills necessary to navigate the nuances of the cosmetic medicine field.
3. Do they have the internal infrastructure required to cover off needs such as marketing, accounting, legal compliance, and HR for a vast array of geographies and partners?
4. How much continued involvement will be required of the practice owner/s? Ask other medical aesthetics practices what their experiences have been working with said consolidator/MSO company-get references from practices you can speak to in your state or province.
5. Do they have access to the capital required to keep operations running smoothly, independent of market fluctuations, for an extended period of time?
6. How stable is the consolidation company's internal HR? Have they had critical employees (Human Resources, Accounting, Marketing, Medical/Legal Compliance etc) in place for a long time? Or are they turning over critical hires several times a year? If it's the later it should be a huge red flag 🚩for practices seeking to partner with them. If a company cannot get a grasp on internal hires, how can they be expected to fulfill obligations to medspa partners for a vast number of practices across a large geographic area? Look for businesses that have their own 'house in order' prior to falling for the hype and promises of 'adding value' to established Medical Aesthetics Practices.
7. Are they providing an overall 'value-add' to your organization or simply acting in a predatory manor in a time of market uncertainty? Practice owners: its critical to ask yourselves "what's in it for me?"
8. How big is the team? A consolidation team containing 5 employees, 2 of which tech developers, an HR manager with a background hiring for restaurant chains, a social media marketer who's predominant qualification is understanding the latest TikTok dance trends, and a remote Medical Director, may lack the depth of industry knowledge, quantity of employees and expertise to facilitate tending a medical aesthetics practices needs, let alone those of all the "partners" they take on. Are the consolidation folks experts in fields such as Medical Law, Human resources (preferably experienced not only in hiring for medicine but aesthetic medicine), financial experts like CPAs, a management team with MBAs on board, marketing experts that are proven brand-makers? If the team appears lackluster and devoid of the very basics you'd expect to open even one medspa let alone a nation full, it's time to run!