The role of a medical director in a medspa is essential, ensuring that medical procedures are performed safely, ethically, and in compliance with Tennessee regulations. But how do medspas and medical directors determine a fair compensation structure? This blog explores common fee structures, including percentage-based fees, flat rates, and minimums, with real-world examples to help guide your decision.
Understanding the Medical Director’s Role
Before diving into fee structures, it’s important to understand what a medical director does. In Tennessee, medical directors provide oversight for procedures requiring medical supervision, such as Botox injections, dermal fillers, microneedling with PRP, and laser skin treatments. They ensure compliance with state and federal laws, review treatment protocols, and often provide training to medspa staff.
Given the scope of these responsibilities, compensation should reflect the level of oversight required and the revenue generated by the medspa.
Common Medical Director Fee Structures
1. Percentage-Based Fees
A percentage-based fee structure is one of the most common arrangements in Tennessee. The medical director is paid a percentage of the gross revenue generated from procedures requiring medical supervision.
Example:
- Fee Percentage: 10%
- Monthly Gross Revenue: $20,000
- Medical Director Fee: $2,000
This structure aligns the medical director’s compensation with the medspa’s success. However, it’s important to clearly define which revenue streams are included in the calculation—typically only those for supervised procedures.
Advantages:
- Scalable with medspa growth.
- Incentivizes the medical director to support business success.
Considerations:
- Requires accurate and transparent revenue reporting.
- May include a minimum revenue threshold to ensure a base level of compensation (e.g., a $1,000 minimum revenue to guarantee a $100 fee).
2. Flat Rate Fees
A flat rate offers predictable costs for the medspa and consistent income for the medical director. This structure is ideal for medspas with stable revenue and procedure volumes.
Example:
- Monthly Flat Fee: $1,500
This approach simplifies budgeting and eliminates the need for detailed revenue calculations.
Advantages:
- Predictable for both parties.
- Easier to manage without constant revenue tracking.
Considerations:
- May not reflect the actual workload if procedure volumes fluctuate significantly.
- Can feel inflexible if the medspa experiences unexpected growth or downturns.
3. Minimum Fees with Additional Percentages
Combining a minimum fee with a percentage-based structure ensures the medical director receives fair compensation even during low-revenue months, while still benefiting from higher revenues.
Example:
- Minimum Monthly Fee: $500 (based on $5,000 in gross revenue at 10%)
- Revenue Above $5,000: Additional 10%
- Monthly Gross Revenue: $10,000
- Medical Director Fee: $1,000 (minimum + percentage of excess revenue)
Advantages:
- Provides a safety net for the medical director.
- Balances fairness and flexibility for both parties.
Considerations:
- May require detailed contract terms to outline the thresholds and calculations.
4. Hourly Rate for Oversight or Training
Some medspas prefer to pay medical directors an hourly rate for specific tasks, such as chart reviews or staff training.
Example:
- Hourly Rate: $200/hour
- Hours Worked: 5 hours/month
- Monthly Fee: $1,000
This structure works well when the medical director’s responsibilities are limited or focused on specific tasks rather than ongoing oversight.
Advantages:
- Directly ties compensation to time spent.
- Ideal for smaller medspas or specific projects.
Considerations:
- Can become expensive for medspas with high oversight needs.
- Requires meticulous tracking of hours worked.
What’s Fair for Tennessee Medspas?
Fairness depends on the medspa’s size, revenue, and the scope of the medical director’s responsibilities. Here are some general guidelines:
- Transparency: Clearly define which procedures and revenues are included in the fee calculation.
- Scalability: Choose a structure that adapts to the medspa’s growth or seasonal fluctuations.
- Compliance: Ensure the agreement complies with Tennessee’s legal requirements for medical oversight.
- Flexibility: Include terms that allow renegotiation as the medspa evolves.
Conclusion
Selecting a fair fee structure for your medical director is essential for building a successful partnership. Whether you choose a percentage-based model, flat rate, or a hybrid approach, the key is to create an arrangement that reflects the value of the medical director’s expertise while supporting the medspa’s financial goals. Clear communication and a well-drafted agreement can set the foundation for long-term success.
Need help setting up a medical director agreement? Contact us to learn more!
Partner with Dr. Lindsay Keith
Are you ready to elevate your medspa with expert oversight? Dr. Lindsay Keith is accepting new partnerships with medspas in Tennessee. With extensive experience and a commitment to compliance and quality care, Dr. Keith can help your medspa thrive.
Click below to apply and start your partnership today:
Apply Now
