For the better part of the past decade, the aesthetic industry has enjoyed a period of considerable growth. This development can be traced back to the recession of 2009 and 2010, when aesthetic practices began promoting injectable treatments as an alternative to higher-priced elective procedures. Now out of the recession, physicians continue to offer patients injectable treatments while simultaneously managing an increase in their surgical patient base.
This growth has encouraged practices to employ additional providers (i.e., other physicians, physician assistants, nurse practitioners, and nurses) to maintain their injectable business. As a result, aesthetic practices today employ a diverse professional staff, offering both surgical procedures and regimented cosmetic treatments to patients.
To keep pace with the ever-changing aesthetic market, better understand industry trends, and provide information back to practices, BSM Consulting and Allergan Inc. conduct an annual benchmarking survey among medical aesthetic, dermatology, and medispa practices across the United States. The recently released 2018 Allergan/BSM Medical Aesthetics Database Results summary report—the findings of which are discussed ahead—includes results from 2015, 2016, and 2017 practice surveys that were received and processed through November 30, 2018.
According to the Allergan/BSM Medical Aesthetics Database, which contains practice data from the past 20-plus years, the increased diversification of services offered within the aesthetics industry have translated into the highest median practice revenue recorded to date, coming in at just over $3 million in 2017.
This diversification trend is further supported by physician revenue as a percentage of total practice revenue, which decreased from 62 percent in 2010 (during the recession) to 47 percent in 2017. Despite this decrease, the median total physician revenue is up from nearly $1.2 million in 2010 to $1.4 million in 2017. The total production from all other providers (i.e., physician assistants/nurse practitioners, aesthetic nurse providers, and licensed aestheticians) in 2017 was $1.3 million, accounting for 44 percent of total practice revenue. Therefore, total practice revenue generation was split roughly 50/50 between physicians and all other providers in 2017, as opposed to 60/40 in 2010.
Even as top‐line revenue grew from 2015 to 2017, practices appeared to control overhead growth, in turn improving practice margins. While operating expenses remained flat from 2015 to 2017, net income margins expanded by more than $200,000. The operating income margin was calculated by multiplying the operating margin by the total practice revenue, both of which are listed in Fig. 1-1 on the previous page.
To support the $200,000 increase in provider production as noted above, practices have increased their support staff headcount by 8.6 percent from 2015 to 2017. The increased headcount and flat payroll ratio (year-over-year) indicates that additional staff were utilized effectively, supporting revenue growth in such a way that any year-over-year increases in payroll costs were offset.
Contributing Practice Demographics
To put this data into perspective, it is important to understand the demographics of participating practices. Survey respondents included practices specializing in plastic surgery (58 percent), cosmetic dermatology (18 percent), and the category of “aesthetic other” (24 percent).
Meanwhile, approximately 55 percent of survey participants in 2017 were in solo private practices, while 39 percent were in practices with up to three physicians, and the remaining six percent were in groups with four or more physicians. All this data is represented in Fig. 2-1 at right.
Contributing practices were identified by the Allergan Practice Consulting team and may not reflect the “average” cosmetic practice. Participation in the program is voluntary.
Participating practices submitted the following source data for report creation:
- Practice financial statements or income tax returns,
- Productivity reports, and
- Employee census data.
Contributing Practice Regions
As illustrated in the figures, the benchmarking results are also segmented by region, which is consistent with the regional alignment set forth in the Medical Group Management Association Annual Cost Survey. This survey organizes and reports cost benchmarks for many medical specialties.
Contributing Practice Specialties
In addition to regional differences, consistent differences in production and efficiency among specialties continue to be seen. These differences are summarized in Fig. 4-1.
While procedure trends are reflective of the production increases of other non-physician providers, they may also indicate that physicians continue to perform more injectable procedures. This is indicated by the fact that:
- Total practice revenue was up,
- Physician revenue was up,
- Surgical procedures remained relatively flat (except for breast augmentation, which was up 10 percent from 2015), and
- Neurotoxin injections increased by 30 percent in 2017 (as compared to 2015, which “all filler injections” were up 37 percent).
Please note there are several factors that may impact the validity of the results including, but not limited to, the number of respondents to the survey. In addition, practices report financial results on the cash basis of accounting, which may serve to distort true measure of performance. Also, practices use different methods of classifying expenses, which can make it difficult to draw meaningful conclusions concerning inter-practice variances. As such, practices are strongly encouraged to view the report results and benchmark comparisons as directional in nature.