Spas With a Twist

When Pat Roitman turned 40, she began to notice red splotches and parched skin on her face. So she started taking quarterly trips from Detroit to New York City for medi-spa services. The airline employee, now 43, says microdermabrasion salt peels administered under a doctor's supervision have rid her face of blemishes and moisturized her dry skin. "I get a smoother surface on my face after a salt peel. I'm going after that porcelain-beautiful skin, and I want to do everything I can to have it," says Roitman.

Medi-spas are the fastest-growing segment of the spa industry, with estimated annual revenues of $450 million for doctor-run medi-spas and an annual growth rate of 11% to 14%, says Eric Light, president of the International Medical Spa Association, based in Union City, N.J. Although there are some 9,000 spas in the U.S., only about 500 are medical spas, which differ from day spas in that they have a doctor on staff. That allows medi-spas to perform more complicated and costly procedures. For plastic surgeons and dermatologists, medi-spas are an opportunity to go retail, with fees determined by the market rather than an insurance company. Cash or credit card, please. "There is no big chain operator, but someone very soon is going to recognize the opportunity for a liquid gold mine," says Light.

Skin Science Medi Spa, on Manhattan's East Side, is very regal in its appearance, with Victorian-era chairs, heavy velvet curtains and gold fixtures. Mirrors in gold frames and anti-aging skin-care products in gold-etched blue bottles create a promising ambiance of magic. Dr. Adrienne Denese, a cosmetic dermatologist, who opened the medi-spa five years ago, completes the picture with her long blond tresses and translucent pale skin.

Only a doctor can administer procedures such as laser resurfacing to tighten skin, Botox and collagen injections, and write prescriptions for oral hormone-replacement drugs to soften lines and wrinkles. And only a doctor can bill like one. Prices vary from $600 for a Botox injection to $1,200 for two laser skin-tightener treatments. "An aesthetician can only generate $100 to $200 per hour," Denese says. "A doctor in a medi-spa practice can generate $2,000 for four Botox injections in one hour. That's what makes a medi-spa profitable."

Marcia Avis transformed her late father's Southfield, Mich., plastic-surgery practice into a medi-spa and increased revenues 40%, to $450,000, in 2003. She positioned her medi-spa as an affordable alternative to plastic surgery. "If a client can't afford a $9,000 face-lift, he or she is more likely to spend $3,000 on a rejuvenation package of collagen and Botox injections, microdermabrasion facials and chemical peels," Avis says.

The growth of medi-spas has prompted a competitive response from more traditional day spas. Last June Elizabeth Arden Red Door Salon & Spa in New York City hired a part-time plastic surgeon to administer Botox injections. Other Elizabeth Arden locations will get doctors later this year. "We have introduced several different modalities tied into what the medi-spas are doing, which is creating a relaxing environment like the traditional day-spa industry but providing Botox injection, for example," says Elaine Sauer, Elizabeth Arden's national spa director and head of Mario Tricoci Salons in Chicago. The doctors, she says, give Elizabeth Arden the ability to offer everything from facials to advice on face-lifts. "It's like a one-stop shop," she says.

Despite the potential profits, there is little regulation of medi-spas. Guidelines mandated by the state and protocols for handling people in a medical environment exist, but for the most part, professional standards are lacking in the industry. For example, a medi-spa's skin-care products, which generate lots of profit, are not regulated by the Food and Drug Administration (FDA). About 75% of Denese's $3 million business, for example, comes from the sale of creams and lotions she developed and tested with chemists. For Avis, about 40% of the medi-spa's revenue is from cosmetic-product sales. "The FDA has little control over the claims made for products sold in medi-spas," says Light. "The question for the medi-spa industry is whether the industry is going to create regulations for itself or let litigators and legislators do it for them." In the meantime, medi-spas are busy making money from a youth-obsessed society.