Doctors turning to more profitable medical ventures through Radiance Medspa

As reimbursements from insurance companies and government payers shrink, doctors nationwide are looking at alternatives that include becoming franchisees in businesses from cosmetic treatments to massage therapy.

James A. Ullman, a Franchise attorney with Greenberg Traurig in Phoenix, said his practice is growingrapidly, mainly as a result of the number of new health care franchises.

Massage Envy, Radiance MedSpa and a new Scottsdale-based home health care franchise called Choose Home are among his clients.

And it's not just the doctors looking for new options. Franchisors nationwide are recruiting physicians into the fold, Ullman said.

"Franchises that sell only to doctors believe they have a different modality or way of delivering the services for the patient care," Ullman said. "It's more comprehensive, more cost effective."

It's good timing for physicians who are looking for ways to supplement, or even replace, their shrinking incomes, he said.

That, and a host of other reasons, are why Dr. Abraham Sayegh is becoming a franchisee for Dermacare Laser & Skin Care Clinics.

A board-certified physician in internal medicine, he has held several medical director positions around the Valley, including being former chief of medicine at Paradise Valley Hospital.

In addition to launching the franchise, he plans to continue his medical practice and maintain his current positions, including serving as team physician for the Harlem Globetrotters.

He said physicians are frustrated with the time spent trying to get authorization from insurance companies to treat patients, dealing with multiple bureaucratic layers in hospitals as well as haggling with patients who don't follow doctors' orders.

"I was always interested in skin and how people look," he said. "I like the idea of the beautification of someone, making them feel well."

He heard about the franchise from a former patient who works as a doctor for Dermacare. Sayegh's clinic in Scottsdale is expected to open this December.

It is one of 80 new clinics that are scheduled to open around the United States, said Carl Mudd, who founded Dermacare in June 2001.

"A lot of physicians are in a state of crisis, particularly OB/GYNs and family practi­tioners facing shrinking reimbursement and skyrocketing medical malpractice premiums," Mudd said. "Our franchise allows them to stay in medicine and be in a cash business absent the malpractice and insurance crisis."

Scottsdale-based Dermacare already has four Franchises in the Valley, with plans to increase that number to 15.

Another is open in Tulsa, Okla., with Dallas, Houston and Denver to open facilities within the next 30 days.

"We have contracts for 120 -- from San Francisco to New York," Mudd said.

Scottsdale-based Radiance MedSpa, which currently has 11 facilities, also is growing.

"We have in the United States 67 franchises awarded," said Charles Engelmann, president of Radiance MedSpa. "In Canada, we have 125, and we're negotiating in Europe as well as Asia for deals that could close before the end of the year."

Of the 11 existing facilities, five are in the Valley and the others are in Florida, Texas, Connecticut and Pennsylvania. One is opening in Denver this month.

Engelmann said about 52 percent of the franchise owners are physicians.

"They're getting into aesthetic medicine because it is direct payment," Engelmann said. "There is no billing for insurance, Medicare or Medicaid. It's retail medicine."

Massage Envy, another Phoenix-based franchise on a rapid growth path, has 45 clinics open, 16 in the Valley.

"We have 145 clinics sold around the country," said John Leonesio, founder and chief executive of Massage Envy. "We are in place to build about 900 units over the next few years."

Leonesio said the growth has been rapid over the past couple of years, but he and his staff are finally getting a handle on it.

"We've settled into a routine of selling franchises and getting them open," he said. "It's not as stressful as it used to be."

This year, Leonesio is giving back to the community in a partnership with the Susan G. Komen Breast Cancer Foundation.

On Sept. 19, Massage Envy will offer free massages in all its Phoenix facilities.

"We're asking people to make a donation to the Susan G. Komen Breast Cancer Foundation," Leonesio said.

Franchising in the health care industry is taking off as doctors look for more solid paychecks.