An investor who visited a med spa in New York in 2023 on behalf of a family office abandoned the idea of buying such clinics after seeing the state of their storage. Instead of acquisition deals, he focused on helping practices manage their purchasing, and his company now serves some of the largest med spa chains in the US, with more than 1,500 locations.
An open storage cabinet from which staff freely took products, and orders tracked from memory or sticky notes, were the first warning signs. The clinic owner could not name current sales, and no written record of current stock existed. Conducting an inventory would have meant sifting through paper receipts. In the cabinet, they found expired filler worth about $50,000 at retail prices that had never been opened.
The family office considered buying med spa chains as a way to expand into healthcare. The team reviewed 50–60 industry sectors and chose aesthetics and wellness. In less than a decade, the number of practices in this segment in the US approached 20,000. However, many of the clinics he visited had no accounting documentation available to investors.
The author comes from a family of doctors but chose to study public health. According to him, this background helped him notice problems with processes, not just medicine. Industry operators are mostly clinicians or owners who are running a business for the first time and often lack business training. Inventory is the largest expense item, higher than payroll costs. A single vial of Botox costs several hundred dollars and fits in a pocket, so it is easy to lose or use without record. Because margins are thin, small losses can wipe out a profitable month.
The problems also concern patient safety. Some clinics did not have Hylenex, an emergency treatment for complications from fillers. Filler injected into a blood vessel can cause irreversible tissue damage, so access to this product is critically important. Some facilities used unauthorized numbing creams, and gaps in documentation would not pass a state pharmacy board inspection. According to the author, such shortcomings are not isolated cases but the result of a general lack of systematic record-keeping.
The author argues that the wellness sector lags other industries by about two decades in technology adoption. In his assessment, basic procurement and administration problems hold the industry back more than questions of medications or insurance. That is why he believes the greatest value for investors lies not in acquiring clinics but in organizing their internal processes.
The company he founded started by visiting 40–50 facilities in New York. Seven of them agreed to use its services. Supplier representatives, who at first seemed superfluous, turned out to be valuable: the company simplified paperwork rather than replacing them. Reportedly, suppliers recommend new practices after seeing growth among well-managed clients, so good procurement organization also becomes a source of new clients.