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inventory of pre-owned

Aging gracefully: the maturing of the cosmetic laser industry

January 08, 2015
by Gus Iversen, Editor in Chief
Like any new technology, the cosmetic laser is in a state of rapid development. Scientific advances allow faster and less invasive procedures and new regulations control who can and cannot operate equipment but, arguably most significant from a business perspective, experience has led to a savvier buying public than in the early days.

“Back then, I was new to all this,” says Vickie Hemphill of Serenity Skin & Laser, in reference to taking the plunge into the cosmetic industry and buying her first laser. “I put my house up for that machine. That machine cost more than my house did. I was a single mom raising two kids and it was a leap of faith for me,” says Hemphill.

With 20 years of experience as a licensed nurse already under her belt, Hemphill saw lasers as an opportunity to learn something new. “I was working in a doctor’s office after a series of hospital centers,” says Hemphill, “He was interested in lasers and asked me to get trained, I said ’sure.’” That was 15 years ago, and a lot has changed since then.

More options and less anesthesia
Fotona has been manufacturing lasers since 1964 — only four years after the technology itself was invented. One of their most recent cosmetic offerings is a system called SP Dynamis; a highly versatile dual wavelength laser that can be used for a variety of aesthetic procedures.

According to Keith Bateman, Fotona’s executive vice president, multiple applications, ease of use, reliability, and improved throughput combined with less invasive treatments, are all benefits typically associated with the latest and greatest in cosmetic lasers. Bateman says these improvements are exemplified in two new procedures performed with the SP Dynamis: NightLase and SmoothLase.

NightLase is a treatment to reduce snoring that requires no anesthesia. “Historically, you would perform uvulopalatoplasty, which is a serious surgical procedure requiring tissue removal,” says Bateman. Performing NightLase with the SP Dynamis treats the soft palate with no pain and no post-operative medication.

“SmoothLase is similar,” says Bateman, “You inter-orally treat wrinkles from inside the mouth without any anesthesia at all and no downtime for the patient.” In the past, Bateman says, these types of wrinkle reductions were achieved with skin resurfacing, where tissue is ablated and recovery time can be significant.

“The industry is growing most rapidly in Western countries,” says Bateman, “but there are also rapidly growing markets in China, Brazil, and several other countries.” His company sells cosmetic lasers in 60 countries worldwide. Abroad, vaginal tightening procedures are booming, he says, including two not marketed in the U.S., IncontiLase and IntimaLase, which are also performed with the SP Dynamis.

Diverse buyer options
As treatments evolve, so have the platforms from which buyers can negotiate purchases. Since 2008, MedResults Network has taken the benefits of a traditional GPO, (lower costs for products and services) and brought them to the end users. Jamie Parrott, president of the company, explains how it works.

“Our business model is to negotiate with major aesthetic vendors for rebates and discounts for our members,” says Parrott. Currently, the MedResults Network contains 2100 members and works with 45 vendors, but if things continue in the direction they’re heading, that 45 may start to go down.

“Everyone is consolidating,” says Parrott, who mentions big aesthetic companies like Allergen, Merz Aesthetics, and Galderma, “These big players are trying to be a onestop shop for the aesthetic provider.” Much like other facets of the health care industry, cosmetic companies are going through a defragmenting process through mergers and acquisitions. Parrott says in the last few years, Valeant Pharmaceuticals has acquired Solta, Medicis, and Obagi.

While there may be fewer brands in the industry, there has been an increase in thirdparty options. When Hemphill was looking for her first laser, the third-party market was a relatively uncharted frontier where brokers selling lasers often had less-than-glowing reputations. Better business practices have improved that market segment. Meanwhile, manufacturers like Alma and Syneron, are marketing their own certified pre-owned devices.

Pre-owned reputation gets a facelift
A doctor will find that “a five- or ten-year-old laser that’s been maintained in good working condition and still meets manufacture specs will give the same clinical results as the newest ones off the production line,” says Tony Kokjohn, president of The Laser Agent Inc. “Does it do it as fast or painlessly? Maybe not. But it’s the same effectiveness.”

In terms of what brings clients to the treatment facility, Kokjohn says it’s essentially the same procedures it’s always been; hair removal, ILP, and vascular treatment. Skin tightening, cellulite treatment, and tattoo removal are less frequently sought out. The necessary tools for those popular services are readily available on the used market and, from an end user perspective, Kokjohn believes the benefits of newer lasers don’t always fit the price tag.

Hemphill’s first laser came from the manufacturer, but that experience did not impress her. “I once paid $13,000 to have my machine repaired and in three months, I called the service guy again, who I had known for years, and he informed me it would be an additional $5,000 for that repair,” says Hemphill, “And $2,400 just to have them walk in the door on top of that.”

That experience ultimately pushed her over the edge and into third-party servicing. “They told me over the phone, without even knowing me, to push a button on the side of the machine. They said it sometimes gets stuck. And sure enough, the monitor came up and it’s worked fine ever since,” says Hemphill, who now deals exclusively with third-party dealers.

But things are not that cut and dry.

“It’s difficult to buy a laser — and do it where it doesn’t impact your company badly,” says Chris Cella, CEO of Sentient Medical Technologies, the third-party vendor and servicer Hemphill switched to.

Cella says the historically dubious practices of laser brokers have enabled manufacturers to cultivate fear of pre-owned lasers in the market by suggesting they won’t work. According to Cella, bad third-party sellers may not keep the machines up to specifications and may not even know how to properly install them.

In a sense, those kinds of horror stories have benefited companies like The Laser Agent and Sentient Medical Technologies, which aim to distinguish themselves as trend-setters in accountability. They offer personalized services and consultations to physicians and med spa owners looking to capitalize on the drastic price benefits of shopping used. In terms of demand, Cella says it has never been higher.

“I will steer buyers in the direction of device models and manufacturers that are easier to get third-party service and support on and don’t have proprietary consumables, such as single-use tips,” says The Laser Agent’s Kokjohn. He says servicing a laser through a third-party typically becomes easier once the system is five or
so years old.

“The hardest thing to do is try to re-sell a very late model system that has consumables,” says Kokjohn, “Something that’s a year old, has proprietary consumables, and the customer paid a ton of money for.”

Cella says it is not unheard of for doctors to order consumables in bulk online and then sell them through a website. “You can get them, but the way you’re getting them isn’t something that’s scalable,” says Cella, who contrasts this practice with a more transparent transaction like going to the auto shop for a replacement car part.

Servicing from the manufacturer
On behalf of Fotona, Bateman says, “When a used Fotona laser is sold independently, if the buyer wants a service agreement on that laser, we will first need to check it out. If anything needs fixing, we will fix it and charge for it, but our rates for that are virtually the same as if they were just another of our customers.”

Bateman says Fotona does not charge recertification fees for transferring ownership of a laser. “If a customer called and we sold them a laser four years ago and they hadn’t had it on a service contract, they could still register for one. We would charge them for checking out the machine to verify it was in good condition, and we would do the same with someone who bought one of our lasers used.”

The cost of that inspection, according to Bateman, would likely be in the ballpark of a few thousand dollars, but not tens of thousands. “It could be very expensive if there were serious problems with the laser. You don’t know if it was in a flood or mishandled, you don’t know if a critical component was broken, you just don’t know until you check it out.”

Although he recommends servicing a laser annually, Bateman adds, “We have customers that do not get their lasers serviced for several years and they still function great.”

State by state regulations
The shift towards legislation requiring physicians to operate cosmetic lasers has increased in recent years. For Sentient Medical Technologies, roughly 80 percent of the current customer base is physicians. “Certain types of physicians get involved because they aren’t making enough money in their occupation,” says Cella, who cites an OB/ GYN getting involved in laser hair removal as a typical example.

Those physicians would ask themselves the same business questions as anyone else entering the business, according to Cella; is there a demand and a demographic in the marketplace? Where is my competition? What is my overhead? What can I charge? Who do I market to? Who do I consult? How do I focus on a return in investment?

“In New York it’s wide open,” says Kokjohn. Meaning there are a lot of medical spas, and lots of aestheticians that do cosmetic laser procedures outside of a doctor’s office and without doctor supervision. “Across the river in New Jersey however,” says Kokjohn, “You have one of the most tightly regulated states for cosmetic procedures.” A result of which, he says, is higher costs to the patient.

“In my opinion, it’s not about the degree of the person doing the treatment,” says Kokjohn. “It’s about the clinical training on that particular device.” He is not opposed to legislation requiring training, but he does think basing a laser practitioner’s qualifications on their degree is missing the mark.

He says there are many nurses and aestheticians who are excellent treatment providers and arguably better than doctors. “They take more time with the patient, they’re better clinically, they’re into it more and it isn’t just a sideline like it is for some doctors,” said Kokjohn.

“Why is a pathologist better at laser hair removal than, say, an electrologist with good clinical training on the device they’re using?” asks Kokjohn.

From the manufacturer’s perspective, Fotona’s Bateman has not felt any impact on his business from this kind of legislation. His opinion on stricter regulations hinges on what procedures are being done, as well as the entities implementing and enforcing those regulations.

Hemphill’s practice, Serenity Skin & Laser, is located in Georgia where you don’t need to be a doctor, but she thinks there are advantages to being associated with one. “I’ve been very fortunate to have doctors behind me all the way through this,” she says.

Her practice has three offices and seven different doctors who rotate through them. It’s a small operation that works within the Falany & Hulse Women’s Center. Although none of the doctors actually use the lasers, Hemphill believes their presence — tending to patients and providing medical expertise — gives the business a more credible feel for people looking for service.

In Georgia, nurses have to renew their laser license every two years at the cost of $200. “In all honesty,” says Hemphill, “a lot of it has to do with money.” She jokes that although it may help prevent people from performing laser treatments at the local gas station, the costs associated with license renewal may not be justifiable.

A smoother future
As time goes on, Cella thinks it’s inevitable that a more fluid relationship will develop between the manufacturers and the third-party providers, but at present there are not enough advantages for both parties to actively work together. “I’ve had conversations with some CEOs where we attempted to talk about distribution and sales, but nothing has come through,” says Cella.

As mergers and acquisitions continue to reshape the manufacturing landscape, Parrott, with MedResults Network, believes new benefits will appear for patients. “Loyalty programs will decrease pricing for patients,” she says. ”They will get the treatments they need for less in the future, and products and services will become more accessible to them.”

“In the old days when people had CO2 laser facial resurfacing done, they had three or four weeks where they had to hide because they looked like they’d been in the blast furnace,” says Bateman, “With today’s advanced technology and clinical protocols you can do similar treatments and people often don’t even know that you had it done. I believe it’s just going to continue in that trend of less invasive procedures and shorter recuperation times.”

Hemphill says the trend towards physician involvement is not going away any time soon and anyone looking to get into the industry now should make sure they’re affiliated, regardless of local legislation.

At the end of the day, the cosmetic laser industry, so often focused on making people look younger, is itself showing signs of aging — but gracefully. Most industry observers see that as very good for better outcomes and better ethical practices. And that is good for patients, practitioner and business.

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DOTmed Registered Cosmetic Lasers Companies

Names in boldface are Premium Listings.
Christopher Ostler, Wholesale Aesthetics, LLC, CA
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Thomas Merolla, Eastern Surgical Company, CO
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Jay Jordan, State of the Art Medical, KY
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Brian Baumgardner, BMX Medical, Inc, MN
Alison Fortin, Global Inventory Management, NH
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Eric Graham, Sentient Medical Technologies, UT
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Lee Atkins, Advanced Medical Inc, WA
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Navneet Kumar, Emerging India Healthcare , India