Parkhurst Laser MedSpa Consultation - October 2019

OCTOBER 23, 2019

Consultation

Prepared for Internal Use Only

PARKHURST LASER MEDSPA SAN ANTONIO, TEXAS

THIS REPORT IS CONFIDENTIAL. DISTRIBUTION TO UNAUTHORIZED PARTIES IS PROHIBITED

Parkhurst Laser MedSpa Consultation

Prepared By

SurgiVision Consultants Inc and Kristine A. Romine, MD

October 23, 2019

Distribution to Unauthorized Parties is Prohibited

SurgiVision Consultants, Inc / Kristine A. Romine, MD

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Executive Summary

This consultation involved an overnight visit to Parkhurst NuVision to evaluate Parkhurst Laser MedSpa and provide suggestions for operational and marketing strategies. The visit included discussions with Heather Parkhurst, PA and Director of the MedSpa, Greg Parkhurst, MD, CEO, of Parkhurst NuVision, Martin Kroesche, CFO, as well as tours of the facility, review of the technology, products and offerings. Dr Romine also had the opportunity to conduct a teaching session regarding facial evaluation for injectables such as neuromodulators, fillers, and collagen stimulators, as well as recommendations for other noninvasive laser procedures and use of technology and skin care on a patient who was being treated later in the day by Heather Parkhurst, PA.

Key Recommendations Include:

• Decide the purpose and Brand of the MedSpa. The MedSpa sector has become crowded and confused. Efforts should be made to differentiate at all levels, perhaps even starting with what you name the center as this will effect who you attract.

• Position the offerings, products, staff and technologies around that brand

• Decide which potential market segments you want to target and provide an experience and offering that fits their needs

• Create a financial pro forma to validate assumptions

•

Select KPI’s to track progress

• Consider visiting other centers (including Kristine Romine MD Advanced Medical Skin Care) for training and to help develop your business model.

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Contents

Executive Summary ........................................................................................................................... 5

Parkhurst Laser MedSpa Brand ......................................................................................................... 9

Potential Models for Parkhurst Laser MedSpa ................................................................................. 13

SWOT Analysis of Current MedSpa and Team ................................................................................... 17

Financial Models and KPI’s ............................................................................................................... 21

Advisory Board / Governance Recommendations ............................................................................. 21

Documentation and Training ........................................................................................................... 23

Summary Recommendations ............................................................................................................ 23

Next Steps ...................................................................................................................................... 25

About the Consultants ..................................................................................................................... 27

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Parkhurst Laser MedSpa Brand

- What is Your WHY? What is your end goal and how does that drive your Brand? All decisions should take you in the direction of that goal and not distract or lead down a different path. Whatever the choice, even though the Center was not estab- lished for primary financial gain, the MedSpa must be profitable to be sustainable. Therefore, the brand should guide derivative decisions (segment, targeting, positioning, offerings, staffing, etc.) and should do so with a clear business focus to assure profitability. Heather spoke about how she wants to give her patients a chance to be their best and give them confidence. This is a very good foundation for your MedSpa Brand. Positioning the center to be inclusive for both women and men of all ages as the demographics include both men and millennials as newer consumers of these highly sought after services. - What is Your HOW?

Parkhurst Laser MedSpa should focus first and foremost on delivering the very highest quality services.

The center should focus on using the highest quality, safe and effective, technologies and products available.

Staff should be highly trained and skilled in both the treatments and technologies as well as personable, caring, and compassionate.

The space should be welcoming for both women and men. This may require some decor changes re: colors, lighting, and some furniture. Two relatively easy changes include: • The room on the right by the front entrance could be switched easily and affordably to a “Men Only” space.

• The reception area should have a more gender neutral ambience than the current very feminine vibe.

- What is Your WHAT?

Medical vs Non-Medical (MedSpa)

Medical

The physical location of the center within Parkhurst NuVision, which of course is a premier quality medical center, provides a wonderful opportunity to differentiate the brand as a medical-grade aesthetics center, run by a

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cosmetic dermatologist or cosmetic Certified Nurse Practitioner (CNP). Should this model emerge as the pre- ferred approach, then consideration to the name and positioning of the center would be desirable. Perhaps in- cluding Aesthetic Dermatology or Medical Aesthetics in the name would be appropriate.

Non- Medical

The current MedSpa offers injectables and laser treatments as well as skin care and can go on doing so with quality training of licensed staff, currently employed and perhaps addition of new hires, maintaining an edge over the strip mall type MedSpas that have treatments administered by lesser-trained personnel, with little to no oversight.

In either scenario, Heather Parkhurst, PA would provide oversight and would participate in the injectable, laser, etc. arm of the center, with a dermatologist or cosmetic CNP with training in Dermatology, providing dermatolog- ic medical care in addition to the cosmetic treatments. Again, some modification of the facility may be required to support a dermatology model, and the existing exam rooms off the back of the center could be converted to support this.

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Potential Models for Parkhurst Laser MedSpa

Heather’s time is necessarily divided between the MedSpa and the Parkhurst NuVision Ambulatory Surgical Cen- ter. Assuming that will not change in the near future, there is a need for additional qualified injector(s) and laser techs to expand capacity, so Heather has opportunity to be in ASC Tuesdays and Thursdays without negatively impacting the MedSpa.

From our discussions, we understood that Heather’s focus on the ASC was not part of the original plan, and that she was expecting to spend most or all of her time in the Center. Nevertheless, the reality is such that Heather will not be available full-time to run and support the Center, so other arrangements and personnel must be considered. As noted above, the Brand will drive the business model, and the business model will drive the personnel selection.

- Options for Potential New Hires

Dermatologist

1. Ideal: A very savvy new graduate from an aesthetic dermatology fellowship who wants to return to San Antonio and would like to be set up in a new facility with free reign on operations of the aesthetic division. This person may or may not want to provide general dermatology services, but will certainly want to treat medical dermatology as it relates to aesthetics, such as acne, pigment changes, etc., potentially also vaginal rejuvenation and other medically-related services. 2. Good: A general Dermatologist new graduate interested in aesthetics and being set up in a facility that can provide the opportunity to grow their skills. Training to become competent in aesthetic treatments will require at least 6 months training, assuming they will offer injectables and perform laser treatments. This could be shortened to as few as three months to support only one or the other. The person meeting this profile would likely want to do general dermatology as well. 3. Less Desirable: A more senior aesthetically oriented Dermatologist who is looking to break away from previous group or solo practice where they had either no autonomy or they want to downscale and focus on aesthetics. The risk is they may not accept current space or equipment as is, which makes this option lowest on list.

Certified Nurse Practitioner

A Nurse Practitioner focused in dermatology and aesthetics will be easier to find. They will ideally come with basic dermatology knowledge and will be able to identify skin lesions in order to avoid treating over potentially dangerous lesions. As with the general dermatologist, this person could be taught to competently administer injectables and perform laser treatments in a 6-month period, or one or the other in 3-month, assuming they are the right candidate.

Heather + The Currently Available Team of Savannah, Andrea and Rosa

The Center could operate with the current team, with possible new hires of certified laser

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technician/ medical aesthetician, focusing mainly on injectables (neuromodulators, fillers, collagen stimulators), skin care, noninvasive fat-reduction treatments, as well as fractionated skin resurfacing.

Quality of service must be highest priority. Injectables and use of lasers require skill and training. The entire current staff must be fully trained, and the following is recommended:

• Training on injectables, to provide finesse and to take skills to the next level;

• Training on facial evaluation to determine needs for services such as structural balance, volume deficit, skin quality, etc. • Training to identify basic skin lesions and conditions to prevent the risk of treating over a potentially dangerous lesion; and

• Training on consultation techniques, prior to actual injection or laser session.

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SWOT Analysis of Current MedSpa and Team

A SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is a useful tool that provides a holistic overview of a business.

- Strengths

• Heather is knowledgeable on injectables, she is passionate and her motivation is ideal – to help her patients feel better about themselves and build their confidence. • Heather is highly motivated to run the Center. This is a strong motivator for her as it provides autonomy and gives her an opportunity to apply her skills. • The MedSpa is located in a state-of-the-art refractive surgery practice that attracts patients that are financially well-suited to access aesthetic services. Parkhurst NuVision has a steady patient flow, providing great visibility and potential referral sources. • The clinic is architecturally and aesthetically beautiful, it provides a great space to consult and treat patients and clients. • The Center is already equipped with scientifically-proven technology (see citations gathered for my research/ evaluation purposes) that are used in combination with injectables, lasers and skin care to maximize results. • The support staff is eager and educated (however they will need additional training if they are going to be doing injectables). • Martin is a savvy CFO who will help guide management and support decision making after carefully designing Key Performance Indicator (KPI) metrics. • The brand, offerings, target segments, and operations of the MedSpa are not clear at this point. • Greg and Heather’s goals are not currently in complete alignment. Greg’s desire to give Heather authority over the Center is admirable, but removes a valuable support for strategic development. • The Color matching offering decreases the credibility of the seriousness of the Center regardless of choice of Branding Medical vs Non- Medical. • There is alignment to either brand in a simple makeup area, with perhaps mineral makeup that is safe for use directly after all treatments, including skin resurfacing. • Overhead LED lights are needed to illuminate the injection chairs. This is critical to visualize and avoid blood vessels during injections to decrease risk of bruising. • I personally recommend offering complimentary IPL treatment to patients over 24-48 hours after injections for any bruising not camouflaged by makeup. This is a huge practice builder.

- Weaknesses

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- Opportunities

• There is a huge opportunity for cross referrals between NuVision surgery patients and Aesthetics. • The multiple touchpoints (3-4 times per year) for aesthetic patients will bring NuVision new state of the art refractive offerings to top of mind, due to the co-location of the 2 spaces. • Add an Aesthetic Concierge Desk/ Consultant to make the cross- referral process seamless. This Value Added service would be a unique opportunity for the aesthetic consultant to help break down some barriers and make patients feel more welcome to discover your Medspa / aesthetic offerings. • Logistics of the Aesthetic Concierge Consultant/ Desk - While waiting in the big, beautiful, open NuVision reception area, patients will have an option of discovering aesthetic offer- ings, complimentary. Would consider offering patients the opportunity to come to their NuVision appointment early to receive a complimentary consultation prior to their visit with Dr Parkhurst, since they are “already going to be there”. (Some dealerships offer complimentary pedicures while car owners are waiting for their car to be serviced). This service would not disrupt the flow of NuVision as the patient is still in general waiting area and can comfortably return to their aesthetic Consultation after completing their medical service if they want more information, now that their interest in aesthetic services has been elevated. • As part of the Aesthetic Concierge complimentary services–I recommend that you have the Visia on a wheeled table or stand to offer complimentary UV scans while they wait. There is nothing like showing patients their UV scan of their photodamage to convert them to an eager consumer of your services!

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- Threats

• Heather is currently too busy with the ASC to devote the necessary time to fully develop the Center.

• Difficulty in locating the right Dermatologist or CNP to hire.

• Failure of the Parkhurst NuVision administrative staff to devote adequate attention to fully develop the Center, whether through resource constraints or an effort to stay at arms- length with the MedSpa. • Potential medical liability for failure to detect dangerous lesions or conditions, or from complications. In that vein, I recommend that full field ablative CO2 resurfacing be limited at this point to physician level personnel.

• Financial underperformance leading to the decision to abandon the MedSpa business.

• Key players such as Martin leaving the practice and not having a fully trained successor to help from the business side.

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Financial Models and KPI’s

The Center should have a strong financial model that evaluates potential profit centers. The model will guide development of the business plan and should align well with the proposed brand. To assist in this process, I am happy to provide financial data from my aesthetics practice in a follow up web-meeting.

Defining key financial and operational KPI’s will support the process and is essential to assessing progress against plan. Input data can include patient visits, revenues, costs, etc., and these should be applied to develop KPIs such as revenues per patient visit, distribution of services, revenues per employee, etc. Martin is well-versed in this area and will be able to identify the right metrics to evaluate (and communicate) to ensure the Center is meeting expectations.

Advisory Board / Governance Recommendation

Developing an aesthetics center in a medical practice has great potential. While it is not a completely novel idea, it is not yet common. No single person can think of everything, and outside perspectives can often lead to valuable innovations. For that reason, we suggest considering two separate boards to support the Center’s growth: An Advisory Board and a Board of Directors.

The Advisory board should include the Center Director (Heather), a few happy patients, key staff from Parkhurst NuVision, and potentially area business people who might align well with the Center’s purpose – e.g., Directors of top health clubs, country clubs, etc. The Advisory Board could meet quarterly at the Center, receive free consultations, try new products, and share ideas for growth and strategic alignment.

Governance should take the form of a Board of Directors. The composition of the board should include Greg, Heather, Martin, and one or two independent board members who have experience in the aesthetics space. The board should provide oversight on brand development, performance of the center against well-defined KPIs, and opportunities on creating synergies between the Center and Parkhurst NuVision.

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Documentation and Training

It may already exist, but if not, we suggest that you develop a Standard Operating Procedure (SOP) Manual and keep it current. The manual will define practices and procedures for common activities. It will not only serve as a guide to best-practices, it will also support training and on-boarding of new staff members.

Summary Recommendations

The top priority is to firmly and thoughtfully establish the brand of the center and develop your business plan around that brand. Carefully consider what you want to offer, what you choose not to offer, the target customer profiles, and staffing requirements needed to deliver those services. Training decisions should be made to sup- port the plan.

While your MedSpa space is aesthetically pleasing, I would recommend being very careful to align the décor to the Brand. The Center is currently colorful (and I love this), playful, and frilly, but I believe the message it sends is somewhat different from what you are trying to accomplish with your treatments. Your MedSpa is located in a very well-regarded, respected medical and surgical office, and it should be consistent with the overall brand of Parkhurst NuVision. The décor can definitely have a feminine touch, while conveying the sense that serious work is being accomplished. Consideration should be made to attracting male clientele as well as millennials, as they are growing sectors in the aesthetics space.

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Next Steps

We would like to have a follow-up conference call with you, once you have read and discussed this report. Please contact my Office Manager, Stephanie, to arrange this: E - SJutzi@CamelBackDerm.com O - 602.544.5745.

As discussed, Heather and the team are encouraged to visit me at Kristine Romine MD Advanced Medical Skin Care / Camelback Dermatology & Skin Surgery. I suggest we arrange this visit as soon as possible.

Thank you for this opportunity to visit Parkhurst NuVision and Parkhurst Laser MedSpa. It was truly a pleasure to meet you all and I hope we have the opportunity to work together further in the future.

Respectfully,

Kristine A. Romine, MD

CEO and Founder, Kristine Romine MD Advanced Medical Skin Care

Phoenix, Arizona

E - KRomineMD@Gmail.com

C - 602.677.4237

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About the Consultants

- Kristine A. Romine, MD Kristine A. Romine, MD is the CEO and Founder, Camelback Dermatology and Skin Surgery , a leading dermatology center in Phoenix, Arizona. She also has a purely cosmetic business, Kristine Romine MD Advanced Medical Skin Care. She holds a position as adjunct faculty at Midwestern University, Glendale, AZ campus, educating medical students, residents, and physician assistant students. Dr. Romine is a highly respected and invited media personality in the area of cosmetic dermatology and surgery. She has lectured nationally on her mission; " Partnering with Patients for a Lifetime of Healthy, Beautiful Skin " to her peers in the fields of plastic surgery and dermatology. She also educates the public on many topics including cosmetic procedures as well as sun protection. She is an invited speaker and hands on trainer for cosmetic procedures including demonstrating advanced techniques for soft tissue fillers, laser treatments, and facial and body rejuvenation at many national meetings.

Dr. Romine has authored numerous peer-reviewed scientific journal articles, as well as magazine and print articles for nationwide news sources. She has been honored as a "Top Doctor" by Phoenix Magazine in 2006, 2008, 2009, 2010, 2012, 2013, 2015, 2016, 2017, 2018 and was the featured "Top Doc" including profile and cover story for the 2007 edition. Dr. Romine remains an active fellow of many relevant national organizations including the American Academy of Dermatology, where she serves as the Arizona Representative to the Advisory Board, American Society for Mohs Surgery, where she serves on the Board of Directors, American Society of Dermatolog- ic Surgery, Women’s Dermatologic Society, American Society for Laser Medicine and Surgery, and the American Society of Cosmetic Dermatology & Aesthetic Surgery. Dr. Romine has served as a national trainer for Allergan, Galderma, Medicis, and Merz. Dr Romine currently serves on the Board of Directors for Evolus, and is a previous director of the board of Alphaeon.

Dr. Romine received her Medical Degree, with highest honors, from the Medical College of Wisconsin in Milwau- kee, Wisconsin. She completed a residency in Internal Medicine and chief residency in Internal Medicine, both at Good Samaritan Regional Medical Center in Phoenix, Arizona. She then pursued and completed a residency in Dermatology & Mohs surgery at Southern Illinois University School of Medicine in Springfield, Illinois.

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- SurgiVision ® Consultants, Inc. Guy M. Kezirian, MD, MBA, FACS is a board-certified ophthalmologist who is the founder of SurgiVision® Consultants, Inc., an ophthalmic consulting firm founded in 1995. SurgiVision® Consultants, Inc. is located in Scottsdale, Arizona and has administered several successful panel track FDA approvals for medical devices, including first approvals for the Summit and Visx excimer laser systems for LASIK and multiple approvals for the WaveLight laser excimer laser system prior to WaveLight’s acquisition by Alcon, and has consulted on several regulatory projects in ophthalmology and audiology.

SurgiVision® Consultants, Inc. has provided strategy and/or regulatory consulting services for Alcon, Bausch and Lomb, Visx, Abbot, eyeonics,

AcuFocus, Wavetec, and several other companies in the ophthalmic space. In addition to consulting services, SurgiVision® Consultants, Inc. provides the DataLink series of products to support regulatory studies, monitor clinical outcomes, generate nomograms and support surgical planning.

SurgiVision® Consultants, Inc. developed the PHYSICIAN CEO® program collaboration with the Kellogg School of Management at Northwestern University, SurgiVision® Consultants, Inc. in 2015, providing accelerated business and leadership training to physicians.

Dr. Kezirian holds a BSc from McGill University in Montreal, Canada. He obtained his medical doctorate (MD) at Brown University, interned at the Tufts-Harvard Faulkner Hospital near Boston, Massachusetts, completed an ophthalmology residency at Lenox Hill Hospital in New York City, and a fellowship in oculoplastics at the New York College of Medicine in Albany, NY. Dr. Kezirian is an active member in several professional societies (AAO, ASCRS, ESCRS, AECOS, ISRS) and is the founder and Chairman of the Refractive Surgery Alliance, a professional organization with over 350 members across the globe.

Dr. Kezirian has participated on FDA guidance development committees and on ANSI advisory committees. In addition, Dr. Kezirian has authored more than thirty articles in the peer-review literature.

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Prepared for Parkhurst Laser MedSpa

THIS REPORT IS CONFIDENTIAL. DISTRIBUTION TO UNAUTHORIZED PARTIES IS PROHIBITED

PREPARED BY:

OCTOBER 23, 2019

SURGIVISION CONSULTANTS, INC / KRISTINE A. ROMINE, MD