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Why Physicians Need To Get Involved in Weight Loss: Whitepaper By J. LaRosa

August 7, 2018

Why Physicians Need To Get Involved In Weight Loss

By: John LaRosa, President, Marketdata LLC

August 7, 2016

Executive Summary: The Problem

Despite being a $68 billion American industry, the weight loss market has no trade association, or even a trade magazine. Many physicians and other medical professionals have seen their income decline due to declining reimbursement under managed care, more competition from retail mini-clinics, and consumers’ incomes being squeezed since the last recession. They are seeking to augment their income, and adding a weight loss program to their practice is a natural fit.

Many independent medical practices are being challenged by:

  • declining revenues driven by declining insurance reimbursement
  • heavy caseloads of patients suffering from chronic conditions such as hypertension, Type 2 Diabetes, and high cholesterol
  • more administrative overhead due to patient management and insurance reimbursement requirements
  • less than optimal work-life

However, currently, no training program, course or seminar or conference exists to train such medical professionals exactly how to launch and operate a medical weight loss program.

Now officially declared a chronic disease by the American Medical Association, obesity affects close to 40% of U.S. adults with close to another 30% classified as overweight.  Obesity has been identified as the root cause  contributing to more than 59 health conditions, including cardiovascular disease, osteoarthritis, sleep apnea and even cancer

However, most doctors feel ill-equipped to effectively treat obesity as a disease and are often uncomfortable having meaningful discussions with their patients about the health risks associated with obesity.  Studies also reveal that physicians are hesitant to discuss weight loss with patients due to being overweight themselves.

From day one of medical school doctors are taught that the front line, first step approach to any      disease state, particularly the chronic diseases such as diabetes, cardiovascular disease (hypertension, hyperlipidemia, CVD, etc.) and other chronic ailments (osteoporosis, dementia, chronic musculoskeletal problems, etc.) is Therapeutic Lifestyle Changes or TLC.  The primary aspiration of TLC is getting patients to eat right and exercise in the anticipation of weight reduction and therefore aid in the prevention, treatment, and in many cases cure of the most common chronic disease states. Of interest, when they do mention TLC to their patients, an innate reaction is to think of and possibly go to a retail weight loss clinic, and pay out-of-pocket for the services from a non-healthcare provider.

Whatever the reasons, be they financial, clinical, psychosocial, or ethical -most medical providers have avoided adapting the large revenue source of a weight loss service.

Potential barriers to adaptation of this service may include:

Afraid of being labeled:  With all the scams, quick fixes, and potential harm thrust upon the American consumer, the last thing doctors want is to be associated with it.

Fear of salesmanship:  Many doctors are under the misconception they must sell things to be involved in weight loss and most do not want to "sell" products (supplements, nutritionals, etc.) or weight loss devices from their office.

Conviction that diets and exercises do not work and their advice falls on deaf ears. All of us have been in the position, either as a physician, friend, or self that all the best effort in the world does not bring about promised results.

Concern about "weight loss" drugs: Side effects, addiction and other worries create legitimate concern with savvy health care providers.

Sincerity that others, such as registered dietitians, will handle the problem: Unfortunately, whatever the reason, getting a patient to a dietitian can be a difficult thing.

However, many of these concerns are simply not valid. Physicians providing weight loss programs are not scams and have nothing in common with fly-by-night operators. They have built up trust with their patients over a long time period. They need not use aggressive sales tactics. All diets do work, as long as the patient adheres to it and follows the plan. There are very safe and affordable appetite suppressing drugs such as Phentermine that have been used safely for decades.

Physicians have several choices of HOW to add a medical weight loss program to their practice, as follows:

  • Purchase an existing franchise
  • Purchase a license from an existing organization
  • Become a bariatrician, get board certified.
  • Develop their own program.

The first option, purchasing a franchise, is costly. Prices for a medical weight loss franchise range from about $200,000to $400,000. In addition, one has to pay ongoing royalties, usually 7-10% of their revenues, to the franchisor on a monthly basis. There may be a 2-3% monthly advertising fund payment required as well. Another drawback: the MD must follow the exact protocol and rules of the franchise, with little room for flexibility and customization to local markets.

The licensee option is less expensive, but there aren’t too many organizations doing this. Again, ongoing fees and royalties may be involved. Training is usually via a 2 or 3-day weekend course, not enough time for a physician to really understand the program and how to serve overweight patients.

One can pursue courses to become a bariatrician, board certified to treat obesity. There are roughly 2,000 members of the Obesity Medicine Association, of an estimated 3,000-3,500 total bariatricians in the U.S. This involves taking courses and passing an exam by the association. This can take several years, and ongoing training is involved. In addition, the OMA does not offer business courses that teach an MD exactly how to set up a weight loss practice (logistics, staffing, insurance, marketing, meal plans, etc.). You must hire a consultant or learn these business skills yourself.

The last option is for an MD (or Registered Nurse, or Physician’s Assistant) to develop their own program, and to hire a consultant, if necessary. Hiring a medical weight loss business consultant, of which there are very few, will cost $15,000-$30,000, for in-depth hand holding, step by step guidance, in person. Training usually lasts about 10 days, and the MD may “shadow” operations of medical weight loss clinics and staff already in operation. It’s solid, practical, nuts and bolts training.

This consultant training is recommended, by not absolutely necessary. Weight loss programs are not rocket science, and a program can be developed, launched and run successfully – if the physician is willing to do some research and homework on his own, acquiring the management and business skills needed. They can operate a program part-time or full-time. They can carve out space from an existing office for weight loss and share staff, or set up a stand-alone, dedicated weight loss clinic.

However, the physician still needs business information, such as:

  • What other medical weight loss programs and practitioners exist in my area?
  • What do they charge?
  • Who should I use to do the counseling sessions, and how much do I pay them?
  • Should I use weight loss drugs, supplements, meal replacement bars and shakes, injections, vitamins, or specially developed diet foods? Where do I get these, and how do I have them private labeled to my brand name?
  • Do I need a website, and what should be included?
  • Should I accept insurance, or just accept cash patients?
  • If I accept insurance, what billing codes do I use and how do I help patients take advantage of Affordable Care Act reimbursements?
  • Do I have to advertise and market my program? How? Where? What cost?
  • What about social media?
  • What days and hours should the program be open?
  • How do I differentiate my program from competitors?
  • Should I offer financing options such as Care Credit?
  • How do I develop 28-day meal plans? Should I work with a local dietician?

These are all questions that must be addressed. Yet, most physicians lack basic business skills and information like this, and become overwhelmed. Not to worry, it can be learned, just like any other course in which a physician may enroll.

 

What Medical Professionals Can Do

My contention is that physicians and other medical professionals should not be deterred or afraid to assume their role in fighting obesity. They are the ones who have the knowledge and training to address obesity-related medical conditions – not the commercial weight loss chains. They have the long-term relationships with patients, and have earned their trust. They have a ready-made database of “customers”, since about 70% of the population is now obese or overweight. They do not have to spend large amounts of money on advertising and marketing. Therefore, their weight loss program can be extremely profitable. So, be proactive.

We’ve all heard the reasons for not getting into weight loss…  Oh, I don’t have the time. I don’t know what to do. I’ve never run a weight loss program before. I’m afraid it will take away from my regular practice.  I don’t want to offend my patients. Yeah, we’ve heard it all. Yet, you are not happy with your income and seek ways to augment it. And you ignore that source of income staring you in the face.  STOP WHINING!  You can’t have your cake and eat it too. Adding a medical weight loss program is doable. This is not rocket science.

The business information and guidance needed to develop and launch a medical weight loss program DOES exist, in the form of a Guide by Marketdata LLC, a 29-year old analyst of the weight loss market. The 230-page Guide’s title: “How To Set Up A Successful Medical Weight Loss Program”, June 2016. There are also a handful of consultants that offer in-person training.

 

Physicians Have the Expertise

Following are various medications and medical conditions that MDs can treat, but commercial weight loss centers cannot.

Conditions causing weight gain:

Medical

  • Chronic pain
  • Cushing’s disease
  • Hypothalamic damage
  • Untreated hypothyroidism
  • Insulinoma
  • Prader-Will syndrome
  • Sleep apnea

Psychological

  • Anxiety
  • Binge eating disorder
  • Depression
  • PTSD
  • Night eating disorder
  • Stress

Medications that consumers take that cause weight gain

  • Some antidepressants (SSRIs, MAO inhibitors)
  • Some diabetes therapies
  • Some anti-seizure meds
  • Some adrenergic blockers

The following are aspects of a successful medical weight loss program:

  • Respect for the patient’s time.
  • Scheduling during non-peak hours (evenings and Saturdays).
  • MD needs to stay involved with the patient during most or all of the program, not hand off the patient to a staff person after the first visit.
  • Building a relationship and connection with the patient is very important.
  • Advertising is not good enough. You have to deliver results and what you promise.
  • Patients should not feel that they are constantly being up-sold.
  • Transparency in the total cost of the program, optional and mandatory services..
  • Providing a variety of meal plans customized to the person – not a one size fits all program. Plans for men, women, seniors, diabetics, menopausal women, seniors on meds, etc.
  • Quality, competent counselors who are well paid, with low turnover.
  • Avoid the sale of overpriced supplements.

When asked what qualities have made California-based Lindora Clinics a long-term success, management said that they are a patient-centric company and that all of their processes are focused on the patient. They are outcomes driven and maintain long-term relationships with patients. This is a chain of 38 clinics, that also provide a telephone and virtual program.

American dieters basically want four things from a weight loss program:

  • That it works, that you do lose the weight
  • That it’s safe
  • That it’s easy to follow and convenient
  • That it’s affordable.

You’ve heard the saying in real estate, that the three most important factors in real estate are: LOCATION  LOCATION  LOCATION. Well, in the weight loss field, it’s: MANAGEMENT  MANAGEMENT  MANAGEMENT.

As a consultant to and analyst of the U.S. weight loss market for 29 years, the one thing I’ve seen ruin more weight loss companies than anything else is bad management decisions. Not recessions. Not pricing. Not diet fads. Not new technology. No, it’s the way that weight loss companies treat their employees and their customers that matters most.

What’s the Right Price to Charge? 

Well, competing programs by a bariatrician or a registered dietician will run about $800. A local drugstore mini-clinic, if they offer a weight loss program, will run about $900-950. A hospital-based program will cost $500-1,200. Commercial programs such as NutriSystem and Jenny Craig will cost about $750-1,200 for a 12-week plan (mainly for the cost of company brand diet food). So, the right price is around $800-1,000 for a medical program. Of course, this does not include

bariatric surgery, just a program based on grocery store food or meal replacements. One advantage that medical diet program have is that they will qualify for IRS tax credits. Also, current provisions of the Affordable Care Act provide for reimbursement of most costs (counseling, exams, lab tests, but not foods or supplements), as part of the yearly $1,625 Preventative Care Benefit. Medicare patients do qualify. Costs can also be spread among monthly installments by using a financing service such as Care Credit.

 

Who Will Do the Day to Day Counseling?

Nurse Practitioners are the best choice. They are registered nurses with advanced education and training who provide a broad scope of health care services under physician supervision. They are board certified with master’s degrees in the science of nursing, and are certified to diagnose and treat illnesses. Research has shown that they provide care comparable in quality to that provided by Primary Care Physicians. Nurse Practitioners capabilities include health promotion, patient evaluation, treatment, diagnosis, education, counseling, case management and coordination of care. They can also prescribe obesity meds.

Nurses are a good choice economically as well, since a nurse’s salary is typically $60,000 per year, versus $90,000 or more for a physician’s assistant.

What Revenues Can I Expect?

Avg. Revenues Per Outlet of Top U.S. Medical Weight Loss Firms: 2009

Company    
Centers for Medical Weight Loss $200,000
Smart For Life 550,000
Lindora Clinics 1,100,000
Medi-Weightloss Clinics 569-712,000
Physicians Weight Loss 600,000
Medical Weight Loss of Michigan 500,000
Health Management Resources   400,000
Optifast   350,000
9-company average *

 

  $ 482,200

Source: Marketdata estimates, company reports (10Ks, FDDs, etc.)

The above example is for 2009. Updating the figures, I estimate that the typical or “median” medical weight loss clinic now has gross revenues of $566,000 per year. Some make a lot more, some less, depending on whether it’s a part-time or full-time venture, location, etc.

Marketdata estimates that the average yearly gross profit equals 36% of sales for medical weight loss franchises. It can be as high as 80% if the physician uses his existing facilities and staff and just carves out some space, without renting a separate, stand-alone center.

 

Conclusions

  • Demand will increase over the next 10 years at least for medical weight loss options, as obesity-related medical conditions become more common.
  • Physicians and other medical professionals need not be afraid of adding a weight loss program to their practice. Training and guidance ARE available, if you know where to look.
  • Medical professionals CAN compete with commercial diet companies, and, in fact, have several major advantages over them.
  • Physicians do not have to purchase an expensive franchise to get started. They can develop their own program at far less cost, that has more flexibility.
  • Medical professionals with a weight loss program can realistically add $250,000 to $1 million to their annual revenues.

The weight loss field is getting more crowded, as multi-level marketing distributors enter the market, along with nearly 2,000 retail drug chain mini-clinics (and growing), entrepreneurs, and others. Large corporations such as Wal-Mart are eyeing the opportunity as well. Wal-Mart has stated that it wants to play a bigger role in the healthcare market. It already has personal services such as optometrists, nail and hair care in its stores. Weight loss cannot be far behind.

Marketdata analysts conservatively estimate that of the roughly 661,000 active physicians in the U.S., only about 10% are substantially involved in offering some form of weight loss program to their patients—or about 66,000 doctors. However, this share is growing—up from an estimated 6% in 2009. According to a survey by the Centers for Disease Control, only 11.7% of consumers surveyed reported that a doctor, nurse or other health care professional had given them advice about losing weight. That leaves a lot of untapped business.

Marketdata further estimates that of the 90 million total dieters in the United States, about 23.6 million would represent the universe of dieters for whom a medically supervised program is applicable.

Why shouldn’t physicians and nurses embrace the weight loss opportunity?

 

About The Author

John LaRosa, BS, MBA, is a 29-year year weight loss market analyst since 1989, consultant, author and speaker, and is President and Research Director at Marketdata, LLC, Tampa, FL. He is the author of 50+ in-depth weight loss industry studies, and Marketdata operates the free weight loss news website called DietBusinessWatch.com. He can be reached by email at: john@marketdataenterprises.com, or by phone: 813-971-8080. The Marketdata website is: marketdataenterprises.com, where John has a business blog.

References

“The U.S. Weight Loss & Diet Control Market”, May 2017, market research report by Marketdata LLC (marketdataenterprises.com), and 12 prior editions dating back to 1989

10Ks and Annual Reports of public weight loss companies (stock symbols: WTW, MED, HLF, NTRI)

Quarterly Conference calls with stock analysts, public weight loss companies

Company Franchise Disclosure Documents, Frandata

CDC

Published articles and Internet searches, Press Releases

Nutrition Business Journal

 

 

 

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