New business model puts dermatology ‘back in the hands of the dermatologist’
My friend, who franchised Blimpie’s sandwich shops, was in my office one day watching customers take everything off the shelf and purchase all of it, and he convinced me to franchise it.
It’s important to understand why we chose this model. If you are a cosmetics company, you are not allowed to tell doctors how much to charge for the products because it violates antitrust laws. This allows some people to buy products and then dump them cheaply on the Internet. We control that by having the doctors sign an agreement that they will not sell the products online, and if they do, we cut them off.
SAN: How do you ensure that the products in your franchises aren’t elsewhere on the Internet?
Dr. Baumann: The plan is that once we have enough doctors in the program, we will negotiate with the manufacturers to create products that are exclusive to us.
SAN: Is this a revolution?
Dr. Baumann: That’s the point. It’s putting the power back in the hands of the dermatologist because we are the authorities on skin care. We need to be the ones that people get all the best news and products from first. Just imagine a world where a great new skin care technology comes out, and the only place you can get it is from the dermatologists. That’s going to drive so much business into the dermatologist’s office, and will help dermatologists build their general and cosmetic practice. The beauty of my system is that it trains your staff to identify the most appropriate products for each patient, but I have selected those products. I tested this method in six dermatologists’ offices, and we found that the product exchange rate went from about 35% to 3%. So, when your patient has a better outcome, they are more likely to trust you, and more likely to refer friends to you.
SAN: But what if a patient doesn’t have access to a dermatologist and the model for purchasing skin care products does change? It sounds like it will be harder for them to get the skin care they need.
Dr. Baumann: That is a great question. It’s a problem I have to figure out how to solve. Right now we’re considering Skype consults. This is not considered practicing medicine, so you can do it across state lines.
SAN: Do you plan to franchise dermatologists only or would you also sell the franchise rights to medical spas and physicians other than dermatologists?
Dr. Baumann: That’s really against my philosophy. I want to bring skin care back to the dermatologist. Did you know that only 15 percent of dermatologists sell skin care products in their practice? It’s difficult for them to set the system up and buy products from the different companies. My company streamlines that process. Another reason many dermatologists don’t sell products is because of ethical concerns. I believe if you are offering patients the best products for their skin types, products they can’t get somewhere else, and at the best price, then that is ethical. When you’re just selling things to make money by taking advantage of the patient-doctor relationship, then I am absolutely against it.
SAN: Why might a dermatologist turn away from this franchise model?
Dr. Baumann: There is no reason not to do it, because the startup costs are minimal. The only reason they might not want to do it is if they have their own skin care brand. A doctor could still sell his or her own brand, but they wouldn’t be able to have it on the Skin Type Solutions shelves, and that gets complicated. Based on patient surveys I’ve done, people don’t really want private skin care labels. I think they feel very suspicious of them. My system solves that problem by helping consumers realize the doctor isn’t pretending they invented these products. This is a more honest approach, in my opinion. That might be controversial, but that’s how I feel.
SAN: It sounds like the cosmetic manufacturers would favor this if you like their line.
Dr. Baumann: My system favors good technology. So the charlatans who are trying to sell stem cell therapies or peptides that don’t work aren’t going to like my system. My system favors the geniuses in the lab who don’t know how to get their technology out there, and I know a lot of them. We’ll be able to find that technology and then launch it through dermatology practices. This helps the genius underdogs who don’t know what to do with what they’ve discovered.
