Navigating Talent Scarcity in the Growing Medspa Industry
Strategic talent solutions for investors to maximize value creation.
The U.S. medspa market is experiencing significant growth and is anticipated to continue expanding in the next five years. The number of medspas nearly doubled from 2018 to present – reaching over 9,400 in 2023 – and is expected to grow to more than 12,000 by 2027, representing a 28% increase from today (Solomon Partners, 2024). Consumer demand is driven by a broad demographic, ranging from millennials seeking preventive treatments to older adults looking for therapeutic treatments to improve their appearance. In addition, these procedures have become accessible and less stigmatized in recent years.
Unlike many fast-growing consumer industries, medical aesthetics seems to be highly resilient to economic downturns (Boston Consulting Group, 2023). Medspa consumers rely on recurring treatments for their hair, skin, and wellness, often leading to an opt-in to additional services within a practice over time. In addition to non-invasive procedures, medspas are incorporating services such as intravenous therapy, weight loss, hormone therapy, and more to offer their customers holistic options for their wellness priorities.
The revenue stream from cash payments, unit economics, and customer demand attracts interest from investors. Many private equity firms are consolidating existing clinics under a single management entity, employing the traditional buy-and-build approach to achieve standardization and economies of scale (Pitchbook, 2023).
Talent Challenges Faced by Investors
The medspa industry is growing rapidly but remains fragmented, with low barriers to entry for individuals to open a medspa. With capital, experience, and resource requirements being relatively minimal, business models vary from single locations to large chains with over 100 locations. Many medspa owners start as aestheticians, nurses, or employees at other spas before opening their own. From 90% to 97% of medspas are standalone businesses, owned by individuals rather than platforms or investment firms, and 68% are owned by a single owner (American Med Spa Association, 2024; Solomon Partners, 2024).
After a private equity investment, a medspa often undergoes significant changes to grow the business and improve profitability. Scaling a medspa presents challenges such as managing growth expectations, balancing stakeholder interests, maintaining consistent quality across multiple locations, implementing an effective direct-to-consumer marketing platform, managing supply chains efficiently, ensuring financial rigor, driving innovation, navigating varying state regulations, and planning for the long term. Former single owners may lack the qualifications to lead in a new private-equity-backed setting, creating a leadership gap.
Two main challenges arise:
- Talent scarcity: Prioritize bridging access to experienced C-level talent and accelerating time to impact.
- The right mix of expertise: Ensure a mix of clinical, operations, retail, direct-to-consumer marketing, and digital experience across the leadership team.
Strategic Talent Solutions
Investors in medspas need to ensure that the leadership team is capable of addressing key challenges while driving growth and maintaining the business’s competitive edge. The leadership team needs to be evaluated and composed holistically: given the lack of experienced C-level talent in the medspa sector, the inaugural CEO could come from healthcare services, while the marketing leader could come from consumer retail or services – or vice versa.
Potential solutions include sourcing from adjacent industries to broaden a potential talent pool, utilizing executive assessments to ensure a better match for the company’s needs, and deploying interim and on-demand leaders for immediate access to experienced C-level talent.
1. Sourcing from Adjacent Industries
To address the talent scarcity in the growing medspa industry, investors can broaden their talent pool by sourcing executives from adjacent sectors, utilizing transferable skills and bringing fresh perspectives. Based on our interactions with CEOs at private-equity-backed medspas, we observe that only a small group have been a medspa CEO in the past. There is a diverse range of experiences, with significant representation from healthcare services (3 in 10) and private equity operating partners (2 in 10).
Previous Experience of CEOs at PE-Backed Medspas
By tapping into adjacent industries, investors can access a wider range of experienced executives who can adapt their expertise to the unique challenges of the medspa sector. For example, leaders from healthcare services bring clinical acumen and regulatory compliance experience, while those from consumer health and wellness backgrounds offer insights into customer-centric strategy and digital consumer engagement (WittKieffer, 2024a). This approach not only helps address the talent shortage but also introduces innovative ideas and best practices from other sectors, driving growth and improving operational efficiency in medspa businesses.
2. Utilizing Executive Assessments
To acquire and retain the best executive leadership team, it is essential to have a clear vision of success in the respective role and subsequently develop focused assessment criteria for evaluating executive candidates during the interview process. Executive assessments offer valuable insights into a candidate’s leadership style, client-centric approach, problem-solving abilities, and cultural fit, ensuring a better match for the organization’s needs. WittKieffer’s research-based Leadership LIFT™ framework is built around four “leadership lenses” that inform the future trajectory of leaders who significantly impact their teams, organizations, and customers.
Utilizing executive assessments ensures a better match between candidates and organizational needs, reducing hiring risks, accelerating time to impact, and improving leadership success rates. By incorporating executive assessments, medspa investors can make more informed decisions, aligning leadership capabilities with the unique challenges of the rapidly growing medspa industry.
The four “leadership lenses” – the telescope, microscope, stethoscope, and mirror – are all necessary for outstanding leadership, though some roles and contexts may require a more substantial focus on a specific lens. Most individuals have preferences for one or two lenses over the others, which is why the ability to see and manage oneself is crucial and underpins them all. Each lens is composed of specific behaviors that are assessed to support executive selection and onboarding, succession, and development.
SELF-MANAGEMENT: Leadership adaptability relies on self-awareness and emotional intelligence to use the right approach for success.
VISIONARY: Today’s leaders must navigate complex issues, think holistically, and continue to innovate to position the organization for long-term success.
OPERATIONAL: Operations are an essential component of running a successful organization. This involves harmonizing structures, systems, and processes to effectively execute strategic priorities.
RELATIONAL: Leaders must be able to effectively manage the often-differing needs of multiple constituents and gain buy-in for their ideas. The ability to be collaborative and foster trust is paramount.
3. Deploying Interim and On-Demand Leaders
To address talent scarcity and rapidly evolving leadership needs in the medspa industry, investors can also leverage interim and on-demand leadership solutions. This approach provides immediate and flexible access to experienced C-level talent, bridging skill gaps and solving temporary capacity shortages (WittKieffer, 2024b).
Interim and on-demand leaders offer significant benefits to medspas, particularly those experiencing rapid growth:
- Flexibility in transition: As medspas expand or undergo ownership changes, these leaders can guide smooth transitions, helping to navigate new market entries, service expansions, or acquisitions.
- Accelerated growth: They can expedite time-sensitive projects such as launching new treatments, implementing advanced technologies, or scaling operations across multiple locations.
- Specialized expertise: Medspas can quickly access leaders with specific skills in areas like aesthetic medicine, regulatory compliance, or digital marketing — critical for staying competitive in the rapidly evolving medspa landscape.
- Strategic execution: Interim and on-demand leaders blend strategic thinking with hands-on execution, ideal for medspas that need to balance clinical excellence with business growth.
- Value creation: For investor-backed medspas, interim leaders can be a cost-effective way to drive value, whether through operational improvements, market expansion, or turnaround situations.
- Industry-specific knowledge: Unlike general consultants, these leaders often have direct experience in healthcare or aesthetics, allowing them to integrate seamlessly due to their understanding of the unique challenges of the medspa industry.
By leveraging interim and on-demand leaders, medspas can address talent shortages, adapt to market changes, and drive growth while maintaining the flexibility needed in this dynamic industry. This approach is particularly valuable as medspas navigates the complexities of scaling operations, implementing new technologies, and meeting evolving consumer demands for aesthetic and wellness services.
In conclusion, to thrive in a growing medspa market, investors should consider building balanced leadership teams by combining different backgrounds and expertise. Given the limited experienced C-level talent in the medspa sector currently, investors must ensure the leadership team can tackle key challenges, foster growth, and maintain a competitive market advantage, all while providing exceptional customer service, leveraging feedback, and investing in advanced technology with adequate development and training opportunities for team members. By implementing strategic leadership solutions, focusing on talent acquisition from adjacent industries, utilizing executive assessments, and deploying interim and on-demand leaders, medspa businesses are well-positioned to navigate the talent scarcity challenge and achieve long-term success.
We at WittKieffer have a deep understanding of both the medspa industry and private-equity-backed organizations. This positions us uniquely to find dynamic executives who can maximize profitability, understand the complexities of scaling operations, meet investor expectations, and drive growth.
If you are looking to exchange insights or learn more about hiring the right leaders for private-equity-backed health and wellness organizations, we encourage you to reach out to our authors. We are here to share expertise, discuss your unique leadership needs, and provide guidance.
About the Authors
Lisa Casper is a Principal in WittKieffer’s Investor-Backed Healthcare practice. With over two decades of dedicated service in the executive search field, Lisa brings a wealth of expertise to her role. Her professional journey encompasses a diverse range of sectors, including direct-to-consumer, healthcare, wellness, retail, and technology, providing her with a unique perspective in addressing leadership challenges within the healthcare landscape. Lisa can be reached at: [email protected].
Shannon Wallace is a Consultant in WittKieffer’s Investor-Backed Healthcare practice. She specializes in private equity and investor-backed firms, offering unparalleled expertise in the search process. With over 15 years of experience, Shannon has cultivated deep relationships with executives across various healthcare sectors, including for-profit healthcare and academic medicine. Shannon can be reached at: [email protected].
Sources
- American Med Spa Association (2024). 2024 Medical spa state of the industry report.
- Boston Consulting Group (2023). Medical aesthetics is resilient, growing, and attracting investors.
- Pitchbook (2023). Private equity raises bets on Botox-dealing medspas.
- Solomon Partners (2024). Medspa market overview, Q2 2024.
- WittKieffer (2024a). Consumer empowered: Are your leaders prepared for the market shift?
- WittKieffer (2024b). Unleashing interim & on-demand expertise: Accelerating leadership in life sciences and investor-backed healthcare.
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