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Plastic & Reconstructive Surgery:
doi: 10.1097/PRS.0000000000000248
Cosmetic: Special Topics

Trends and Drivers of the Aesthetic Market during a Turbulent Economy

Wilson, Stelios C. B.A.; Soares, Marc A. M.D.; Reavey, Patrick L. M.D., M.S.; Saadeh, Pierre B. M.D.

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Author Information

New York, N.Y.

From the Institute of Reconstructive Plastic Surgery, New York University Langone Medical Center.

Received for publication August 1, 2013; accepted January 29, 2014.

Disclosure: The authors have no financial interest to declare in relation to the content of this article.

Pierre B. Saadeh, M.D., Institute of Reconstructive Plastic Surgery, New York University, 305 East 33rd Street, Lower Level, New York, N.Y. 10016, pierre.saadeh@nyumc.org

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Abstract

Background: Aesthetic procedures are significant sources of revenue for plastic surgeons. With the popularity of nonsurgical aesthetic procedures, many plastic surgeons question how to best tailor their aesthetic practice.

Methods: Revenue generated from surgical and minimally invasive aesthetic procedures performed in the United States between 2000 and 2011 was calculated from the American Society of Plastic Surgeons’ annual reports. Regression analysis was performed against six commonly cited economic indicators.

Results: In 2011, revenue from minimally invasive procedures increased from $3.0 billion to $5.7 billion (90 percent growth), whereas revenue from surgical procedures decreased from $6.6 billion to $6.0 billion (10 percent decline). Between 2000 and 2011, minimally invasive procedure market share grew from 30 percent to nearly 50 percent. Linear regression analysis revealed significant correlations between surgical procedure revenue and indicators of macroeconomic climate: Dow Jones Industrial Average (R = 0.72; p < 0.01), Standard & Poor’s 500 Index (R = 0.64, p < 0.05), and unemployment rate (R = −0.81; p < 0.001). Minimally invasive procedure revenue was significantly correlated with indicators related to microeconomic decision trends: disposable income per capita (R = 0.93; p < 0.001), real gross domestic product per capita (R = 0.88; p < 0.001), and home price index (R = 0.63; p < 0.05). No economic indicator in this study was found to be significantly correlated with both surgical and minimally invasive revenue.

Conclusion: Despite economic turbulence, minimally invasive procedures are the most rapidly growing source of revenue and are poised to be the dominant source of revenue in the aesthetic market.

Aesthetic procedures are significant revenue streams for plastic surgeons. In general, these types of procedures are elective and largely not covered by insurance, requiring consumers to pay providers directly. The lack of insurance coverage along with the provider-driven competition for surgical procedures makes the aesthetic market unique in the way it functions in the context of the economy.1 Unlike most fields of medicine, the aesthetic market has been noted to follow the same standard economic laws and principles as other nonmedical service industries.2,3

There is a relatively young but growing body of literature dedicated to understanding how the U.S. aesthetic market responds to the economy. Previous analyses have correlated number of aesthetic procedures performed with various economic indicators using linear regression analysis.4–6 Others have used price analysis in a similar manner.2,7 Because price affects demand, and vice versa, neither price nor procedure volume alone is an optimal variable to use when attempting to make associations with the economy.8 Instead, total revenue, which represents the free market equilibrium set by the interplay between price and demand, may be a more appropriate variable to study within the context of the economy.8

In the past, the vast majority of aesthetic revenue was generated from surgical procedures.9 More recently, minimally invasive procedures such as botulinum toxin, soft-tissue fillers, chemical peels, and laser treatments have continued to garner increased attention from the public and national media alike.10,11 In fact, a recent online news search of this subject yielded more than 450 unique media stories (print and video) published in the past month alone. In light of the burgeoning popularity of minimally invasive procedures, many plastic surgeons question how to best tailor their aesthetic practices, particularly in the context of recent economic turbulence.12

The purpose of this study was to explore how aesthetic market revenue streams have changed over the past 12 years. In particular, we were interested in gaining a better understanding of how both surgical revenue and minimally invasive procedure revenue fluctuated in relation to the economy during this period. In general, minimally invasive procedures cost less than surgical procedures. In contrast to surgical procedures, many minimally invasive procedures such as botulinum toxin require repeated treatment, which can be easily delayed or discontinued during difficult economic times. Thus, we hypothesized that revenue from minimally invasive procedures would be associated with microeconomic indicators, or indicators correlated with an individual’s personal consumption, disposable income, and personal wealth. In contrast, we hypothesized that revenue from surgical procedures would be associated with macroeconomic indicators, or indicators correlated with the overall strength of the economy. The principles set forth in this study may help explain how the aesthetic market has changed in recent years and also offer insight into the future direction of this dynamic market.

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METHODS

For this analysis, information regarding cosmetic surgical and cosmetic minimally invasive procedures performed between 2000 and 2011 was obtained from the American Society of Plastic Surgeons’ annual reports on plastic surgery statistics.9 The data include not only plastic surgeons but also other board-certified physicians and surgeons who routinely perform both surgical and minimally invasive aesthetic procedures.9 Economic indicators including the Dow Jones Industrial Average, the Standard and Poor’s 500 Index, civilian unemployment rate, real gross domestic product per capita, Case-Shiller Home Price Index, disposable income per capita, and consumer price index calendar year–averaged data were obtained from the Federal Reserve Economic Data.13

For the purposes of this analysis, we studied three indicators of the macroeconomic climate: the U.S. unemployment rate and two stock market indices: the Dow Jones Industrial Average and the Standard and Poor’s 500 Index. The unemployment rate, or percentage of the labor force without a job but actively seeking employment, is historically high during times of recession and low during periods of economic growth, making it a well-cited indicator of current economic status.8 Similarly, there are three stock market indices commonly cited as indicators of U.S. economic health: the Dow Jones Industrial Average, the Standard and Poor’s 500 Index, and NASDAQ. The Dow Jones Industrial Average reflects the stock price of the 30 largest and most influential corporations in the United States. The Standard and Poor’s 500 Index, described as a better gauge of stock market strength than the Dow Jones Industrial Average, is composed of 500 companies with greater diversity in terms of sector and company size. Of note, the NASDAQ, composed primarily of technology companies, was excluded from our analysis because it includes both U.S.-owned and non–U.S.-owned companies, and thus is a less reliable indicator of the U.S. economy.

We also explored indicators more closely related to microeconomic decision trends, including the Case-Shiller Home Price Index and real disposable income per capita. The Case-Shiller Home Price Index, a 20-city composite index that reflects inflation-adjusted home prices, was used because personal consumption has been found to be more sensitive to housing wealth than stock market wealth.14 We also analyzed real disposable income per capita, or the average amount of posttax dollars per individual, because this variable directly relates to personal consumption.15

All nominal data were adjusted for inflation using the consumer price index and reported in 2012 U.S. dollars. Total revenue earned in the United States for 19 of the most common aesthetic surgical procedures and nine of the most common minimally invasive aesthetic procedures was then calculated by multiplying each by their respective inflation-adjusted average surgeon/physician fee. Linear regression analysis was performed using statistical software StatPlus (AnalystSoft, Inc., Alexandria, Va.).

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RESULTS

The Aesthetic Market, as a Whole, Has Grown

Over the past 12 years, the U.S. economy has experienced a period of strong economic growth punctuated by two periods of recession (March of 2001 to November of 2001, and December of 2007 to June of 2009) and, most recently, economic stagnation.13 Despite this economic turbulence, we found that the market for aesthetic procedures has continued to expand. In 2011, the total revenue for all cosmetic procedures was $11.7 billion, a 20 percent increase from 2000. This growth was not uniform. In fact, the revenue from surgical procedures experienced a net decline of 10 percent during this period ($6.6 billion in 2000 to $6.0 billion in 2011). In contrast, the revenue generated from minimally invasive procedures nearly doubled over 12 years and increased its market share from 30 percent to nearly 50 percent ($3.0 billion in 2000 to $5.7 billion in 2011) (Fig. 1).

Fig. 1
Fig. 1
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Botulinum Toxin and Soft-Tissue Fillers Have Primarily Driven Minimally Invasive Procedure Revenue Growth

Although the growth of the entire market has been driven primarily through the increased consumption of minimally invasive procedures, growth within the minimally invasive market was also found not to be uniform. Most notable was the increase in revenue generated from botulinum toxin and soft-tissue fillers. Specifically, inflation-adjusted revenue from botulinum toxin in 2011 was more than $2.1 billion compared with just $384 million in 2000 (450 percent growth). Similarly, but less dramatically, inflation-adjusted revenue from soft-tissue fillers in 2011 was more than $1.1 billion compared with $600 million in 2000 (95 percent growth). Together, revenue generated from botulinum toxin and soft-tissue fillers grew from being 9.5 percent of the entire aesthetic market (both surgical and minimally invasive) in 2000 to more than 28 percent in 2011 (Fig. 2). In comparison, the revenue from all minimally invasive procedures other than botulinum toxin and soft-tissue fillers experienced a net growth of just 6 percent in the same 12-year period.

Fig. 2
Fig. 2
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Surgical Aesthetic Procedure Revenue Was Significantly Correlated with Multiple Indicators of Macroeconomic Climate, whereas Minimally Invasive Revenue Was Not

Linear regression analysis showed a significant positive correlation between surgical procedure revenue and the Dow Jones Industrial Average (R = 0.72; p < 0.01) and the Standard and Poor’s 500 Index (R = 0.64; p < 0.05), and a significant negative correlation with unemployment rate (R = −0.81; p < 0.001) (Table 1). In contrast, minimally invasive procedure revenue was not significantly correlated with the Dow Jones Industrial Average, the Standard and Poor’s 500 Index, or the unemployment rate (p > 0.05 for all) (Fig. 3).

Table 1
Table 1
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Fig. 3
Fig. 3
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Minimally Invasive Aesthetic Procedure Revenue Was Significantly Correlated with Multiple Indicators of Microeconomic Decision Trends and Surgical Revenue Was Not

Linear regression analysis of minimally invasive procedure revenue showed a significantly positive correlation with both home prices (R = 0.63; p < 0.05) and disposable income per capita (R = 0.93; p < 0.001). In addition, minimally invasive revenue was associated with real gross domestic product per capita (R = 0.88; p < 0.001) (Table 1). This value represents the inflation-adjusted value of all goods and services produced in a given year divided by the population. Thus, as the productivity on a per-person basis increased, so too did the revenue generated from minimally invasive aesthetic procedures. In contrast, surgical procedure revenue was not significantly correlated with home prices, disposable income per capita, or real gross domestic product per capita (all p > 0.05) (Fig. 3).

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DISCUSSION

In recent years, both government and private insurance–based reimbursement for reconstructive surgery has failed to keep pace with inflation and the costs associated with maintaining a practice, and as a result, many plastic surgeons have shifted their practice mix to include a larger proportion of aesthetic procedures.4,16,17 Thus, revenue generated from aesthetic procedures has become an increasingly relevant point of discourse, especially in light of an increasingly competitive overall marketplace. The purpose of our study was to gain a better understanding of trends within the aesthetic market and to determine whether changes in revenue streams were correlated with various indicators of the economy over a consecutive 12-year frame that included periods of growth, recession, and stagnation.

Driven primarily by increased revenue generated from minimally invasive procedures, the entire aesthetic procedure market has experienced a net expansion over the past 12 years. Specifically, revenue generated from minimally invasive procedures grew from 30 percent of the entire market share in 2000 to nearly 50 percent in 2011. Interestingly, this growth has been fueled primarily by the increased consumption of two types of procedures: botulinum toxin and soft-tissue fillers. In addition, the revenue generated from these types of procedures appears to be highly sensitive to economic indicators related to personal consumption. For instance, a change in real disposable income per capita from $34,000 to $39,000 (14.7 percent increase) is associated with an increase in total revenue from approximately $2.6 billion to $6.2 billion (147.0 percent increase). Although surgical revenue was significantly correlated with multiple indicators of macroeconomic climate, changes in these economic indicators were associated with only modest changes in this source of revenue. Overall, revenue from aesthetic surgery has remained surprisingly stable over the past 12 years.

Interestingly, we found that surgical revenue and minimally invasive procedure revenue were associated with different economic indicators. In theory, a practice with a balance of the two would offer stability, especially during times of economic uncertainty. In contrast, a purely minimally invasive practice appears to be too vulnerable to changes in the population’s disposable income, whereas a purely surgical practice would fail to take advantage of future economic windfalls. Lloyd Krieger makes some excellent points when describing pricing strategy for aesthetic surgery during times of recession.18 In summary, he states that high-end plastic surgery practices, which have spent years acquiring their reputation, should not jump to decrease prices during times of recession. He warns that decreasing prices may remove the “premier” status from their name. He goes on to explain that the same thought process is the reason why many high-end designers do not offer discounts on their products. Thus, the author suggests offering more minimally invasive procedures during times of recession until the patient is ready for more expensive, surgical procedures.18 A questionnaire-based study looking at the effects of the 2009 U.S. recession on facial plastic surgeons found that this strategy is commonly used.12 Our data also support this notion. Specifically, during the most recent recession in 2009, aesthetic surgery revenue dipped to a 12-year low and minimally invasive revenue experienced a rebound, marking a difference in revenue of less than $80,000 (0.00065 percent of the entire market). Still, it is important to note that no economic indicator in this study was found to be positively associated with one type of procedure and negatively associated with another. Furthermore, microeconomic factors are less severely and directly affected by a recession than macroeconomic factors, which are defined by a recessionary environment. Thus, surgical and minimally invasive procedures should be analyzed independently to more carefully appropriate resources, especially during difficult economic times.

Overall, minimally invasive procedures appear poised to become the major revenue generator. Still, there are many other issues to consider when interpreting our data. First, botulinum toxin was not approved by the U.S. Food and Drug Administration for aesthetic facial use until April of 2002.19 Thus, the rapid growth of this revenue stream may be a result of the procedure’s novelty rather than changing consumer preferences. Similarly, there are many new synthetic and biological materials now used for soft-tissue fillers that were not available in 2000. Another consideration is that an increasing number of non–plastic surgeons are offering aesthetic procedures. This is especially true for botulinum toxin, which is now offered not only by facial plastic surgeons and dermatologists but also by gynecologists, ophthalmologists, internists, dentists, and other members of the greater medical community. The growth of minimally invasive revenue may be attributable in part to the success of non–surgical-trained professionals gaining a foothold in the aesthetic market. Similarly, aesthetic surgical procedures are also being performed by a greater number of non–plastic surgeons. Thus, it is difficult to discern whether the surgical data presented reflect a change in plastic surgeon revenue, non–plastic surgeon revenue, or both. Regardless of who is performing aesthetic procedures, these data firmly demonstrate that the U.S. aesthetic market is not saturated and that it continues to grow. Plastic surgeons should understand the trends of the aesthetic market to act strategically in an increasingly competitive marketplace.

This study has multiple limitations. First, the data are limited by the fact that they encompass only 12 years of data. However, extrapolation is likely appropriate, given the flux experienced in this time with periods of recession, stagnation, and growth. The data are also limited by the fact that the information was gathered through several questionnaires, and their inherent vulnerabilities to all of the biases associated with survey-based studies. Finally, the data include not only plastic surgeons but also other board-certified physicians and surgeons. Some may view this as a limitation but, arguably, this helps to validate our findings. Including all members of the medical community who perform these types of procedures more accurately reflects the entire aesthetic market. Finally, although we believe that the correlations described between aesthetic revenue and the aforementioned economic indicators to be valid, we in no way are offering direct cause-and-effect relationships. Instead, this study should be used as a springboard to continue to study these trends and develop models that can be used to accurately predict future revenue streams based on current economic data and future economic speculation.

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CONCLUSIONS

Nonsurgical procedures represent the most dynamic growth sector of the aesthetic market but are more sensitive to microeconomic forces compared with the relatively consistent revenue of surgical aesthetic procedures. Plastic surgeons should note these trends and associations to make educated decisions regarding practice management.

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REFERENCES

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2. Krieger LM, Shaw WW. Pricing strategy for aesthetic surgery: Economic analysis of a resident clinic’s change in fees. Plast Reconstr Surg. 1999;103:695–700

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