Who's Actually Keeping Your Money?

Dr. Jeff Williams spent twenty years hiring physicians. The question he says almost nobody asks is who owns the practice, and it quietly decides what reaches your bank account.

How does practice ownership affect what a physician takes home?

A practice's ownership structure decides what happens to your money before it reaches you. In a large multispecialty group you might receive 75% of collections, pay overhead out of that, and then watch 3 1/2 to 4% of profit flow to a parent company. None of it is hidden. None of it is offered up either.

Two physicians can generate the exact same revenue and take home very different pay. When I asked Williams why, he didn't hesitate.

"Residents and fellows need to understand the capital structure of the practice," he told me. "It's the thing they never think to raise."

Why it matters: Ownership is the only term on the table you can't renegotiate later. Call schedules shift, salaries get adjusted, titles change. Who owns the practice, and what they take off the top, is fixed the day you sign, and it sets the ceiling on everything you ask for after that. 

The four structures Williams wants you to identify

He walked me through them like someone who has watched people sign without knowing which one they were in.

• Private equity. "Am I joining a private-equity-backed practice?"
• Payer-owned. "A vertically integrated health system run by a payer, Optum, United?"
• Physician-owned. "Is this physician-owned and operated?"
• Equity on the table. "Is there equity? Is there equity I'm buying into?"

Each answer rewrites your compensation, your autonomy and your trajectory. Williams is the first to let residents off the hook for not knowing.

"No fault of their own. I was there. You don't even know what to ask."

How ownership changes what you actually take home

Williams made it concrete, in dollars. A cut flows up the chain and everyone understands the deal going in. 

"Every Vanderbilt doctor knows they're tithing the mothership. But if you're joining a big multispecialty group, you might not understand that you're getting only 75% of your collections, and then you have overhead, and then you're paying 3 1/2 to 4% of your profit to the parent company."

Nobody lies to you. Nobody draws you the org chart either.

"That's usually where things start breaking down."

Ask what equity costs, out loud

Williams admits his own practice wouldn't hand over every number.

"We wouldn't necessarily want to tell you how much it costs to buy in," he said, "but we'd say, you can have an ownership stake in the outpatient imaging, you can buy into our billing company."

Not every group offers equity, and that isn't the test. The test is whether they'll show you the map. In his words, "they have to understand where the money is going."

A practice proud of its structure will walk you through it. One that won't has told you something too.

The pay structure matters more than the number

Williams reads pay structures the way a cardiologist reads a rhythm strip:

• Guarantee, then collections. "Is it a guaranteed salary for two years and then I'm paid on a percentage of collections?"
• RVU. "Am I paid on an RVU basis?"
• CPT. "By CPTs?"

The same headline number can mean a radically different paycheck once the guarantee quietly expires. It's another reason the salary is the least useful number in the offer.

Two warning signs

The offer that glitters too hard. "If it looks too good to be true, it is," Williams said. "They're probably paying you 1.5x to live somewhere remote, and you're going to be taking call every other week. There's usually a reason."

Salaries climbing fast. "A lot of practices, as they start to go into it, have massive rapid turnover, and salaries start going up."

A rising number isn't always generosity. Sometimes it's the sound of a back door that won't stay shut. It's also information about your own position, because a practice that keeps losing people needs you more than it lets on.

Turnover costs the employer more than it costs you

This is the part that surprised me. Williams insists the misalignment is expensive on the hiring side too, which is exactly why your hard questions shouldn't scare a good employer.

"They'll prop up a new rockstar doctor," he said, "and then within six months there are problems, and they quietly shuffle them out the door. You've lost a million and a half, two million dollars in lost revenue and recruiting."

Plenty of groups stay in denial about it.

"They'll tell you, we don't have a hiring problem, we pick who we want. And I know they're struggling to keep people. Where's the disconnect?"

The two questions most practices won't answer

• "When was the last person you hired?"
• "How many have left in the last year, and why?"

If they won't answer, in his words, "that's immediately a trust bond you're never forming."

Williams thinks honest practices should volunteer it, because the disclosure is itself a selling point. His own move was to hand it over unprompted.

"People come to us and they stay. We've had three people leave in the last two years, and these are the reasons why."

The tell isn't a high turnover number. It's a refusal to give you one at all.

The bottom line

You wouldn't prescribe a drug without understanding how it works. Don't sign a contract without understanding where the money goes, and who's keeping the part that isn't reaching you.

Questions physicians ask about practice ownership

• What is the capital structure of a medical practice?

  It's who owns the practice and who has a financial claim on what it earns. The main types are private equity-backed, payer owned and vertically integrated, physician owned and operated, and structures where equity is available to buy into. Each one changes your compensation, your autonomy, and how decisions get made above you.

• Does private equity ownership change how a physician gets paid?

  It changes who has a claim on what the practice earns, and that determines your share. A private-equity-backed group answers to investors expecting a return, and that return comes out of practice revenue before it reaches physicians. It isn't automatically a worse deal, but it's a different one, and it's the kind of thing a group will explain if you ask and deflect if the answer is unflattering. 

• What questions should physicians ask about a practice's finances?

  Who owns the practice and whether there is a parent company above it. What percentage of collections you receive and what comes out first. Whether equity exists and what it costs to buy in. How pay is structured after any guarantee expires. And two turnover questions: when they last hired someone, and how many people left in the past year and why.

   

• Is a higher salary offer a red flag?

  Sometimes. Williams warns that an offer well above market usually carries something that explains it, such as a remote location or call every other week. A rising salary at a practice with rapid turnover can also mean they are paying more because people keep leaving.

• What does it mean if a practice won't tell you its turnover?

  It's a bad sign on its own. A practice confident in its retention treats the number as a selling point and volunteers it. Williams calls a refusal "immediately a trust bond you're never forming."