Fractional CFO for physician group practices
A fractional CFO for a physician group practice is a part-time senior finance leader who answers the questions a multi-provider group fights over: what each provider and each site actually contributes after overhead, whether the compensation model rewards the right work, which payer contracts are underpriced, and what a private-equity offer really trades away. For a $5 to $50M group, that is CFO-level judgment on the partnership's hardest financial decisions without a full-time hire.
Where a group's margin actually lives
Contribution margin per provider
after direct cost and allocated overhead
Profit by site or location
which office carries the group, which leaks
Overhead allocation model
a basis the partners can see and defend
Payer contract margin
by payer, by site, by service line
wRVU comp reconciled to collections
does the model pay what the group earns
Normalized EBITDA and comp bridge
what a PE offer actually trades away
These are line items, not invented benchmarks. The Margin Map builds each one from your own practice data.
01 · Where a group loses margin
The financial problems specific to multi-provider groups
A physician group is a partnership and a business at the same time, and the two pull against each other. Money moves between providers, sites, and ancillaries in ways the standard P&L never shows, so the fights are about numbers nobody can quite see.
Nobody agrees on how overhead should be split
Equal-share, production-based, or full cost-accounting: the overhead allocation model decides every partner's take-home, so the argument never really ends. The provider who runs a lean panel resents subsidizing the one who orders every ancillary. Until overhead is allocated on a defensible basis that the partners can see, the comp fight is really an accounting fight in disguise.
The group does not know its profit by provider or by site
Most groups can produce collections per provider. Far fewer can produce contribution margin per provider or per location, with direct cost, shared overhead, and ancillary income attributed correctly. Without that, you cannot tell which site carries the group, which associate is ready for partnership on the numbers, or where a location is quietly losing money.
wRVU comp models drift out of line with the economics
Compensation tied to wRVUs with a conversion factor is clean until the conversion factor, the payer mix, and the ancillary economics move underneath it. A model set three years ago can pay out more than the group collects, or reward volume in the lowest-margin service line. The comp formula has to be reconciled against what the practice actually earns, not left on autopilot.
Payer contracts are underpriced and never re-examined
Fee schedules sit as a percentage of Medicare and rarely get revisited. A group can run the same contract for years without knowing its margin by payer, by site, or by service line. When one large payer is priced well below the others for the same work, that is real money left on the table every single month, and it is invisible without contract-level margin analysis.
Buy-in and comp math is opaque, so partners do not trust the split
Partner buy-in valuation, cash-basis versus accrual reporting, and a comp formula only the managing partner fully understands: that combination breeds suspicion. When the numbers behind the split are not transparent, good associates hesitate to buy in and existing partners assume someone is doing better than they are. Clean, shared financials are what let a partnership actually function.
A PE letter of intent arrives and the group cannot read the real trade
A rollup offers a multiple of adjusted EBITDA, where the adjustment is largely a haircut to physician compensation. The headline number looks large. The real trade is upfront cash and rollover equity today against a reduced comp model for years, plus a management fee. Without normalized financials and a comp-reduction model, a group signs an LOI without knowing what it actually agreed to.
02 · How the Command Center Method applies
What the Margin Map builds for a physician group
The Margin Map is a fixed $7,500 diagnostic over three weeks. For a multi-provider group, it rebuilds the numbers the partnership argues about into numbers the partnership can trust:
- 01
Contribution margin by provider and by site
Direct cost, allocated overhead, and ancillary income attributed correctly, so the group can finally see who and what actually pays.
- 02
A defensible overhead allocation model
Cost split on a basis the partners can see and agree to, so the comp conversation stops being a fight over hidden math.
- 03
Payer contract margin, ranked
Margin by payer and service line, so the underpriced contracts and the renegotiation targets are obvious instead of buried.
- 04
A short list of the biggest opportunities, priced
The Margin Map identifies at least $22,500 in margin opportunities, three times its fee, or you do not pay. Then the Command Center Method moves to Build and an Operating Cadence.
On independence
Koen takes no fee, commission, or referral cut from any PE firm, buyer, or billing vendor. When a rollup comes courting, the analysis of what its offer trades away is built for the partners, not for the buyer.
03 · If a PE offer is on the table
Read the LOI before you sign it
The multiple in a rollup offer is applied to adjusted EBITDA, and most of that adjustment is a reduction to what the physicians take home. So the real question is not the multiple. It is the comp bridge: how much cash and rollover equity you receive today against how much lower the compensation model runs for the next several years, net of the management fee.
Model that first, from your own normalized financials, and you negotiate from your numbers instead of the buyer's. Josh has closed five sell-side transactions and was CFO of the Walter Reed Army Institute of Research. He reads a physician-group LOI the way the buyer's quality-of-earnings team will, and tells you what it actually costs.
Straight answers
Questions group owners ask
What does a fractional CFO do for a physician group practice?
Builds the financial picture a partnership actually needs to make decisions: contribution margin by provider and by site, a defensible overhead allocation model, payer contract margin analysis, and a compensation model reconciled to what the group collects. When a sale or PE offer is on the table, normalizes the financials and models what the deal really trades away, all for a fraction of a full-time CFO's cost.
How is a fractional CFO different from our practice administrator or CPA?
The administrator runs day-to-day operations and the CPA files the taxes and closes the books. Neither is built to settle the overhead allocation fight with a defensible model, tell you true profit by provider, find an underpriced payer contract, or read a PE letter of intent for what it actually trades. A fractional CFO owns those financial and strategic questions without the salary of a full-time executive.
How should overhead be allocated among partners?
There is no single right answer, but there is a defensible one for your group. The model has to reflect how cost is actually driven: staff time, space, ancillary usage, and direct expense attributed to the provider or site that creates them, with shared overhead split on a basis the partners agree to. The goal is a method everyone can see and trust, so the comp conversation stops being a fight over hidden math.
A private-equity firm sent us an LOI. What should we do first?
Understand the real trade before you sign. The multiple is applied to adjusted EBITDA, and the adjustment is usually a reduction to physician compensation. The deal is upfront cash and rollover equity today against a lower comp model for years, plus an ongoing management fee. Model that comp bridge and normalize the financials first, so you are negotiating from your own numbers rather than the buyer's. Josh has closed five sell-side transactions and reads these the way the buyer does.
Can you help us set or fix a wRVU compensation model?
Yes. The work is reconciling the comp model against the group's actual economics: the conversion factor, payer mix, ancillary income, and overhead. A model that once fit can drift into paying out more than the group collects or rewarding the wrong service line. The fix is a formula that tracks what the practice earns and that the partners can see the logic behind.
How much does a fractional CFO for a physician group cost?
It starts with the Margin Map, a fixed $7,500 diagnostic over three weeks. Ongoing work is a monthly retainer set well below a full-time hire. A full-time healthcare CFO runs roughly $275,000 to $500,000 all in; fractional work delivers comparable judgment in the $90,000 to $150,000 range a year.
Keep reading
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See what each provider and site really earns
Three weeks, $7,500 flat. The Margin Map finds at least $22,500 in margin opportunities, three times the fee, or you do not pay. Retainer capacity is capped at 5 clients.