You can pay a second provider a flat salary, a share of the revenue from their panel, or a base plus a share of profit. Each one moves risk between you and the provider. Pick the one your cash can carry while their panel grows.
The three common setups
- Flat salary. Predictable for both of you. You carry the risk while their panel is small, and the cost stays the same once it's full.
- Revenue share. The provider earns a percentage of what their panel pays each month. Cheap for you early on, but lean for them until the panel grows.
- Base plus a share. A lower salary plus a percentage of panel revenue or practice profit above a set point. It splits the risk and rewards growth.
A made-up example
Say a new provider's panel grows by 20 members a month, each paying $80.
- Salary of $12,000 a month: in month 6, their 120 members bring in $9,600, so you're covering $2,400 plus payroll taxes and benefits. By month 8, their 160 members bring in $12,800, which covers the salary itself.
- Base of $8,000 plus 25% of panel revenue: in month 6, that's $8,000 plus $2,400, or $10,400. Your gap is $800. At 300 members, it's $8,000 plus $6,000, or $14,000, more than the flat salary.
Neither one is right in every case. The base plus share costs you less early and more later. Run both against your cash before you make an offer. This post shows how to test a slow and fast ramp.
What to settle up front
- How a member gets assigned to a provider, and what happens to shared patients.
- Whether "revenue" means list price or what's collected after discounts and fees.
- When the pay structure gets reviewed, like at 6 and 12 months.
- What happens to the panel if the provider leaves.
Write it all down. Whether the provider is an employee or a contractor, and what goes in the agreement, are questions for your CPA and an employment attorney. Here's why that question matters.
How the books need to change
If pay depends on a provider's panel, your books and membership platform have to show revenue by provider. Set that up before the first paycheck, not after the first disagreement.
What I'd do this week
- Estimate how fast a new provider's panel would grow, slow and fast.
- Price out each pay setup month by month for the first year.
- Check each one against your cash runway.
- Ask your bookkeeper if revenue can be tracked by provider.
Common questions
What's a typical revenue share percentage?
It varies a lot by market and role. Model a few percentages against your own panel and costs instead of borrowing someone else's number.
Should profit share be based on the whole practice?
It can be, but then the provider's pay depends on costs they don't control. Many owners tie it to the provider's own panel instead.
Can I change the pay structure later?
Yes, if the agreement allows it. Set review dates in writing so a change doesn't come as a surprise.
Want to model provider pay before you hire?
Modeling provider pay against your cash is part of our Fractional CFO work. If you'd like help with that, apply to work with us.