Negotiating Blind
Why the people across the table always seem to know more than you do
Negotiating Blind
Why the people across the table always seem to know more than we do
The deal seemed reasonable at the time. A substantial one-time payout, a clean exit from the headaches of running a practice, steady employment on the other side. So he signed. Most of his partners signed. A couple years later, when I met him during my intern year in Las Vegas, he told me why he wished he hadn’t. I remember being a little surprised, because the deal he described seemed reasonable to me, at least on its face.
He’d been part of a traditional private practice group in the area before a large private equity group acquired it. The way he described it, the terms looked pretty good on paper: a large upfront payment in exchange for staying on as an employee, with a clawback provision that would require repaying a portion of that payout if he left before a certain number of years elapsed. They gave up their ownership stake, and with it control over how the practice operated. Their ongoing compensation would be lower than what they’d made as partners, which was a tradeoff they accepted partly because the upfront number was large, and partly because they figured the freedom from having to deal with the operational headaches was worth something.
What he hadn’t fully appreciated was what losing that control would actually feel like. He didn’t like how things were run under the new structure, but now had no meaningful recourse whatsoever. The clawback provision meant leaving was expensive. He used the word regret more than once.
I’ve thought about that conversation a lot since. Not because he was naive (he wasn’t), but because the deal he described had a very specific shape. Every term in it made sense from the perspective of a buyer who had done this dozens of times and understood exactly what they were acquiring. It’s less clear that the sellers understood it at the same level. That gap, between what one side of the table knew and what the other side knew, wasn’t unique to that transaction. This asymmetry in business and economic competency runs through nearly every consequential negotiation clinical radiologists engage in, be it with prospective private equity suitors, hospital CFOs, or policymakers. And that has serious implications.
A CFO knows the financial ins and outs of their organization like the back of their hand. I know because when I was a financial analyst at a large corporation, it used to be my job to comb through the numbers, analyze financial performance, and then package the story neatly into a monthly presentation made just for the CFO to consume. A hospital CFO knows things about your practice that you probably don’t know yourself.
She knows what the technical component revenue from her system’s scanners amounts to annually. She knows what imaging-driven admissions and downstream procedures contribute to the system beyond the radiology contract itself. She knows your group’s payer mix, your productivity relative to national benchmarks, and roughly what it would cost to replace you with a national platform willing to accept less favorable terms. She’s done this analysis because she does it for every service line contract the system holds. It’s her job. To be fair, the hospital is also carrying costs the radiology group doesn’t fully see: capital investment in equipment, facility overhead, staffing obligations, and the administrative infrastructure that makes imaging operations run. The CFO’s information advantage isn’t purely about hoarding margin. It’s the natural byproduct of running a large, complex organization that has to model every service line to survive.
The radiology group sitting across from her typically knows its professional component billing, maybe its aggregate wRVU productivity, and whatever the outgoing contract said. That’s usually where the financial picture stops.
The instrument at the center of this relationship is called a professional services agreement, or PSA. It’s the standard contract through which an independent radiology group provides interpretive services to a hospital that owns the imaging equipment. The hospital captures the technical component revenue, the group bills the professional component, and the PSA governs the terms of that arrangement: stipends, call coverage obligations, exclusivity provisions. These agreements typically run multiple years before renegotiation, which means the asymmetry isn’t a one-time problem. It recurs on a schedule.
The hospital system comes to that renegotiation with a finance department, business intelligence infrastructure, and institutional memory about what previous agreements produced. The radiology group comes with physicians who are excellent at reading images and, in many cases, a part-time administrator handling the business side of a practice nobody trained them to run. When those two parties sit down, they’re not starting from the same place. The hospital is thinking about how the radiology service adds value to the system as a whole, which goes well beyond the technical revenue component: think procedures, admissions, downstream referrals, patient turnover time. The radiology group is focused on the stipend, or at least starting there.
A group that doesn’t understand what its contract is worth to the system can’t argue effectively for a larger share of that value. It can push back on the obvious line items — call schedule, tail coverage, stipend amounts — without ever engaging the deeper question of what the relationship actually generates for the hospital and what portion of that the group is entitled to ask for. A 2025 JACR study found that hospital-employed radiologists negotiate commercial rates approximately 43% higher than independent practice radiologists, and noted the financial advantages of hospital ownership likely disproportionately benefit the health system rather than the radiologist employee. The hospital doesn’t need to negotiate in bad faith for this to produce a predictable outcome. It just needs to know more than the other side does, which isn’t hard when the other side hasn’t done the math.
The PE acquisition is the same asymmetry, compressed into a single transaction.
Before a private equity firm makes its first call to a radiology group, it has already done the work. It has modeled the practice’s EBITDA (earnings before interest, taxes, depreciation, and amortization), the primary metric on which physician practices are valued in these transactions. It has assessed the payer mix, the productivity per physician, the contract concentration risk, the growth runway, and what a consolidated platform of similar groups might fetch from a subsequent buyer several years out. The deal team has done this for dozens of practices. It knows what the numbers look like before the conversation even starts.
The mechanics of how the deal gets structured flow directly from that analysis. Transactions are generally built by reducing partner compensation to the market rate required to hire a comparable employed physician. The difference between that reduced ongoing compensation and what partners previously earned becomes the EBITDA that gets valued at a multiple and paid as a lump sum at closing — meaning a practice generating $3 million in EBITDA, valued at a 7x multiple, produces a $21 million purchase price divided among the selling partners. The upfront payout the Las Vegas radiologist described wasn’t arbitrary generosity. It wasn’t a bonus. It was his own future income, pulled forward, discounted and paid to him upfront in exchange for accepting less later.
The clawback provision follows the same logic. Vesting periods are structured to retain the clinical assets the acquirer just paid for. This period is usually long enough to matter, but short enough to feel reasonable at signing. The physician who wants to leave before vesting faces a financial penalty calibrated to make leaving expensive. That’s not incidental to the deal structure. It’s the point of it.
None of this requires bad faith. Some acquisitions have genuinely solved problems that independent groups couldn’t solve on their own: succession planning for aging partnerships, scale to compete with national teleradiology platforms, access to capital for technology investment. The deal structure isn’t inherently predatory. It’s standard corporate finance applied to a transaction where one party has spent weeks building a financial model and the other is encountering that model for the first time. Many physicians enter these negotiations without having done the same preparation. They haven’t modeled their own EBITDA, assessed their own valuation range, or thought carefully about what the compensation and vesting terms mean over a ten-year horizon. The buyer’s information advantage isn’t a predatory tactic. It’s what happens when one side treats the transaction as a financial event and the other treats it as an offer to consider.
What makes this particularly acute in radiology is the scale at which it has played out. PE-backed corporate radiology has grown from essentially nothing in 2013 to employing roughly 12% of all US radiologists by 2023. That’s hundreds of transactions, each one involving the same structural asymmetry. The groups that went in with a clear understanding of their own numbers negotiated better than the ones that didn’t. The ones that didn’t are the ones telling the story the Las Vegas radiologist was telling me.
The gap didn’t appear by accident, and it isn’t a mystery.
Radiology residency is a five-year clinical training program designed, evaluated, and culturally organized around one goal: producing physicians who can interpret images accurately and safely. Everything reinforces that priority. The feedback is clinical. The milestones are clinical. The attendings who do most of the teaching are academic physicians whose careers have been largely insulated from the reimbursement realities described above. They’re salaried, removed from contract negotiations, and genuinely unfamiliar in many cases with how a practice P&L works or what a PSA negotiation involves. They can’t teach what they don’t know.
The ACGME nominally requires that residents develop competency in healthcare finance as part of systems-based practice. As the previous article documented, most programs don’t deliver it. A 2024 study found that 79% of diagnostic radiology residents reported no formal coursework in finance, and only 31% of program directors include any business content in their curriculum. The requirement exists on paper. The instruction mostly doesn’t.
Clinical knowledge accumulates through years of structured, deliberate exposure. A resident reads thousands of studies under supervision before graduating. There’s no equivalent process for business literacy. After four years of medical school and now two years of residency, I have yet to encounter that moment when someone formally walks through how a professional services agreement works, what EBITDA means in the context of a practice valuation, or why the conversion factor has been declining for fifteen years. I’ve come to believe this moment isn’t coming. The expectation seems to be that this knowledge will just appear somehow, at some point, before it matters. I suspect it won’t.
Medicine has a long tradition of treating business knowledge as slightly beneath the profession. Good doctors focus on patients, and the financial machinery is someone else’s concern. That instinct wasn’t entirely unreasonable when the someone else was a physician partner with aligned interests. It’s more costly when the someone else is a private equity associate or a hospital CFO who has studied your practice more carefully than you have.
The two situations above aren’t separate problems. They’re the same problem at different scales and different moments in a practice’s life. The PSA negotiation is chronic: it recurs every few years, with consequences that slowly accumulate. The acquisition is acute: it happens once, the terms are largely permanent, and the information gap at signing doesn’t resolve itself afterward. In both cases the mechanism is the same: one party understands the economics of the relationship and the other doesn’t, and the outcome reflects that.
A specialty that doesn’t track its own negotiating outcomes doesn’t know what it’s leaving on the table.
The radiologist in Las Vegas wasn’t undone by a bad deal. He was undone by a predictable one, structured by people who understood exactly what they were buying, signed by people who understood it less well. That’s not a character flaw. It’s what happens when a profession doesn’t place any serious value on business literacy.
I’m a resident. I’m clearly in no place to demand how the specialty should structure its training or negotiate its contracts, and I’m not going to pretend otherwise. What I can say is that I was surprised by that deal in Las Vegas. I probably shouldn’t have been, and that’s exactly the problem.
The gap isn’t inherent to radiology. It’s a product of how the specialty trains its physicians and what it has historically decided counts as essential knowledge. Both of those things are changeable. A radiologist who understands EBITDA before their first acquisition conversation or walks into a PSA renegotiation having modeled the contract’s value to the hospital is in a completely different negotiating position than one that hasn’t.
The person who sat across from that Las Vegas radiologist at closing understood his practice’s finances better than he did. That fluency isn’t complicated to acquire. It just hasn’t been treated as something worth acquiring.
Further Reading
Khunte & Singh, “Private Equity Acquisitions of Radiology Practices From 2013 to 2023,” AJR (2025) — the quantitative record of how quickly PE has reshaped the specialty’s ownership structure
How to Negotiate Professional Services Agreements with Hospitals, Medical Economics (2025) — a practitioner’s guide to what’s actually in a hospital radiology contract and what to watch for before signing
Assessing the debt and current state of financial literacy in a cohort of diagnostic and interventional radiology residents, Clinical Imaging (2024) — the data behind the financial literacy gap this article describes