A Worksheet for Equity in a Behavioral Health Group

Write down whether your state requires the clinical entity to be owned by a licensed professional (common for psychologists and psychiatrists, more variable for licensed counselors and social workers) and how your management services organization relationship is structured on top of that. This varies more across behavioral health license types within a single state than it does in most other healthcare specialties, so don't assume one clinician type's rules apply to another on your team.

If your group employs a mix of license types under one clinical entity, confirm with counsel that the entity's ownership actually satisfies the strictest applicable rule among them, rather than the most permissive one, since regulators generally don't grade on the most convenient interpretation.

For every founding clinician who rolled equity into the group and every senior clinician who's been promised phantom equity for staying and growing their caseload or their team, write down the percentage or formula, the vesting schedule, and whether it was ever actually put in writing. Behavioral health groups that grew through organic hiring rather than acquisition often have more of these informal promises than a group that grew entirely by acquiring existing practices.

A founding clinician who sold their practice into the group usually gets rollover equity in the management entity. A senior clinician who's grown a caseload or built a specialty program, telehealth, a particular treatment modality, without ever owning a practice, is a better fit for phantom equity tied to that program's performance. Reserve real, non-rollover equity for someone becoming an actual business partner.

A clinician's insurance panel credentials, especially for panels that are currently closed to new providers, are a real asset the group loses if that person leaves. Factor this into the vesting timeline for phantom equity: a longer vesting period is more defensible for a clinician whose panel status would be hard or slow to replace.

This is also worth revisiting whenever a major payer closes or reopens its panel in your market, since a clinician's relative value to the group can shift meaningfully based on factors entirely outside their own performance.

Pulley fits a group with a small number of founding clinicians' rollover stakes and no outside capital, wanting a clean setup quickly. Carta fits a group that's raised outside capital to fund acquisitions of other practices, added a board, or is issuing rollover equity to founding clinicians across a growing number of locations, especially once telehealth expansion means the group operates across several states at once.

A behavioral health group's non-clinical leadership, such as a VP of operations or a head of telehealth, generally needs a strike price at or above fair market value, typically supported by a current 409A valuation, before any stock option grant, same as any other company. Because behavioral health groups vary widely in how much of their value comes from a handful of key clinicians versus a broader, replaceable provider base, use a valuation provider who asks about that concentration explicitly rather than applying a generic healthcare services template.

Write into the rollover agreement what happens to a founding clinician's equity if their license is suspended, restricted, or lapses, since this is a scenario healthcare groups have to plan for that most other industries don't. A clean answer in the original agreement, rather than a negotiation after the fact, protects both the group and the clinician from an already difficult situation getting worse.

Applying the same caseload-based phantom equity formula to a front-line clinician and to a clinical director who spends much of their time supervising and building programs undervalues the director's actual contribution, since their impact shows up in the group's overall caseload capacity and retention, not their own billable hours. Write separate formulas for individual-contributor clinicians and for anyone in a supervisory or program-building role, rather than defaulting to one template for every phantom equity grant.

Add these lines to the worksheet for every clinician:

• The license type and the ownership rule that applies to it in your state, since counselors, social workers, psychologists, and psychiatrists can differ.
• Whether the equity promise exists in writing, with the percentage or formula and the vesting schedule.
• Whether the right instrument is rollover equity, phantom equity, or real equity in the management entity.
• The clinician's insurance panel status, which supports a longer vesting period when the credential would be slow to replace.
• What happens to the equity if the clinician's license is suspended, restricted, or lapses.