The History of Drawing Accounts
The term "drawing account" reflects how income was distributed to physicians before the creation of the Palo Alto Medical Foundation (PAMF). Once a year, the Executive Board and business managers would estimate the bookings for the entire group over the next 12 months. They would then divide that figure among the physician partners and pay it to them in monthly installments, so that the physicians were drawing a monthly salary from their projected account.
Because actual revenues typically fell in the first quarter of every calendar year, there might not be enough money to cover "the draw" in those months after all other expenses had been paid, and the physicians' checks would be less than expected. Though subsequent checks would make up the difference, this uncertainty was a source of angst.
Today, Clinic physicians provide medical services to PAMF patients through an exclusive contract with the Foundation. The Clinic annually negotiates the amount it will receive from the Foundation over the coming year and gets a fixed payment every month. Physician checks are thus predictable. Nevertheless, the term "drawing account" continues to be used, and the Executive Board sets compensation for each partner in much the same way as in previous decades.