Cholesterol is an essential component of lateral domain formation in lipid bilayers. Experiments using structural analogues of cholesterol have revealed that slight changes to the steroid headgroup chemistry can lead to significantly different degrees of domain formation. For example, the seemingly slight modification to 4-cholesten-3B-one changes the molecule from domain enhancing to domain inhibiting. To investigate the relationship between steroid headgroup structure and domain formation, we have performed a series of coarse-grain molecular dynamics simulations in which the hydrophobicity of the steroid headgroup is altered. We show that bilayers containing steroids with polar headgroups undergo lateral phase separation, with the steroids adopting the canonical, upright orientation. However, increasing the hydrophobicity of the steroid's headgroup dramatically changes the orientation of the molecule such that it ties at the center of the bilayer, perpendicular to the bilayer normal. As a fundamental consequence, we show that these steroids inhibit the formation of phase-separated domains in membranes.