[Editor's Note: This is a guest post from Melissa Byington, the president of the locum tenens division of CompHealth the nation's largest locum tenens physician staffing company and a leader in permanent and temporary allied healthcare staffing. Melissa's career in physician recruiting spans nearly two decades. She also serves as the president of the National Association of Locum Tenens Organizations (NALTO). CompHealth is a paid advertiser on this site, although this is not a sponsored post, meaning I receive no compensation as a result of running this post which was judged on its own merits to be a worthy topic for discussion here. Many times this site focuses on how to best manage the income you have. In reality, sometimes it makes sense to simply increase your income. Locum tenens can be a good way to do that, part-time, full-time, temporarily, or even permanently. You can learn more at Locums Story.]
Like early frontier doctors who traveled from community to community, today’s locum tenens doctors travel across the country to meet the needs of rural and underserved communities. The idea of these traveling assignments dates back to the late ‘70s, when two physicians at the University of Utah saw a need for healthcare in rural settings that were unable to attract full-time physicians. One of these physicians, Dr. Therus C. Kolff, went on to found the first locum tenens staffing agency, CompHealth, in 1979.
Locum Tenens by the Numbers
Melissa Byington
Locum tenens staffing is now a $3.2 billion industry. More than 40,000 physicians work locum tenens assignments each year, throughout the US and internationally. The locum tenens industry will continue to grow as baby boomers near retirement. In addition, nearly 70 percent of physicians ages 50 or older say they plan to work part-time after retirement age.
Because there is a constant need for physicians in hospitals and clinics to cover shifts — whether it’s for vacation or maternity leave, to fill spots between permanent physicians, or just relieve burnout within the facility — 90 percent of US healthcare facilities use locum tenens physicians. The vast majority (90 percent) of locum tenens work these temporary assignments in addition to a permanent job.
How Does Locum Tenens Work
So how does locum tenens really work? Though some physicians contract directly with healthcare facilities to work temporary shifts, the majority of locum jobs are filled by staffing agencies that bring together the facilities that have jobs and the physicians that are looking for them.
Locum tenens physicians are independent contractors and usually receive an hourly wage, negotiated in advance, by the staffing agency placing them. Working hours, job expectations and the length of the assignment are also all determined in advance.
In addition to paying the physicians’ wage, a good staffing agency will cover travel expenses, housing and provide a rental car for the physician during the assignment. The agency pays the physician’s malpractice insurance, handles credentialing and can even help with state licensing. Because they are independent contractors, locum tenens physicians are responsible for their own taxes, health insurance and retirement planning.
Why Do Facilities Need Locums?
There are a variety of reasons healthcare facilities use locums. Some rural facilities still have a hard time filling permanent positions and often use locums for in-demand specialties. VA hospitals and Native American reservation hospitals and clinics also use locums when they have issues finding full-time providers.
Facilities in both rural and urban areas are now using locum physicians to help fight burnout among their full-time staff. Bringing in a locums to cover a maternity leave or even a permanent physician’s vacation is proving to be a much better option than just adding those physicians’ workloads onto their coworkers.
The final reason is financial. Physicians are the only healthcare providers that are true revenue generators. Bringing in locums to meet higher patient demand or to cover for an absent employee ensures the facility still makes money, even while a full-time staff member is on vacation or they’re waiting for a new hire to start.
Why Do Physicians Work Locum Tenens?
The reasons for doing locums as a physician are even more varied. Here are some of the top reasons physicians work locum tenens, either in addition to a full-time job or instead of one:
- Money on the side — Locums is a great way for physicians looking to make money on the side. Some doctors pick up extra shifts on nights and weekends, others use their vacation time to work locum assignments.
- Try before you buy — Not every job is a good fit. Before deciding to relocate to a new area or work at new facility, some physicians choose to work temporary assignments as a way to test drive the job.
- Keeping skills fresh — In most large facilities and practices, physicians become very specialized. By taking assignments in rural locations, doctors are often able to see a wider range of cases and refresh their skills. Locums also allows doctors to see how other practices do things, which can be taken back to their permanent job.
- A cure for burnout — Burnout is increasing in every specialty. Some doctors find the solution to burnout is not a new career, just a change in environment. A locum tenens assignment can be reinvigorating for the traveling physician and a lifesaver for the full-time staff they’re helping.
- Scheduling flexibility — Full-time locums work when they choose. If they want to take time off for an extended vacation, they can do so without having to ask permission. They can arrange their schedules around family events, hobbies, or passions outside of medicine. Some doctors use this flexibility to make time to participate in medical missions or volunteer work.
Depending on your specialty, assignments can be as short as a weekend or last six months or more. They are available in your hometown or anywhere around the country or even the world.
How Do Locum Tenens Get Paid
Locum tenens physicians are considered independent contractors and as such are responsible for paying their own taxes and arranging for their own benefits. Because of this, they usually receive a higher wage than an equivalent physician in a permanent role. Locums are paid hourly for the time they work in addition to traditionally having their housing and travel expenses covered as well.
Locum Tenens at Different Career Stages
Dr. Brian Harmych knew he wanted to open his own facial plastic surgery practice after finishing his fellowship. But launching a practice doesn’t happen overnight. While he was working through the logistics of getting his own business up and running, Dr. Harmych worked locum tenens assignments. In addition to the financial benefits, Harmych found mentors at his locum assignments that impacted the way he runs his own practice.
“From a financial standpoint, it’s an excellent opportunity, primarily because of the flexibility,” Harmych says of locum tenens. “I can pay the bills and arrange my locum assignments around important meetings [for my own practice].”
Fully established in her career, Dr. Tina Passalaris loved working as a full-time oncologist at a large hospital, but it was taking a toll on her family.
“I was absent from my kids’ lives. I didn’t go to school plays, and it was uncanny how often I would be on call during the most important nights,” she says. Now she works locum tenens assignments about four months a year and spends the rest of the time at home. “Although I’m absent 100 percent when I’m on an assignment, when I am home, I’m 100 percent home.”
Though he’s practiced internal medicine for more than 40 years, Dr. Norman Baron has no plans to hang up his stethoscope. In fact, he says, “Retirement will never be in my sights. In my blood is this burning desire to practice medicine — it’s just as much as a hobby as it is a vocation for me.” He has found that locum tenens allows him to keep practicing medicine, but on his own terms. He determines both the length and location of his assignments, allowing him to work near family — or sometimes in new areas he just wants to explore. “When I’m on assignment, I see myself as a good doctor who’s giving the best opinions that he can with his many years of experience and seeing that patient do well.”
Regardless of your stage in life, what your goals are for your career, locums could be a good option.
What do you think? Have you done locums before? What was it like for you? Have you considered doing it in the future? Why or why not? Comment below!
Understandably pro-locums post.
What are some of the cons of locums work?
What is an appropriate hourly compensation for a locums company to receive for placing you?
What are “red flag” locums, contract terms that one should definitely avoid?
Hi MochaDoc – I wrote a guest post here @ WCI called Lessons from Locum Tenens and have written about some of the pros and cons based on that experience. http://www.physicianonfire.com/locumspros/
The compensation for the locums company? I’ve never been able to nail that down, but I’ve heard it’s quite significant. Lucidity Direct is a new “matchmaking” platform that is looking to reduce the costs, but without the full service you receive from an agency.
Red flags? Be sure you have the terms in writing beforehand. Don’t accept a flat rate for “light call.” An hourly rate will protect you when “light call” means a 20-hour workday. Been there, done that.
Thanks for the reply and the information, PoF.
What are some of the cons of locums work?
-Being in a horrible area at a horrible hospital environment and culture, with an ancient EMR, and having to carry an abnormal patient and work load. Yes it has happened. So make sure you address in your contract that you will specifically see an X amount of patients considered normal for the site, and anything over you will get overtime rate. Bottom line don’t do any free work.
What is an appropriate hourly compensation for a locums company to receive for placing you?
– Depends on the contract the hospital has with the agency. A friend of mine worked as locum at site, and they gave him a great offer for an employed position. The hospital had to pay 22k as the contract buy out or placement fee.
What are “red flag” locums, contract terms that one should definitely avoid?
– see above. Make sure to look at the restrictive covenant – some agencies (wont mention names) will block you from working at any site they have a contract with. Some will block you for from the entire health system even though you worked at one of their sites in the system. Typically its 2 years from the day you were presented, or the last day you worked, and 15 mile radius. This can be an issue depending on where your home city is and where the site is and how big the site’s health system is. Also make sure to enforce overtime rates if you carry above normal patient load, or if there is a missing provider (ex – on a team of 4 hospitalist, only 3 show up).
Also dont settle for the crappy car rental and whatever hotel room – they need you, and they should value you, so get the nicer room and upgraded car.
Also – whatever they offer you – for ex 150 an hour, ask for more. With out batting an eye they can usually go up by 15 or 20 dollars. Dont fall into the traps that you are not experienced or whatever. Sometimes when you get to the site, you find out people are getting way more than you are. Tell your company, if they dont compensate you that will leave. Trust me, the company needs you to work there so they can make their nice margins, they will do what it takes to keep you there.
How do I know…I have been doing locums for while, and have formed my own locum company – we are physician owned and operated company. Our goal was to cut out the middle man, save the hospital some money, and pay the docs more money by lowering our costs and margins, and providing good quality of care, and ultimately giving patients the care they need and deserve. Everyone is happy.
Not to hijack this post….but we should probably be discussing how not to pull your money out when the market opens down 5-10% this morning.
I was hoping for a huge drop, but alas…
Anyone know if they have this type of thing for Dental?
I totally disagree. As you can see, that was much ado about nothing, like most daily market movements. Far better to maintain my habit of posting mostly evergreen posts. If I had posted some specific post I worked on at midnight last night about staying the course after elections, it would already be outdated and useless to readers.
I did send a tweet out last night telling people to stay the course though. 🙂
Maybe a bit off topic–and totally unrelated to big news of election last night–but three quick accounting points related to this approach to income generation:
1. If you do this, you need a good accounting system since you are really now in a business. (Quicken works, so does QuickBooks.)
2. Be alert to if you find yourself operating in multiple states… you and your business entity will have nexus anywhere you want as well as where you reside.
3. The choice of entity decision gets a little complicated, but if you have a W-2 from an employer, you probably don’t want to incorporate (an LLC is okay) because a corporation including an S corporation usually works poorly for a side business business.
I think readers would appreciate you explaining the concept of “nexus.”
Sorry, good point. “Nexus” means enough of a connection to a state so that the state gets to tax you. Or your business.
In general, if you do something inside a state (like provide services inside the state or try to sell services in the state or do a trade show or a convention), own property, or have an employee in the state, you have nexus for income tax purposes. That means you use a formula to apportion a percentage of your income to that state.
Example: You work as an independent contractor in Washington, Oregon, California and Arizona. Note that you actually do hours of work in those states… in this case, you have nexus in all of those states and all of them get to tax a chunk of your income.
BTW, as a general rule, if you have no physical presence in a state, you don’t have nexus.
Example: You’re a radiologist and you do your work in Washington state but for hospitals or patients or whatever in Michigan and Wisconsin… because you’re not physically present in Michigan or Wisconsin, you don’t have nexus and don’t have to pay them any taxes on the income.
And then a special and increasing common rule: More and more states (including California) argue that if you have significant revenue earned in a state even though you’re not physically present in the state, you have economic nexus. California’s rule is that if you earn the lesser of $500K in revenue or 25% or more of your revenue inside California, you owe them income and franchise taxes.
Example: Your spouse runs an Etsy business and earns $1K in CA, $1K in UT and $1K in AZ. California thinks your spouse owes income and franchise taxes because more than 25% of the business revenue comes from California.
Final comment: The rules are a little friendlier if you’re selling tangible property rather than services because there’s a federal law that protects you.
Ugh, point #2 should be:
2. Be alert TOO if you find yourself operating in multiple states… you and your business entity will have nexus anywhere you WORK as well as where you reside.
Sorry
Stephen –why does an S Corp work poorly for a side business? Totally aside from this post, we’ve been debating an S Corp for my husband’s business, where one of his contractors pays him with a W2 (amounts to about 30% of his income) and the rest with 1099s.
Would like to know also. I have a LLC taxed as an s-corp for my dividends. Another entity pays me my W2 salary.
If your first job pays you the FICA max, you’re not going to be able to make the sideline S corporation produce much payroll tax savings.
Sorry this is a little complicated, but this blog post as a longer explanation:
http://evergreensmallbusiness.com/should-you-use-an-s-corporation-for-a-sideline-or-part-time-business/
P.S. Probably what makes sense (and keeps with White Coat Investor’s philosophy) is to use an LLC or PLLC, accept the default classification as a sole proprieotorship, and then (I would say) do a SEP to max your pension.
Not a big fan of SEPs unless you’re converting the whole thing each year since it gives you pro-rata issues with your backdoor Roth IRA.
Not trying to start an argument, just want to make that clear! 🙂
But the general problems I semi-frequently encounter with solo 401(k) plans if that’s the other option we’re talking about are the costs if the business later adds another employee other than spouse… and then the hassle factor of complying with the permanency requirement.
If someone knows absolutely they will never add another employee to the business other than spouse, no problem with a solo 401(k). But otherwise IMHO a SEP can regularly be an easier thing to work with longer and/or change…
Again, not arguing. Just offering another perspective.
Oh, there’s no doubt SEPs are easier to work with. But is it worth the cost-i.e. no backdoor Roth? I think it usually isn’t.
Why wouldn’t you then start with a SOLO-k and make the necessary adjustments if and when you add an employee. May never happen given the topic of this convo, which is having a side business.
Remember, also, that with a SEP that you have to make the same contribution % for all employees. So if you want to put 25% in for yourself, you have to do the same for all employees. Not many business owners want to do that in my experience.
You don’t need to cover employees until year 3 with a SEP… and often you never have someone stay until year 4. So some small businesses can go years and years with a SEP…
Regarding the 401(k), I think the issues are the permanency requirement you need to consider when you add that next employee and then the cost of the replacement 401(k) plan if that’s what you end up having to do… you can get cheap 401(k) plans for a small business… but often not cheap plans with economical investment options.
My “standard recipe” is a SEP… and then if you must, a Simple-IRA… Totally understand it’s not always optimal. But regularly I think it is.
That’s right, but you have to cover all employees who have earned at least $550 in any part of 3 of the last 5 years. That is a pretty low threshold for ongoing businesses who have even part-time employees.
Given that the employee has to earn only $550/yr in any part of 3 of the last 5 years, it’s a pretty low threshold for participation. I understand that the SEP is simpler, but still don’t think, in general, it is the plan of choice for WCI readers.
Not sure what Stephen’s reason is, but I discourage it because you have to be paid as an employee + you have to file a separate corporate return (which you do not need with a PLLC). For part-time work that is only a fraction of your main income, the cost of administration is not worth it. Other than the Medicare tax savings, which is negligible, you have access to the same benefits, such as a SOLO-401k.
What are some agencies used to find locum tenens as the article suggests?
You might find the agency that wrote the article- CompHealth (Weatherby/CHG etc)
You can sign up through NALTO’s website and then you’ll be contacted by several different agencies that have agreed to abide by certain rules and practices. I practice locums full time as a Family Doc found it helpful to find assignments with the scope I want.
You can look within individual agencies, but the ones that will have the most jobs for you depends on specialty and location.
You might find a better variety on a job board that is specialty specific. In anesthesia, we have http://www.gaswork.com.
FWIW, I did locums through Comp Health in 2003. While the job wound up being great, the folks at CH were difficult and frankly unethical. It was everyone from the recruiter to the handler to the travel office to ultimately one of the VPs. I hope they’ve improved since then.
Why kind of problems if you don’t mind me asking? Looking into signing with the,
M.
– Wondering how big the learning curve is from going from place to place, ESPECIALLY with learning new EHR’s.
– I do inpatient work (psychiatry). If I’m paid by the hour, would I be incentivized to lollygag and take as much time shooting the breeze with patients as possible? Or would this be an unlikely compensation model?
– Anyone just try cold calling various hospitals in a locality and attempting to cut out the middleman after doing locums for a while?
– Does locums work require you to submit to the various uncompensated work that employers do? Or are time wasters such as empathic communication trainings, computer system trainings, endless meetings, etc something you can get compensated in your contract?
I’m definitely tired of being employed full time.
Have done only 3 total weeks of locums in my life, so take this for what it’s worth-
1) My whole first two days I got paid the daily “clinic” rate while doing all the “orientation stuff” at the hospital and the clinic practice. Same as if I was in clinic those hours
2) They will schedule your patients, but when they overbook or patients were more complicated I billed for the excess time that it took to finish my charting. My impression is that if they think you are lollygagging, they will not invite you back and will ask the company to provide someone else.
I had a good experience with Weatherby and will go back to them first if/when I pursue more locums – but clearly have not worked with anyone else to compare. I had lots of questions about malpractice coverage (something I don’t deal with in the military – at least not in the traditional way) and the exec VP in charge e-mailed and called me personally and seemed to really enjoy talking about how they handle it and the funds set aside to carry the policy forward if they ever changed carriers, etc.
Not trying to sound like a commercial for one company though – do your own due diligence. But ask the questions up front – they need you and should be talking with you.
D’ohhh!!! ” same as if I WERE in clinic”….
I didn’t edit my grammar well. I promise I do know how to talk gud English…
Also – the malpractice items are still thankfully untested in my case – but I have a lot of confidence based on my inquiries that the coverage will stay in force if ever needed.
I’ve been working as a locum tenens psychiatrist this year. Did one inpatient gig and one outpatient. Both had “guaranteed minimums” per day in case you only ended up working a few hours due to lack of patients. Sometimes I made $1200 a day rounding for 2 hours on a new inpatient unit. The outpatient gig was $1100 a day and had specific time slots for patients. A lot of people no-showed. Both jobs were super chill.
The learning curve was easy….EMRs are not difficult to figure out and most places use Epic (both of mine did)
Shooting the breeze is not necessary since you should have a daily minimum for inpatient
Haven’t tried cold calling because I wanted to travel and not deal with paperwork/contracts/malpractice etc
And yes I was paid for orientation time
Thanks for that comment. I’ve been looking at locums for potential work for the year after I graduate (psychiatry here as well) and have been in touch with several of the big names in LT industry. I think weatherby quoted me those numbers at several places. Seems a bit lower as I’ve found other places quoting me $1500/day for inpt work.
A few colleagues have told me that 1200/day for inpt is low (equivalent to 150/hr at 8hrs/day) and should ask for more. DId you have any experience with negotiating higher rates and also recs on good companies to sign up with? (I can also be reached at ginmqi at gmail dot com)
Thanks!