Few among us would work without fair compensation, no matter how much we loved our jobs. Physicians who practice locum tenens on either a part-time of full-time basis are naturally interested in earning potential. In this article, we answer some of the most commonly asked questions about pay rates.

Q: HOW ARE PAY RATES DETERMINED?

A: Think back to Economics 101 where you learned about supply and demand. Pay rates for locum tenens physicians – who typically work as independent contractors and are matched to assignments by staffing agencies – are very much market driven. When there is a higher demand for, say, anesthesiologists than there are anesthesiologists to fill positions around the country (or in a particular geographic area), these physicians will command a higher rate than they would if they were in an oversupply situation. Pay rates may vary somewhat by location (i.e., you may earn more practicing in a remote community), but overall specialty demand tends to trump geography. Rates may be higher in practice settings where patient volume is above average, or where a position has been vacant for a long period of time.

Q: IS THERE ROOM FOR NEGOTIATION?

A: Yes, you have the ability to negotiate your pay rate and then accept or decline an assignment accordingly. Since they are not employers, locum tenens firms cannot dictate how you practice and you can negotiate what you are paid. If you are willing to work longer hours or for an extended stretch of time at one location, there could room for further negotiation. Doctors who call around to several locum tenens companies to compare rates, however, often find that they are all fairly comparable. Remember, too, that you are obligated to contract with the first locum tenens company that introduced you to a specific placement. Calling around to try to get better compensation for a particular opportunity violates your contract and industry standards of practice. Keep in mind that a locum tenens arrangement involves three parties: the doctor, the client (hospital or clinic), and the agency. All three should ultimately feel that they are getting a “fair deal” or this three-way relationship will not be successful long-term.

Q: HOW IS PAY CALCULATED?

A: Locum tenens physicians are typically paid by the day. You may receive an additional amount for weeknight and weekend call, and you might be offered “premium” pay for exceptionally long shifts or work weeks. You may or may not receive extra compensation for seeing patients on holidays, so be sure to ask. Also, be aware, that except in very unusual circumstances, you will not collect any part of your billed charges. The revenue you generate seeing patients goes directly to the clinic or hospital.

Q: HOW DOES THE LOCUM TENENS AGENCY GET PAID?

A: As the “matching agent,” the firm pays you and collects a slightly higher amount from the client. Agencies earn their fee in exchange for matching you with opportunities, handling the licensing, credentialing, and privileging process, making travel and housing arrangements (often on short notice), providing malpractice insurance, and perhaps a few other perks. Since they are independent contractors, physicians often wonder why they cannot simply find temporary practice opportunities on their own, cut out the “middle man,” and receive the full daily rate directly. The short answer is that they can, but most do not because (a) they do not have a large network of colleagues who need locum tenens coverage on a regular basis; and (b) the time involved in taking care of all the little details that an agency typically handles is significant. That said, physicians who fill in occasionally within their own communities may be quite successful in negotiating locum tenens engagements.

Q: HOW ARE INCOME TAXES HANDLED?

A: As a physician practicing locum tenens, you must understand that you are an independent contractor. That means taxes (income and social security) are not withheld from the amount you receive. At the beginning of each year, you will receive 1099 forms from the staffing agency or agencies that matched you with assignments during the prior year, and the amount specified must be reported for tax purposes. You may wish to set up a special account where you can “escrow” a percentage of your earnings throughout the year. That way, you won’t be scrambling come April 15th.

We hope that this brief Q&A session has answered most of your concerns about pay rates. If you have additional questions, be sure to contact your NALTO agency recruiter.

Views and opinions expressed herein are those of NALTO and not necessarily those of Advanstar Communications Inc. or LocumLife.

About the Author

Karen Childress is a Colorado-based freelance healthcare writer currently crafting a series of articles on behalf of NALTO.