Physician staffing can be a fickle business. In today’s fiercely competitive market where loyalty runs thin, staffing agencies will bend over backwards to attract and keep a physician in their locum tenens pool or a hospital as a client. So when a physician or client insists that you sweeten the pot by providing workers’ compensation, what’s a locum tenens agency to do?

The answer is simple: To quote a former first lady, “Just say NO!” And if the physician or client challenges your frugality, explain you are simply trying to protect the independent relationship for all three parties to the transaction.

Employee vs. Independent Contractor

Unlike nurses and allied healthcare professionals - who are generally treated as employees because they are subject to control, supervision, and direction (by the physician) - locum tenens physicians are universally treated as independent contractors. A hospital, clinic, or other healthcare provider contracting the services of a locum tenens physician does not retain the right to exercise the overall direction and control over the doctor’s services necessary to establish an employer-employee relationship. The hospital may provide some general policy and procedure direction, but in no way can it supervise, direct, or control the services performed, that is, treating patients. And, obviously, the staffing agency does not provide any control, supervision, or direction.

When a physician is contracted as a locum tenens, the standard practice is to treat that individual as an independent contractor, and for the physician to conduct all of his/her affairs as such. Consequently, the locum tenens physician is not entitled to file claims for workers’ compensation, disability, or unemployment. And more important, the staffing company representing the locum tenens physician should not provide these and other typical employee benefits to the independent physician. Doing so would result in one major factor leaning towards an employer-employee relationship.

Protect Yourself and Your Physicians

It is important to the locum tenens staffing industry that we do not inadvertently convert our locum tenens physicians to employees. Upon a federal or state audit, the payroll taxes, penalties, and interest assessment could be steep - easily in excess of 40 percent of the compensation paid.

To make matters worse, the physician may not even get the workers’ compensation insurance coverage he/she desired. Regardless of the insurance premiums paid, the locum tenens physician may not be covered under the policy because he is not defined as an employee according to the insurance provisions. After a routine investigation of the job-related injury case, your insurance broker may not agree to pay based on its findings that the locum tenens physician is considered an independent contractor.

As a NALTO member, it is your responsibility as provided in the Criteria for Membership (Section I, Article F), to treat and report all your locum tenens physicians as independent contractors.

When physicians register with your agency, make sure they understand and agree to the responsibilities and benefits that come with being a locum tenens physician. Encourage them to solicit the guidance of a tax and/or financial advisor to discuss the federal and state tax issues, insurance needs, and retirement planning opportunities resulting from their status as an independent contractor.

After all, it is in their best interest - and yours.

About the Author

David Baldridge is vice president of administration for the locum tenens division of CompHealth, a CHG company, which is headquartered in Salt Lake City; 800-453-3030; www.comphealth.com.