There’s a lot of talk in healthcare about physician recruitment, retention, and the current shortage of doctors. Hospitals and health systems can’t operate without these folks, so when there’s a gap to fill and not enough time to fill it (or enough candidates interested in what a facility has to offer), staffing on the margins, or using locum tenens, is the direction financial leaders head.
The current shortage of doctors ensures that a segment of healthcare is going to have more than its share of business in the coming years. A report on temporary staffing trends from Staff Care, Inc., of Irving, Texas, showed that 48% of physician respondents to a nationwide survey indicated their intention to continue working locums for more than three years. That's up from 39% five years earlier.
Therus Kolff, MD, healthcare strategy advisor for Salt Lake City-based CHG Healthcare Services, spoke at this year’s American Medical Group Conference in Washington, DC. Kolff, a locum tenens thought leader, is the founder of CompHealth, one of the first providers of locum tenens. He offered me his thoughts on the direction of this segment of healthcare.
Q: Where is the locum tenens segment headed over the next three to five years?
A: "It’s grown dramatically and it will continue to do so," he said. The advent of healthcare reform coupled with the fact that baby boomers are getting ready to retire and the continual shortage of medical training programs means increased demand for physicians, he says.
"These days it’s even more important that we retain as many physicians in this profession for as long as possible. There have been a lot of predictions that if the [stock] portfolios of doctors ages 50-60 years old come back, that these physicians may retire. We don’t want that as a society – we need those doctors to continue to take patients," Kolff said.
Q: What prompts a physician to opt for a locum tenens role versus hospital employment?
A: "Locum tenens allows the physician to experience what it’s like to practice pure medicine again; they don’t have to deal with the hassles of billing and collections," said Kolff.
There are three overarching groups of physicians interested in working as a locum tenens, Kolff explains. Each group has a different reason for opting for this avenue—which can be beneficial to the hospital:
(1) The younger physician: This doctor has worked hard to get into medical school and has been working as a resident but not getting paid much. ‘Some of these physicians may not know where they want to live and work, or even what specialty they want to practice. Or they may want to take some time off before they begin working full-time," he says.
Working as a locum tenens can help these younger physicians narrow down the parameters of what they are looking for before they join a hospital. "By working with a hospital first as a locum tenens, both the hospital and the physicians can decide if it’s a good fit. In the long run, that helps the hospital with physician retention," he says.
(2) The middle-age physicians: This group consists of physicians who have practiced medicine for a while. They have settled in at a facility, but they may feel the practice or position didn’t turn out the way they had hoped.
"There are also a number of physicians in these middle years that want to pursue alternative careers, such as painting or playing music, but they want to have the stability of an income," he explains. These physicians may want to work part-time, which can fill in service line gaps at a hospital or they can cover time off when employed physicians go on vacation.
(3) The older physician: This group may have already retired but want to return to work. They are usually empty-nesters who may also want to travel, or relocate to an area where their children now live. "This is the group we like because they have the art of medicine down and they understand how different systems work—that’s beneficial to a hospital," he says.
Q: Using locum tenens is expensive, although vacancies in staff may dictate the necessity to use them. Are they worth it?
A: "What an institution ultimately wants is full-time staff that can provide quality care to the community. It isn’t often you see locum tenens being used to provide services over a long time," Kolff explains.
The cost of locum tenens, however, is significant. According to numerous staffing industry surveys, the average daily rate for a locum tenens physician ranges from $1,000-$2,000 depending on the medical specialty. In addition, the hospital usually pays for housing and transportation. Malpractice premiums may or may not be paid for by the locum tenens agency.
"What we find is these physicians generate revenue in cash in excess of their cost; that revenue stays with the hospital," he adds. A 2010 Jackson-Coker Industry Survey arrived at the same conclusion. With the exception of emergency medicine, the top ten specialties all brought in more in daily professional fees than it cost to staff the physician for a day.
Determining Need, Assessing Value
Although most hospitals and health systems are in search of physicians to immediately fill staffing voids, don’t let the level of urgency for these doctors override the budget completely. Kolff’s assertion that these doctors generate more than enough to cover the cost of their use should be validated at each hospital or health system. Periodically, financial leaders should calculate the cost versus value these physicians are providing to the hospital. Just as all physicians are not created equal, the revenue they generate for the hospital isn’t either.
To assess the value of these physicians, combine the base pay, benefits, incentives, vacation, CME allowance, liability insurance, and taxes to arrive at the cost of a permanent practitioner. Then compare that amount to the cost of a locum tenens in the same position (be sure to include malpractice premiums, housing costs, agency fees, etc.). Finally, calculate the revenue generated by both the employed and locums physicians and compare.
Keep in mind that a couple of less financially tangible factors to consider in your locum tenens needs assessment: patient satisfaction and quality of care. As reform pushes everyone toward providing more for patients in both of these areas—and eventually reimbursing for them—you will need to create locum tenens contracts that allow you to quantify and calculate the value locum tenens provide in these areas as well.
For now, however, if you cannot adequately assess the financial contribution of areas to your hospital or health system, consider the strategic direction your hospital is headed and see if the locum tenens you are utilizing fit that direction. Moreover, if you haven’t done so already, you may also want to start creating locum tenens contracts that guide these physicians toward your strategic vision. Certainly locum tenens are a costly solution to staffing shortages, and as Kolff points out, should not be the long-term solution for this staffing problem.
Unfortunately, as hospitals nationwide find that there are fewer physicians candidate to actually recruit, locum tenens will remain a line item in the budget—how big a number you see in that row depends on how diligently you track the monetary (and non-monetary value) these physician bring to your hospital or health system.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
