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Do Locum Tenens Physicians Fit Your Strategic Plan?

Karen Minich-Pourshadi, for HealthLeaders Media, May 16, 2011

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.

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