Calculate ROI for Locum Tenens Physicians

Physician Compensation & Recruitment, May 15, 2008

Twenty years ago, locum tenens physicians were a relative anomaly at hospitals and medical groups. Today, 77% of facilities are using locum tenens physicians to maintain services while they seek hard-to-find permanent staff, a trend driven in part by the physician shortage.

Locum tenens physicians are important to providing continuity of care, but their impact on revenue should also be considered. By treating patients who might otherwise not have been seen or who may have gone elsewhere, they can maintain revenue streams in the absence of permanent physicians.

Locum tenens physicians are paid on a per diem basis, and from the facility’s perspective, daily rates must be balanced against revenues that physicians are likely to generate while working as locum tenens to measure a return on investment. The daily rate for a family practitioner, for example, is in the $750–$800 range. Rates are similar for general internists and run several hundred dollars per day higher for surgeons.

On average, a family physician generates approximately $1,433,000 a year on behalf of his or her affiliated hospital, according to Merritt, Hawkins & Associates’ 2007 Survey of Physician Inpatient/Outpatient Revenue. This equates to approximately $4,000 per day.

Similarly, a general surgeon generates about $2 million a year on average for his or her affiliated hospital, based on the Merritt Hawkins survey. This equates to about $5,400 per day. In some situations, locum tenens physicians will be net revenue producers, in some cases they are a break-even proposition, and there are instances when they represent a net cost.

However, additional factors should be considered. By helping to alleviate physician burn-out, particularly in cases where deficits on the permanent staff are causing physicians to be overworked, locum tenens physicians can prevent the significant cost of physician turnover. Long-term, locum tenens physicians can help maintain patient satisfaction levels, which have a considerable impact on the reputation and market brand value of hospitals and medical groups.

Like other types of temporary clinical professionals, locum tenens physicians provide the most value when they are integrated into a facility’s strategic staff plan. Planning in advance to use locum tenens physicians during peak usage times, to transition the practices of retiring physicians, and in other situations, is less stressful and often less costly than turning to them in emergencies. As a growing number of doctors embrace alternative practice styles, locum tenens physicians are one more piece of an increasingly varied mosaic.

This story was adapted from one that first appeared in the May edition of Physician Compensation & Recruitment, a monthly publication by HealthLeaders Media.


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