5 Things to Know About Locum Tenens Pay

Doctors who are considering getting into the locum tenens market have a lot to learn. At the top of the list are all things related to pay. Doctors need to know how they will be paid, how their earnings will be determined, etc., in order to figure out if locum tenens is a good fit.

Do a quick internet search on locum pay and you will discover some pretty common questions. This article takes a look at answers to some of the most frequently asked among them. If you have been thinking about locum work, consider this article a starting point in your quest to learn the answers to your questions.

1. A Supply and Demand Market

Fans of free-market economics love the locum tenens model because it is very much a supply and demand market. The first thing to understand is that locum tenens clinicians are self-employed contractors matched with employers through an intermediary, usually a locum staffing agency.

The fact that they are self-employed gives locums the ability to negotiate their own pay. And right now, it is a seller's market. The severe shortage of clinicians in every discipline means demand is high. And when demand is high, doctors can demand commensurate compensation.

Doctors Are Paid by the Day 2.

Though there are exceptions to the rule, most locum doctors are paid a daily rate. That rate is based on an expected number of hours of service for a routine shift. The nice thing about daily pay rates is that they are negotiable. A doctor can insist that his/her weekly rate is 'X’, but his/her weekend rate is 'Y'. He or she can also stipulate higher pay for holiday shifts.

3. Pay Is Not Linked to Revenue

The downside to daily pay is that it is not linked to revenue. In other words, the doctor is not directly billing the patients he/she is seeing. Healthcare facilities handle billing. They keep 100% of the revenues as well. Locum doctors do not earn a percentage of their billable services except under rare circumstances.

As a side note, a doctor who is in exceptionally high demand might be able to negotiate a revenue link. Still, any income derived from revenue will be insignificant compared to the doctor's daily rate.

4. Pay Goes to the Staffing Agency

Unless a locum tenens doctor arranges his or her assignments independently, the pay he/she receives does not flow from employer to his/her bank account. Employers pay their staffing agencies a set fee based on contractual obligations. The staffing agency deducts its own intermediary fees before passing the remainder on to the clinician. This guarantees the agency actually gets paid for its services.

5. Locums Pay Their Own Taxes

Despite pay being filtered through a staffing agency, the locum doctor is responsible for everything tax related. Staffing agencies issue 1099 forms as required by law, but they do not withhold payroll or income taxes. That is the doctor's responsibility.

This is the one downside of being a self-employed contractor. Where employed doctors pay 6.2% of their income as federal payroll taxes, locums pay double that amount at 12.4%. Payroll taxes cover both Social Security and Medicare contributions. Locums are also responsible for any applicable state and local taxes.

Locum tenens clinicians tend to earn more, on average, then their employed counterparts. So even with some of the inconveniences that come with being a locum, it is actually worth it from a financial standpoint. They earn more without having to worry about travel expenses, accommodations and, most of the time, malpractice insurance. It's a good deal all the way around.