Locum Tenens

Locum Tenens: What to Expect in Your Contract

If you are considering locum tenens employment, you need to understand the contract and tax implications involved with this type of work.

Nick Ball, Supervisor, Locum Tenens Administration

Provider Solutions & Development

April 8, 2022

Understanding How Locum Tenens Employment Contracts Work

Know your upfront and long-term financial obligations.

If the opportunity to set your own schedule and choose where you work every few months appeals to you, a locum tenens job might be a good fit. You’ll get to travel and enjoy a flexible work-life balance. Locum tenens can be lucrative too, but there are several points you should consider before signing a contract.

As a graduating resident, you will start to receive employment solicitation calls as soon as your CV is posted on a job board and/or your name is in an agency database. While a locum tenens position can seem like a tantalizing option, doing your homework is a good idea before you jump in.

Remember that locum jobs are contract employment positions, so you will need to set aside money for your tax payments, as they will not be deducted from your paycheck.

Entering into a Locum Tenens Contract

When you sign a locum tenens contract, your agency owns your relationship with a facility or the health system where you work for a period of time. This means you cannot directly contract with or be employed by the health system – or a part of it – until the contract expires or is bought out.

Understanding Your Contract Language

Common contract language about how long, when and where an agency owns the relationship includes:

1 or 2 years from representation
1 or 2 years from last day of last assignment
Specific sites or specialties within a health system

Because of contract terms and requirements, it’s important to consider where and when you may want to take a more permanent position.

“If you plan to use locum tenens assignments to experience a health system’s culture and operations on your way to a permanent job, it might be preferable to choose ‘locums to permanent’ assignments,” says Nick Ball, Supervisor for Locum Tenens Administration at Provider Solutions & Development.

Learn more in our resource tool, "Physician Contracts: The Fine Print."

Beware of Contract Buy-Out Fees

If you sign a locum tenens contract right after residency, pay attention to the language around buyouts and the contract period. You could be a financial risk for a hospital that wants to hire you if they must observe a waiting period or pay a fee to buy out your contract.

Contract buy-out fees can apply to hospitals or health systems that want to employ you. You could also face a buy-out fee if you want to switch agencies or leave your contract early.

Remember that a locum tenens agency will not lose money on your assignment.

“Don’t sign a contract where you have to pay a buy-out fee,” Nick says.

As you explore your employment options, consider the benefits and risks of working with an agency or contracting directly with a health system.

Contracting with an Agency for Locum Tenens Assignments

Do your due diligence and find out all you can about what the agency provides and what its expectations are. At the same time, you should keep your own expectations grounded – don’t expect your motorcycle to be shipped to your new job location or your family to be flown out with you.

“Don’t ask for the moon and expect it,” Nick says. “Hospitals value locums contracts because they provide an efficient way to add physicians to their patient care teams. Keep that in mind throughout your contracting process.”

As you begin your search, it’s important to take time to get to know an agency. You can interview agencies, health systems and hospitals.

Your assignments
Your licensing and malpractice insurance
Your travel and living arrangements (in most cases)

You Are in the Driver’s Seat

As a contractor, you own part of this employment process.

“Remember that you can pick and choose what you want to do and where you want to go,” Nick says. “Take the time to find the right match.”

Understand the Rules of Engagement

Pay attention to your agency’s contract requirements.

Things to pay attention to and watch out for include:

Buy-out fees
Call coverage
Charting guidelines. Know the system being used.
Living arrangements: Is your lodging near the hospital?
Time-tracking rules and the use of geotags.
Your clearance: Does the agency own your relationship with the entire health system or just one site?

Read the Cancellation Policies

Each assignment provided through your agency contract includes guidelines to follow if an assignment gets canceled by the health system or by you. Make sure you read the fine print.

Be sure you understand what happens:

Between the agency and the health system
If the health system cancels the assignment
If you back out of an assignment

A health system might be required to provide a 30-day notice to avoid paying a fee.

Engaging Directly with a Health System

You may also choose to work directly with a health system and not engage with an agency. These arrangements have unique components to their contracts.

When you work with an agency, the agency manages the necessary legwork for you.

If you want to contract with a hospital or health system directly, you will need to manage many items on your own, including:

Forming an LLC to own and operate your business and to contract with employers
Credentials and licensing
Funds to cover living and travel expenses
Malpractice insurance

Your locum tenens start-up costs will vary from state to state, system to system and in rural versus urban locations.

“You may make more money as a provider in North Dakota in winter than in California in the middle of spring,” Nick says.

Get the answers you need about locum tenens employment. Read our frequently asked questions in "Locum Tenens: Asking the Right Questions."

Your Locum Tenens Resource

At Provider Solutions & Development, we are locum tenens experts, offering you guidance on getting started, working with an agency and understanding the finer points of a contract.

“We want to see if you are a good fit for the team, and you need to know if we’re a fit for you,” Nick says. “We want to match providers to the right role the first time, so they have long-term job satisfaction. We want you to come to work with your cup full.”

Our locum tenens team aligns with an agency operating model, working with you to match your passion and purpose to the right job. For more than 20 years, PS&D has been helping residents discover locum tenens opportunities within Providence's 51-hospital network. Reach out to one of our experts today for more information about the locum tenens lifestyle.

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