Provider-centric staffing for purpose-driven healthcare
healthcare-professionals
Posted on
May 15, 2023

Guide to Understand a Locum Tenens Contract Agreement

Locum tenens is a Latin phrase that means "to hold the place." Today, the phrase is commonly used to describe when a physician works temporarily in a hospital or other healthcare facility. Practices that often use locum tenens are sometimes in remote areas.

Adding locum tenens to the staff allows hospitals and clinics to cover another physician's vacation/medical leave, account for increased patient demand, or fill a gap. In contrast, a new, permanent physician is searched for.

Find out more about locum tenens credentialing.

The appropriate number and mix of physicians allow healthcare organizations to provide quality healthcare to their patient populations while offering physicians more flexibility, extra income, the ability to travel, and exposure to new and evolving patient care environments.

As a locum tenens physician, you will often work with a third-party staffing group, like Caliber, and sign locum tenens contracts. Most often, a locum tenens agreement can range between 5 to 10 pages and will cover the important details of work.

Before signing the contract, several key areas in the contract should be considered before signing. Search the contract for key details and be sure you understand the terms of the locum tenens agreement. If you're using a locum tenens staffing agency like caliber, don't hesitate to get in contact with a representative to ask questions.

NON-COMPETITION AGREEMENTS IN LOCUM TENENS CONTRACTS

A non-competition agreement is generally a contract between an employer and an employee or contractor. Its purpose prohibits an employee or contractor from engaging in a business directly competing with the employer's business.

Non-compete agreements ensure that hospitals can continue providing quality health care to their patients by having access to talented physicians. Providers benefit from non-compete agreements in that it unites the community of physicians at a hospital/practice. Since physicians are discouraged from leaving, they are more likely to stay within the same community at a medical institution.

While an employer cannot require an employee or contractor to sign a non-compete, they may terminate or choose not to hire you if you refuse to sign.

Three terms are pretty standard in the majority of locum tenens contracts:

First, the contract will likely contain a stipulation about accepting a permanent position with the healthcare organization following the end of your contract with the locum tenens agency.

Second, most non-compete locum tenens agreements are dictated by the amount of time the agreement is effective (a maximum of two years is standard) and the geographic area it covers.

Third, the contract will generally stipulate that once you sign the contract with the agency, you may not decide to work directly with the hospital or practice for that assignment the agency shared with you. It is important to read the language carefully and be wary of locum tenens agreements with excessively long timelines or broad, open-ended language.

PAYMENT OPTIONS AS A LOCUM TENENS PROVIDER

Wages for locum tenens providers are usually broken down into hourly work or daily rates. The most important factors in defining compensation are the medical specialty, geographic location, and the urgency of the assignment. Expectations of wage requirements should fall in line with the specific medical specialty.

For example, wage requirements for a locum tenens orthopedic surgeon should expect a vastly different rate compared to a locum tenens pediatrician. In addition, healthcare facilities in certain towns won't be able to offer the same locum tenens pay for physicians that work in other hospitals. And finally, an assignment that needs a locum tenens physician urgently instead of one with a flexible start date will most likely pay higher.

Overall, the contract should outline how you will be paid, the method of payment, and the hours and days worked. To ensure payment, make sure to provide your timesheet to the professional staffing agency in a prompt manner and on a regular schedule.

TAXES AND RETIREMENT FOR LOCUM TENENS

You are considered an independent contractor when working as a locum tenens physician since the position is not permanent. Because of this, healthcare organizations will not withhold taxes from your paycheck. At the beginning of the year, you will receive 1099 forms from the professional staffing agency your received assignments through from the prior year. The amount specified must be reported.

In addition, you will also be responsible for creating your nest egg for retirement. There are many different options, such as:

  • Money Purchase Pension Plan,
  • Simplified Employee Pension Plan,
  • Solo 401, and
  • SEP IRA.

No matter what you choose, it is recommended that you consult an accounting and tax expert who serves clients nationwide, especially if you plan to work locum tenens jobs in multiple states.

EXPENSES ASSOCIATED WITH BEING A LOCUM TENENS

Expenses include anything from airfare, rental cars, and gasoline to food and hotel stays. Your locum contract should also include whether the healthcare facility or the physician will cover expenses. Ensure you understand what is and isn't covered and keep receipts for all travel expenses.

LOCUM TENENS PROFESSIONAL LIABILITY INSURANCE

Professional liability insurance or Malpractice Insurance is a standard term included in locum contracts, but details and coverage limits may vary. A typical locum tenens malpractice insurance policy will have a twelve-month term with a $1/$3 million coverage limit, meaning that the insurer will cover up to $1 million of a single claim and an aggregate total of $3 million over the life of the policy.

There are two types of malpractice insurance policies, occurrence policies, and claims-made policies. Occurrence policies are more expensive and provide coverage for claims that occur at any time during the policy period, regardless of when the claim is reported to the insurance company.

Most professional staffing agencies rarely offer this type of coverage because of the broad coverage it provides. Claims-made policies are more common and provide coverage for claims that are made on or during the plan's active time frame. When the plan expires, the coverage no longer exists. Ensure that the insurance policy also includes "tail" coverage, which will protect you financially from any malpractice claims made after the policy period ends for incidents during the contract.

Additionally, some locum contracts allow you to be covered under the hospital's malpractice policy or may require you to produce proof of independent professional liability insurance. It is important to know your obligations ahead of time as malpractice insurance can be a significant cost that may impact your decision on a particular locum tenens position.

TERMINATION AND THE 30-DAY CANCELLATION CLAUSE

Given the nature of locum tenens work, both parties enter the agreement expecting it to end at some point. However, you do not want to be stuck in a position where your contract is suddenly terminated, and you are left in a position with no income, stuck searching for a new job, or you are required to work for months in a position that you would rather leave.

The goal of the locums contract is to protect you from either scenario. Make sure to review the termination procedures and auto-renew clauses of the contract to ensure that you are provided with a 30-day notice of termination and that you are not locked in for a longer time period than expected.

In the event that the healthcare organization cancels the assignment or you cancel the assignment, a locums contract should outline details such as the time needed to cancel, how the cancellation should be documented, and if any penalties exist. Similar to the termination clause, most locum tenens contracts will also require a 30-day notice of cancellation.

In general, working locum tenens assignments can be a rewarding experience that offers you the benefit of travel, flexibility, and working on your own terms. Partnering with a locum tenens agency can help you take advantage of more opportunities available to you. You'll get access to a wide range of employers around the U.S. and filter searches based on personal preferences.

Before engaging in any locum tenens work, always make sure you review the master services agreement with an experienced legal counselor.

The Benefit of Working with Locum Tenens Organizations

You’ll want to ensure that your contract protects your interests (beyond compensation), has a plan to address disputes, and reduces risks. Building a relationship with a locum tenens agency allows you to understand better what to expect and the type of work available to you. You’ll have a team of experts seeking optimal positions and opportunities for you. You can trust that your interests are protected and that you are covered in case the unexpected happens.

Locum tenens providers trust Caliber to find them fulfilling roles around the United States. If you’re interested in finding locum tenens assignments, please visit our job search page.

Share this article: