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Posted on
August 11, 2023

How to Understand a Locum Tenens Staffing Agreement

For physicians looking to supplement their income or gain experience in different healthcare settings, locum tenens work can be an attractive option. However, understanding the locum tenens staffing agreement can be intimidating. This blog will explore the key components of a typical locum tenens staffing contract agreement and offer tips on how to navigate it with confidence.

WHAT IS LOCUM TENENS COVERAGE?

Locum tenens is a Latin phrase that means "to hold the place." Today, the term is commonly used to describe when a Physician works temporarily in a hospital or other healthcare facility. Locum tenens positions are still able to perform Physician’s duties such as practicing medicine with the proper license or hospital credentialing. 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. At the same time, they search for a new, permanent Physician.

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 locum company that helps with staffing, like Caliber, and sign a written locum tenens assignment contract.

Most often, negotiating locum tenens agreements can range between 5 to 10 pages and will cover the essential details of work. Before signing a contract through a locum tenens agency, several key areas in the contract should always be considered before signing. Locum tenens contracts vary, so make sure to search the contract for key details and read everything as carefully as possible to avoid unnecessary liability and avoidable costs.

NON-COMPETITION AGREEMENTS IN LOCUM TENENS CONTRACTS

A non-competition agreement is generally a contract between an employer and an employee or independent contractor. Its purpose is to prohibit an employee or contractor from engaging in a business that directly competes with the employer's business. While an employer cannot require an independent contractor to sign a non-compete, they may terminate or choose not to hire you if you refuse to sign.

A non-compete is a standard clause of locum tenens contracts and shouldn't deter providers from considering or accepting locums assignments. Clients, not providers, are usually responsible for paying any fees related to a breach of the non-compete clause in regard to providers accepting a full-time position at that particular healthcare organization.

There are three terms often found in the majority of locum tenens contracts:

  • The contract may contain a stipulation about accepting a permanent position with the healthcare organization following the end of your contract with the locum tenens agency if a permanent position becomes available.
  • The contract will typically stipulate you may not work for the same hospital or practice through a different locum tenens agency after the contract expires for a certain period of time after your contract expires. Most of the non-compete locum tenens agreements are dictated by the amount of time the agreement is effective (two years is standard) and the geographic area it covers.
  • 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.

Tail coverage is also something that providers should be aware of in their locum contracts. While some locum tenens agencies will require providers to purchase tail insurance at the conclusion of an assignment, others may continue to provide insurance coverage for past assignments. This retroactive coverage protects any physicians who are currently working, have worked for, or are no longer working for a given locum tenens agency.

It's important to read the language of a master services agreement carefully and be wary of negotiating locum tenens agreements that have excessively long timelines or contain broad, open-ended language.

PAYMENT OPTIONS AS A LOCUM TENENS PROVIDER

The salary for a working locum tenens provider is 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 salary requirements should fall in line with the specific medical specialty. For example, salary requirements for a locum tenens Orthopedic Surgeon should expect a vastly different rate compared to a locum tenens Pediatrician.

In addition, Healthcare facilities in smaller towns will not be able to offer the same locum tenens salary for a typical Physician contract where the Physician may work in larger city hospitals. And finally, an assignment that needs a locum tenens Physician urgently as opposed to one that has a flexible start date will most likely pay higher. Always remember that rates outlined in the contract are not set in stone, and you have the ability to negotiate before accepting the position.

When negotiating, locum tenens Physicians must be aware that the rates are not set by the staffing agency but by the healthcare organization they will be contracting with. Usually, healthcare organizations are open to negotiations if the locum tenens Physician is willing to work longer hours, nights, or weekends when needed. 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

When working as a locum tenens Physician, you are considered an independent contractor 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 you received assignments through from the prior year. The amount specified must be reported.

In addition, you will also be responsible for creating your own nest egg for retirement. There are many different options for an independent contractor, such as Money Purchase Pension Plan, Simplified Employee Pension Plan, Solo 401, or 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 in multiple states.

EXPENSES ASSOCIATED WITH BEING A LOCUM TENENS

Expenses include anything from airfare, rental cars, gasoline, food, and hotel stays. Your locum tenens contract should also cover details about whether the healthcare facility or the Physician will cover expenses. Ensure you understand what is and is not covered, and keep receipts for all travel expenses.

LOCUM TENENS MALPRACTICE INSURANCE

Malpractice Insurance is a standard term included in locum tenens 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 for issues that may arise in performing medical services, 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 locum tenens organizations rarely offer this type of malpractice coverage because of how broad the coverage is that 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.

Some locum tenens contracts allow you to have a hospital's malpractice coverage policy or may require you to produce proof of independent insurance. It is important to know your obligations ahead of time as medical 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 locum tenens contract aims 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 time period longer than expected. In the event that the healthcare organization cancels the assignment or you cancel the assignment, a locum tenens 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, locum tenens assignments will reward you with experience that offers you the benefit of travel, flexibility, and working on your own terms. However, because of the unique issues associated with working as a locum tenens Physician, it is important to understand how the locum tenens contracts can expose you to unnecessary liability and avoidable costs. Before engaging in any locum tenens work, review the locum tenens agreement yourself and with an experienced legal counselor.

Discover How Caliber Can Accelerate Your Medical Career

Caliber connects qualified healthcare professionals with the facilities that need them most. We use a specialty-focused recruitment approach to connect the right providers with the right hospitals and clinics. Whether it's a few extra shifts or full-time locums jobs, we provide a comprehensive range of assignments for our clients supported by a robust pool of healthcare staffing resources. If you're interested in locum tenens work, get in touch with Caliber today.

FAQs

What is a locum tenens agreement?

A locum tenens agreement is an established timeline of locum tenens work that covers assignments over the course of a given period, usually two years. Locum tenens agencies provide documents that specify the details of the agreement, including location, duration, and compensation. This is often done in the form of confirmation letters with one overarching contract supplemented with additional documents detailing each assignment.

How long is the contract for locum tenens?

The length of a locum tenens contract can vary depending on the specific needs of the healthcare facility or practice and the availability of the locum tenens provider. Contracts can range anywhere from a few days to several months or even a year.

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