For physicians, understanding the essentials of compensation is critical to a satisfying and successful career. With so many payment structures available, how do you decide on the best fit for your goals? And how does locum tenens work differ from a permanent position?
Weatherby Healthcare’s senior director, Ronney Davis, recently hosted the Physician’s Guide to Competitive Compensation webinar, offering insights on payment structures, the factors affecting income, and the nuances of locums work. Watch the full webinar below or read on for a recap of the most important takeaways.
Only half of physicians are satisfied with their compensation
According to Medscape’s 2023 physician compensation report, only 52% of physicians reported satisfaction with their income. And while raw numbers aren’t the only thing that matters, feeling fairly compensated is an important part of job satisfaction and overall happiness.
Physicians who understand compensation have more leverage at the negotiating table and can ensure they’re being paid fairly compared to their peers. They’re also able to make informed decisions in pursuit of their personal, professional, and financial goals.
Compensation basics and common payment structures
The three most basic factors affecting physician income are experience, location, and specialty. Experienced physicians command higher salaries, and cost of living and regional economics can significantly affect the offer they receive. Every physician should stay up to date on industry trends regarding average pay and demand for their particular specialty.
The five most common compensation structures for physicians are:
Fee for service: Physicians are paid a flat rate for each service, incentivizing them to perform more services and procedures.
Salary: Physicians are paid a fixed salary, incentivizing them to focus on quality of care rather than quantity of services.
Productivity based: Physicians are paid based on productivity metrics — typically the number of patients seen or the number of services performed.
Value based: Physicians are paid based on quality of care as determined by metrics like patient satisfaction, patient outcomes, and cost efficiency.
Hybrid: A combination of multiple compensation models. For example, a base salary with incentives for productivity, quality metrics, or other performance goals.
Compensation is more than just money
Fair compensation goes far beyond a dollar amount — it’s about accessing the lifestyle you want to live and building the career you envision for yourself. Factors like schedule flexibility, number of on-call days, quality of facilities, and administrative burden can all impact workplace satisfaction and your resulting quality of life.
Locum tenens physicians have easier access to important benefits
Locums work typically offers much greater control over your schedule, as you can choose the length, volume, and location of assignments you accept. It also frequently comes with fewer administrative tasks, giving physicians more time to spend with their patients. Working locums also allows providers to build valuable experience with a variety of systems, equipment, and patient populations.
Short-term contracts let you test-drive administrations, locations, and work environments with limited commitment. And, any reputable locums agency will cover the cost of travel and housing, which drastically reduces your expenses while exploring different parts of the country.
The basics of locum tenens compensation
Unlike most permanent positions, locum tenens physicians are usually paid on an hourly basis as 1099 employees (independent contractors) of a staffing agency.
Many of the same market factors that impact compensation for permanent positions are relevant for locum tenens physicians. Demand for your specialty, facility location, and the projected patient load all affect how much each assignment pays. Some contracts include sign-on bonuses or completion bonuses, and you may also receive higher pay for certain call shifts or exceptionally long workweeks.
Is locum tenens for you? Read The pros and cons of locum tenens to find out.
Does working with a locum tenens agency affect my compensation?
It’s possible to work locum tenens without an agency, but it can also be complicated. You’ll be responsible for establishing relationships, negotiating rates, and handling all logistics.
Reputable agencies establish long-term relationships with their physicians and secure competitive rates for assignments that align with their preferences for things like location or length of contract. Agencies also coordinate essential details, such as:
Malpractice insurance: Any worthwhile agency will cover you while on assignment, but not every agency includes tail coverage to protect you in perpetuity.
Licensing and credentialing: Top-notch agencies will have dedicated teams to help you move through the licensing and privileging process as efficiently as possible.
Travel and housing: Locums agencies generally pay for accommodations. Details like rental cars, Wi-Fi hotspots, and concierge-level service are what separate a good agency from a great one.
Taxes, retirement, and health insurance when working locums
As independent contractors, locum tenens physicians are responsible for their own taxes, medical coverage, and retirement savings.
Taxes as a locum physician: You’ll need to make estimated tax payments quarterly, and you’ll generally be subject to income tax in each state you work an assignment. Working with a CPA streamlines the process and is highly recommended.
Insurance benefits: Locum tenens physicians must pay for their own health and life insurance if they’re not already covered by benefits from a spouse or full-time position. Many full-time locum physicians opt for high-deductible HSA plans to reduce their taxable income.
Retirement planning: You’ll be responsible for your own retirement accounts like IRAs or SEPs. Self-employment offers unique opportunities and tax advantages — talk to a financial advisor to create a plan that works for you.
Partner with a locums agency that puts you first
The right locums agency can help you secure more competitive compensation, more desirable assignments — and most importantly — the fulfilling lifestyle you’ve worked so hard to achieve.
When you work locums with Weatherby, you’ll be assigned a personal consultant who’s trained in the nuances of your specialty. They’ll get to know your career goals and personal preferences and deliver assignments to match how, when, and where you like to work. And with a vast network of jobs in all 50 states, you’ll have options when choosing where to go next.
Get in touch with a Weatherby consultant today and start a new, more flexible chapter of your career.
