What is Locum Tenens Coverage?
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 while a new, permanent physician is searched for. The appropriate number and mix of physicians allows 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 Lucidity, and sign a locum tenens contract. 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, there are several key areas in the contract that should always be considered before signing. Make sure to search the contract for key details and read everything as carefully as possible in order 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 employee or 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 employee or contractor to sign a non-compete, they may terminate or choose not to hire you if you refuse to sign.
There are three terms that are pretty standard in the majority of locum tenens contracts. First, the contract will most 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, 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 (maximum of two years is standard) and the geographic area it covers. Third, the contract will generally stipulate once you sign the contract with the agency, you may not decide to work directly with the hospital or practice for that same assignment the agency shared with you. It is important to read the language carefully and be wary of locum tenens agreements that have excessively long timelines or contain broad, open ended language.
Payment Options as a Locum Tenens Provider
Salary 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 an locum tenens orthopedic surgeon should expect a vastly different rate compared to a locum tenens pediatrician In addition, Healthcare facilities in smaller towns won’t be able to offer the same locum tenens salary for physicians that 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 on 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 instead 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 that you received assignments through from the prior year, and 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 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 serve 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 expenses will be covered by the healthcare facility or the physician. Make sure you understand what is and isn’t 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, 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. Make sure 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 that occurred during the contract.
Additionally, some locum tenens contracts allow you to be covered under the hospital’s malpractice policy or may require you to produce proof of independent 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 into the agreement expecting that it will 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 locum tenens 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 time period 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 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 as a locum tenens can be a rewarding 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, always make sure you review the locum tenens agreement yourself and with an experienced legal counselor.