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Navigating Locum Tenens Contracts: A Physician’s Guide

Mar 20, 2024

There are a good number of you in our SimpliMD community who do short-term independent contracting, also known as locum tenens. Therefore, I thought it would be a good idea to review common considerations when assessing and negotiating a locum tenens contract.

You learn a lot of things during medical school, residency, and fellowships — but how to interpret and negotiate lengthy professional contracts isn’t usually one of them. Physician contracts are notoriously complex, and the agreement you sign affects everything from your earning potential to your work/life balance. So how can you tell an average offer from a great one and make sure your physician contract negotiation experience is a successful one?

In collaboration with Weatherby Healthcare and Contract Diagnostics Founder & CEO Jon Appino and Dr. Kathryn Sarnoski, created a webinar Physician Contracts 101: A Practical Approach to Understanding and Negotiating…from a Locums Perspective offers expert tips on reviewing and negotiating your offer, plus it provides important insights on how locums contracts differ from permanent positions.

The basics of contract review for physicians

Whether it’s a long term-job, or a short-term job, the contract you sign can be the difference between a dream job and a waking nightmare. I suggest you hire Contract Diagnostics to review your contract. They are part of our SimpliMD network and will provide our community members with an inexpensive contract review that is worth every dime—go here to let them help you.

To make sure you end up with a favorable agreement, there are a handful of key areas that you should consider:

Compensation and benefits: Make sure the salary, bonuses, and other incentives align with your expectations and professional goals. (For more in-depth info on payment structures, check out our previous webinar: Physician’s Guide to Competitive Compensation.) Consider benefits like vacation time, sick leave, health coverage, or retirement planning, and be sure you understand how they’re structured and when they become available.

Work schedule and expectations: Pay close attention to the number of hours you’re expected to work, the call schedule, and any after-hours duties.

Non-compete clause: Don’t risk compromising your future employment prospects — look closely at the length and geographic scope of any non-compete clauses.

Duration and termination: Make sure you understand the terms for renewal, termination, and any repercussions if you decide to move on before a contract is completed.

Malpractice insurance: Ensure any provided policies will adequately cover you in case of a claim.

Intellectual property ownership: If you’ll be involved in research, it’s important to know who owns the rights to any IP you create during the terms of your contract.

Miscellaneous clauses: This is where you’ll encounter things like non-disparagement clauses, non-disclosure agreements, or arbitration agreements. Become familiar with their terms and how they could impact your employment or future prospects.

What’s different about locum tenens contracts?

Locum tenens contracts are work agreements between a physician and a locums agency. The terms of most locums contracts are generally pretty similar, but certain things are negotiable, including:

Compensation rate: This is the most frequently negotiated term. Ensure your hourly or daily rate is satisfactory, and pay attention to reimbursements for things like travel or meal stipends.

Scope of practice: Make sure you’re clear on what’s expected of you during an assignment, and what support staff will be available for patient care or administrative tasks.

Travel and housing: Understand who’s responsible for arranging (and covering the costs of) flights, lodging, and rental vehicles.

Go deeper: How locum tenens travel and housing works

Payment terms: These typically range from 15 to 90 days. Electronic transfers are usually much faster than paper checks.

Termination and cancellation: Review any termination procedures and auto-renew clauses to ensure you have plenty of notice, and that you’re not locked in for longer than anticipated. Make sure you’re clear on any procedures and penalties that apply if you or a healthcare organization decide to cancel an assignment.

Contract buyouts: If you decide to accept a permanent position, you may be responsible for buying out your locums contract — though it’s common for hiring organizations to cover contract buy-out expenses. Some agencies will decrease your buyout if you agree to keep working locums for a certain amount of time before starting your new role.

Malpractice insurance: Know where your coverage is coming from — the facility, your agency, or your own policy — and what the policy limits are. Be sure to ask about tail coverage, especially for short-term assignments.

Explore more: What to know about Weatherby Healthcare’s malpractice coverage

A few of the terms in locums contracts are typically non-negotiable, including terms related to cancellation of assignments, malpractice coverage amounts, and indemnification policies. A reputable locums agency will take the time to explain these terms in detail and make sure you understand the agreement you’re signing.

How to negotiate your offer

Many people find negotiating uncomfortable, but it’s an essential part of securing a contract that meets your needs. Never assume an employer has your best interests in mind. Take your time reviewing an offer, ask lots of questions, and consider the following:

Know your worth: Research compensation packages for physicians in your specialty and geographic area so you have a frame of reference as to what’s fair. If you want to know what you are worth, for less than $300 Contract Diagnostics will do a comprehensive compensation analysis for you—I highly recommend this service!

Prioritize your needs: Every individual has their own priorities when it comes to compensation, scheduling, benefits, and other factors.

Consider the entire package: Salary is only part of the equation. Consider health and retirement benefits, paid time off, and your work schedule and scope of responsibilities.

Negotiate from a position of strength: If you have multiple offers or an in-demand specialty, you’ll have the leverage to ask for more. In more competitive job markets, you may have less wiggle room.

Ask for what you want: Be clear, confident, and specific in expressing your needs and expectations. Never be afraid to ask, but be willing to compromise if necessary.

Understand the terms: Don’t sign until you fully understand everything in the contract, including termination clauses, non-compete clauses, or other restrictions.

Consider legal advice: If you’re unsure about any part of the agreement, ask an attorney specializing in physician employment contracts to take a look at your offer.

Always be respectful: Be prompt, professional, and courteous in your responses, even if the negotiation doesn’t go as planned. Don’t compromise future opportunities by burning bridges.

How is negotiating a locums offer different?

Staffing agencies are aiming for a win-win agreement that benefits both the physician and the agency. A relationship with a trusted locums agency is a huge asset when reviewing and negotiating agreements, especially when they’re experienced with your specialty and preferred job markets. Locums agencies can help with:

Negotiating contract terms: Great locums agencies remain proactive in securing fair compensation and reasonable contracts for your services.

Identifying red flags: Locums consultants have seen a lot of contracts, and they can provide support during the review process to point out any abnormalities or areas of concern.

Acting as a liaison: Staffing agencies streamline communication between you and the client organization and ensure contracts and any logistical details are finalized efficiently.

Contract negotiation resources

Below are several resources provided by Contract Diagnostics to accompany the information provided in their webinar: