As supply and demand curves in physician staffing as well as physician demographics shift, locum tenens work is becoming increasingly popular amongst doctors seeking both side gigs and main gigs. Flexibility, an increasing number of physicians who don’t want to work full time, and higher daily rates compared to permanent positions are contributing factors. As our physicians explore or engage in this work, we have seen more questions in our online physician community about contracts. We’ve also seen many posts with both positive and negative experiences doctors have had working with locums staffing agencies. Unfortunately, we often see physicians signing locums contracts with terms that aren’t favorable, and then being stuck without recourse when a situation turns sour. Below, we cover what a physician locum tenens contract or agreement should include, contract red flags to look out for, and other best practices as you start a side gig or full-time locum tenens opportunity.
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The basics of negotiating locum tenens contracts and agreements
When doing locums work, you may have to sign multiple agreements, including between you and a locum tenens recruiting company as well as individual contracts between you and the locations where you’ll be working.
You’ll want to ensure the contract reflects your needs and expectations. While not all parts of a locum tenens contract may be negotiable, many may be, at least partially. If a locum tenens company or hospital system tells you something is non-negotiable, challenge that. They are likely just hoping you’ll accept it, and there’s a good chance that the standard terms may not be the most favorable for you. As with negotiating a physician employment contract, you won’t get anything unless you ask.
Additionally, remember to get everything you’ve discussed and agreed upon in writing. If it isn’t in your locums agreement, it’s not enforceable, so make sure that you protect yourself and have all terms included in the contract.
Locums contracts and master services agreements (MSAs) when working with a staffing agency
There are pros and cons to contracting directly with a hospital system or practice versus using a locums company to help you find jobs. We’ve discussed these in our physician’s guide to locum tenens.
If you decide to work with a locums staffing agency, you’ll likely be asked to sign a master services agreement (MSA) or a similar contract before they can offer you a position(s). This establishes a working relationship between you and the staffing agency and governs the terms under which you and the locums agency will work together.
Some agencies may want you to sign a contract as soon as you reach out to work with them, but you can also ask to wait until you’ve found a satisfactory opportunity before signing an agreement.
The MSA doesn’t relate to a specific locums assignment, but is an overarching agreement that will apply to all of the locums assignments you take with that company. The MSA can be addended for special terms you negotiate related to a specific assignment.
Each assignment that you agree to will then have a separate statement of work or work order type document that outlines the specifics of that assignment with things like location, rate, dates, and other terms you negotiate with that assignment specifically in mind.
Reviewing and negotiating a master services agreement (MSA)
While an MSA can be addended as needed, realize that your best leverage is usually at the time of the initial signing.
Remember that the staffing agency is paid by the healthcare facility or practice that you will ultimately be working for. As such, the primary customer they need to make happy is not you; it’s the healthcare facility, so in situations where objectives don’t align, the staffing agency may not always be your best advocate.
This is one of many reasons we recommend having a contract review attorney familiar with locums contracts go over the agreement before you sign it. Since they are paid by you, their job is to advocate for the best terms for you, not the healthcare system or the locums company.
What to negotiate in a master services agreement (MSA) with a locums company
A few specific terms/clauses in a master services agreement to pay attention to:
Restrictive covenants or noncompetes
Some locums contracts may be worded to provide them with exclusivity. Others may not impose as restrictive of language, but can still come with limitations that can prevent you from working for other facilities or staffing agencies. Additional restrictions can prevent you from accepting other locums contracts or even from doing other work. Be very careful what you sign - these can absolutely be negotiated with most agencies if they want you badly enough.
Evergreen clauses and term
Some terms within a MSA may contain an evergreen clause. This allows the contract to automatically renew for a set specific period of time until one of the parties provides notice of a desire to terminate. With an evergreen clause in place, the agreement can remain in effect indefinitely. While there can be some advantages to an evergreen clause, there are disadvantages for doctors as well. For example, we discuss in the compensation section that without an inflation agreement attached, you could be locked into a rate that will effectively become a pay cut every year your agreement automatically renews due to inflation.
Termination clauses
Before you sign an agreement, you want to make sure you understand the conditions under which both parties are able to terminate the contract, and what constitutes a ‘with cause’ versus a ‘without cause’ termination.
This should also include how much notice needs to be given, and separate terms for when a contract is ended both with and without cause. How the contract is terminated has important implications for things like noncompetes, tail insurance, payments owed, and what expenses you may need to pay back such as licensing and credentialing fees, so you’ll want to make sure there are not a lot of reasons outside of gross misconduct that would allow you to be terminated with cause.
You’ll also want to maintain the right to find another staffing agency if yours isn’t providing you with locums opportunities that meet your objectives.
Another unique situation to negotiate if you feel that you may eventually want to transition to a permanent position with one of the locations you do locums at is under what conditions they’ll let you do this. Many times this will actually be in their independent agreement with the hospital system or practice and that will be the party responsible for navigating that situation, but it’s worth asking about.
Malpractice insurance and tail insurance
In most cases, the policy you hold at your primary job as a doctor won’t cover the work you’re doing at other institutions. It’s critically important that you cover yourself with an adequate malpractice insurance policy.
Many locums staffing agencies provide their physicians with malpractice coverage, but you’ll need to decide whether it’s adequate. Make sure the policy limits and terms are clearly outlined in the contract or agreement. A common arrangement is a policy that provides $1 million in coverage per claim, as well as a $3 million aggregate total coverage limit for a one-year policy term. There are policies with maximum payout limits that may apply to all physicians working under the locums company, so you’ll want to understand how many physicians are covered under the policy and whether judgments against them will result in limits to your coverage.
As a reminder, there are different types of malpractice coverage. If the policy offered is claims made coverage, negotiate to see if you can get tail coverage added as part of your contract for the assignment. Some companies will have policies that will continue to cover you for as long as their company is in business, but be wary of this with new companies without an established track record, as if they encounter financial trouble and shut down, you could be left holding the bag on purchasing the tail insurance policy.
Learn more about malpractice insurance and tail coverage for doctors.
Licensing and credentialing
Know what expenses are covered by the locums agencies. If the locums agency isn’t willing to sign a blanket statement about this, you can also negotiate this part in the individual statement of work for an assignment you are taking in an area that you aren’t currently licensed in or that requires certifications you don’t have for credentialing.
In addition to costs, know who does all the paperwork and what other support is provided through these often tedious processes. This will help you meet the deadlines to ensure that you can start on time.
Carefully note if there are any conditions associated with the agency covering the costs. For example, some may stipulate that if you don’t work a certain number of shifts, you will owe them the money back.
Related PSG Perk (if you are paying for the licensing):
Jennifer Lincoln at Blue Shift Licensing (jen@blueshiftlicensing.com) offers PSG members 10% off licensing services through our advertising relationship! They are experienced and have helped so many physicians and companies get their licensing completed efficiently.
Payment and reimbursement terms
Your contract should define how soon after you complete your locums shifts you will get paid, and what the recourse is if it is not paid on time.
Additionally, you’ll want to know the policies and procedures for payments. Most companies will tell you exactly what logs and other paperwork you need to get to them and by when to get paid in a timely manner.
Understand the procedures you will need to follow to get reimbursed for any expenses not initially paid for by the locums company.
Travel expenses and arrangements
Bigger staffing companies often cover travel arrangements or may have group discounts or arrangements with particular airlines, car rental companies, or hotel chains. They may do the bookings for you, or ask you to do them and then get reimbursed.
If you are handling the travel arrangements, pay particular attention to limits on the amounts you can spend on travel or hotel, and make sure that you’ll be comfortable with the options that will be available to you at those price points.
The same goes for meals and other expenses. Most companies will have caps or guidelines for reimbursements for these as well.
Know these things ahead of time and negotiate them up if you need to.
Of course, if you can’t get something reimbursed, assuming you’re being paid as a 1099 physician, know that non-reimbursed travel expenses are often tax deductible. Meals are not completely reimbursable.
Learn more about tax deductions for 1099 contractor locums physicians.
What to negotiate in a contract when working directly with the hospital instead of using a locums company
Overall, most of the things that you negotiate with the locums company will be similar to what you should negotiate when working with the hospital directly.
However, some things can vary significantly. These include how malpractice insurance is provided, who pays for expenses, and what noncompetes with other nearby institutions may be.
What to negotiate in a locum tenens contract or statement of work for a particular assignment
Whether you use a staffing agency or work directly with a healthcare system, there are several parts to a locums contract to be mindful of and to negotiate in regards to a particular assignment.
Locum tenens contract term
The term will dictate how long terms you agree to in the contract remain in effect.
Shorter contracts offer more flexibility, while longer contracts offer more stability. Pick what works for you.
Schedule, duties, and assignment location
Your schedule, duties, and hours should be explicitly defined before the start of the locums assignment. If this is not done, you may quickly find that the assignment is not what you perceived, and could be asked to work more hours or do things that you are not comfortable with.
You’ll want clearly defined terms for the following, especially when engaging in a long term contract:
Standard shifts and/or hours
Location of the shifts, especially if multiple facilities or offices
What work is expected of you, including typical patient volume, types of procedures you will be expected to perform, etc.
Holiday coverage responsibilities
Weekend requirements
On-call responsibilities
Supervision responsibilities for non-physician clinicians
What support staff or backup you’ll have
Extra pay associated with any of these responsibilities
Extra pay if additional work is requested of you
Each of these things are common causes of frustration or conflict that we see in our communities. You should feel comfortable with the workload as well as your ability to deliver care consistent with the standards you expect for your patients.
Compensation and payment terms
Obviously, compensation matters. You’ll want to negotiate the best rates possible for yourself.
Determine whether you are paid based on a daily rate, an hourly rate, or based on productivity.
If your schedule includes weekends, holidays, or on-call work, consider shift differential and make sure you negotiate specific compensation/rates for these as well. Make sure you negotiate when you should be paid extra - for example if you have to come in for more than a certain number of hours on call or if you are asked to work extra shifts or hours beyond what you were originally scheduled for.
Understand how you’re paid for administrative time or for any training that you have to do within the system prior to starting.
Your compensation rate, regardless of the structure, should be based on local market forces. This is another area where a local physician contract review attorney can be an invaluable resource.
To get a baseline idea, we have compensation data for doctors to use in contract negotiations that is free to all members of our online physician community. This includes a dedicated locums compensation database with information not just on pay rates by location and specialty, but details of their locums gigs so you can make apples to apples comparisons, as well as our members’ experiences with different locums companies. You can also explore aggregate statistics on locum tenens compensation for doctors.
Don’t be afraid to negotiate for a fair rate. You bring unique skills and experience to the job, which provides value to employers. You are worth asking for the value you provide.
If you’re working under a master service agreement with a locums agency, it may have an evergreen clause as discussed above. If so, you’ll likely want to negotiate an inflation adjustment, or escalator, into your agreement. This way, if the agreement automatically renews, your negotiated rate will increase by a set agreed upon amount for each term, so you don’t end up taking a pay cut with the reduced purchasing power of your earned income thanks to inflation.
Cancellation terms
There should always be some provision that addresses what happens if the facility decides to cancel your contract. Staffing needs can change due to a number of reasons, and as we’ve seen in many accounts posted by members of our physician communities, a facility may decide they don’t need you anymore, sometimes on short notice. Remember that you have significant opportunity costs in taking the assignment, in that you have to plan around it, may decline other opportunities, or have used vacation time at your main gig for it.
Similarly, a facility will be depending on you to show up, so they’re going to want some protection against you deciding to cancel the arrangement.
Review and discuss the notice period required for both parties should the need to terminate the agreement arise with a specific time frame and how notice should be given. 30 days seems to be pretty standard based on what our members say.
Termination
Sometimes, an opportunity just isn’t a good fit.
If you need to exit a gig sooner than what you’d committed to, you’ll want the conditions in which you can do so, and what, if any, consequences the facility may be able to pursue. Similarly, you’ll want to know what conditions they can terminate the agreement under.
Discuss both with cause/for good reason terms and terms for termination without cause. These are often different and can determine your rights in each situation, as previously discussed above.
Without cause: either party can terminate the assignment for any reason or no notice at all.
For cause: the facility can terminate the assignment, sometimes immediately or after a “cure period” where you are given the opportunity to correct a situation.
Try to avoid vague clauses like “failure to perform duties to reasonable satisfaction,” as you don’t want to give facilities an easy reason to have an out.
Buy-out terms
You’ll also want to know what happens if both parties have a mutually beneficial experience to the point where they may want to cut out the middleman and contract directly with each other. Especially with long-term contracts, the opportunity may arise where the facility decides they want to bring you on in a permanent job placement instead of temporarily working for them with a locums assignment. Plan for this ahead of time with reasonable clauses that allow you to pursue a good situation.
Boilerplate provisions, such as hold harmless or force majeure verbiage
This legal jargon is often in tiny print that’s difficult to read and may seem like it continues on forever. Given that it looks standard, like the “boilerplate” name suggestions, physicians may be tempted to gloss over this part of their locums contract when reviewing and signing. Don’t be that physician.
We’ve written an entire article about indemnification clauses and “hold harmless” wording, which is becoming more standard in physician contracts. These protect the facility over the physician, and can leave you with all the liability. If you can negotiate out of an indemnification clause, it’s recommended.
Another section to pay close attention to and read multiple times is the force majeure verbiage, which may allow them to get out of contractual terms in unique situations and leave you without the power to enforce your contract.
A physician contract review attorney experienced in locums agreements can help you to negotiate within the clause to something that’s more reasonable and limited in scope.
General tips for negotiation
Negotiating doesn’t come naturally for many physicians, but it’s an important skill and critical for physicians when taking on new side gigs and job opportunities. There are some negotiating tips and strategies we recommend for all doctors.
When at all possible, don’t throw out the first offer. Let them set the baseline for negotiations, just in case they’re thinking higher than what you’re prepared to accept. And remember that their first offer is rarely their best offer.
We’ve covered this extensively with our article on negotiation tips, tactics, and strategies all physicians should know and use.
Conclusion
Taking the time to review and negotiate a locums contract before agreeing to an assignment can save you frustration and headaches on the backend of dealing with a poorly negotiated contract. With the labor storage of physicians in healthcare, we want to remind you again to know your worth. Don’t underestimate your years of education and training.
Putting together a comprehensive contract for your locums work, especially if you’re negotiating a master services agreement with an agency, is the best time and opportunity to define the best arrangement that will get you the work/life balance you desire.
Additional locums and contract resources for doctors
Search our database of local contract attorneys for physicians if you need help reviewing your locums contract.
Explore our physician’s guide to locum tenens for more information about locums work.
Join our Physician Side Gigs Facebook group to sign up for our locums database to find out about future opportunities that meet your criteria. Both the group and database are free to join, but you must be a physician.
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