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.
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.
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.
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.
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.
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.
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.
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.
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.
Full webinar transcript
Read the full transcript from the compensation webinar here:
Kim: Hello everyone. Welcome to today’s webinar, a physician’s guide to competitive compensation. The team here at Weatherby Healthcare is thrilled to have you join us for an informative overview of the physician compensation landscape from the eyes of one of our experts, Ronnie Davis. Not only does Mr. Davis have an extensive educational background with two master’s degrees and a PhD in progress, he’s also an expert in the healthcare staffing industry who has spent over a decade helping physicians uncover their true worth and achieve their goals. During today’s webinar we encourage you to use the Q&A feature to ask questions which we’ll answer near the end of the presentation. And feel free to use the chat feature to weigh in on any questions we ask. And with that, Ronnie, the room is all yours.
Ronnie: Thank you, Kim. We at Weatherby want to thank you for joining us today to learn more about compensation. We know that compensation is important to all of us. In fact, it’s the number one reason why physicians choose to do locum tenens. Now the pay structure for a locum tenens provider may look a little different from some of the traditional ways you are compensated. Our goal today is for you to have a full understanding of how that works. So, lets dive right in.
Let’s look at our goals for today. We will review factors impacting compensation. Now pay is not the only thing that impacts your job satisfaction. We will explore those factors as well. And lastly, we want to highlight the differences between a locum tenens pay structure and some of those traditional pay structures.
So, we’re going to begin today by looking at Medscape’s annual reporting data which found that 52% of physicians are satisfied with their income. Now that was kind of a shock to me because that means almost half of physicians are not satisfied with their income. Now it’s understandable that equitable pay is correlated with job satisfaction and even your intentions to stay with your current practice, but physicians have reported that pay can even impact their overall health, so that’s how important compensation is. Now what about that other 48%? Let’s take a look at that. So, 48% of physicians are dissatisfied with their income. Now lets look at some factors that lead to that. Physician shortages have been something that’s been increasing over the recent years due to early retirement, burnout. One of the numbers that we’ve seen is that retirements are actually outweighing new physicians entering the field and that’s leading to an increase in workload, and many times physicians aren’t compensated extra for that increased workload, so that’s a big factor driving dissatisfaction. One of the other common complaints we hear is about medical reimbursements, that they’re down, especially with Medicaid and Medicare. Even insurance providers are reducing the payments to physicians and facilities so that is impacting compensation. And also, there is an increase in competition from allied health professionals where they are servicing patients sometimes at a lower wage than what a physician would do.
So, let’s take a look here and I actually want some audience participation. So, we’re looking at physician specialties that are most satisfied with their compensation. I’d love for you to participate by typing into the chat which of these specialties do you think is the most fairly paid. Come on, don’t be afraid out there, let’s see what you think. Which one of these specialties do you think gets paid the most? I see Ken thinks it’s cardiology. I see Royce, cardiology. Well, I’ll tell you what – oh, I see someone said dermatology. Okay. It seems like cardiology is a popular one. Plastic, anesthesia, okay, OB. Well, I can tell you you’re all wrong. It’s actually psychiatry. Does that surprise anyone? It didn’t really surprise me because psychiatry is definitely needed these days.
Now, understanding your compensation, why is it so important? One, it influences your ability to negotiate affectively. It also guides the career choices that you make. Understanding whether your pay is fair and equitable, we just saw that that leads to job satisfaction and it can even lead to better health. It influences the way you go about planning financially. And just your overall career satisfaction it impacts. So, lets take a look at the factors that impact compensation on our next slide here. So, of course experience plays a big role. What’s that old saying, “Practice makes perfect.” Well, at least practice makes better so experience has a big factor when it comes to how much you are compensated. And of course, your specialty, that’s a big one. The location that you’re in, and there’s also some other market factors that impact compensation. One thing that we saw in the industry was a big flux in provider pay during the Covid pandemic. It impacted specialties differently. There were sharp pay increases in different specialties like hospitalist, critical care, there were definitely increases because demand increased. But especially in the beginning of the pandemic we saw where elective surgeries were paused. That actually lowered the demand for some specialties like orthopedic surgery and that impacted compensation as well, so market definitely plays a factor there. Now, if you look there, below, we’re going to be looking at the five common compensation structures that you may come across. Of course, fee-for-service, per diem. Now, salary, we’re all familiar with that one. Of course, there’s combinations of multiple structures. Hybrid. One interesting one that stands out to me is productivity based pay. That’s a big one. Now some physicians see that as a big benefit, you get paid for what you do, but others can see it as a hinderance. Why? Now, I’ve heard stories from physicians where a lot of their annual compensation was tied up in meeting a certain RVU quota and the RVU quota could be difficult to obtain at times, so that puts an impact on your compensation and that adds a lot of extra pressure to meet those goals.
Now, before we go to the next slide I want some more audience participation. We’re going to be looking at states with the highest salaries for physicians. I want you to throw in the chat which state that you think pays the highest salaries for physicians overall. Texas, okay. North Dakota, Midwest states, South Dakota, California, Georgia, Hawaii. We’re all across the map there. Desolate states. Washington state, Montana, southern states. Let’s take a look at it. Mississippi, number one. A lot of you said southern states and Mississippi is number one when it comes to highest physician salaries. Happy to see Florida on there. That’s where I’m joining you from today. Not only do you get paid well but you’ve got the beaches too so that’s a good one. Let’s move on.
So, we talked about factors that impact job satisfaction other than money. Flexibility, which leads to better work/life balance. We’ll talk a little bit more about how locum tenens provides this later. But of course, there are other factors that lead to job satisfaction. The vacation time that you have, professional development, funding for your research, keeping up with your CMEs, your staff support – how critical is that – the facility, the equipment, the reputation, culture fit – that’s an interesting one. Not only do you want to be a culture fit within the hospital or facility that you’re at but also with the local patient demographic. And of course, location. Doesn’t everybody want to be in Florida? An interesting one is telecommute opportunities. Now, I started in this industry about nine years ago and I’ll tell you that I rarely heard about telecommute opportunities, but now those offerings are increasing and they’re available in nearly all specialties and I believe that will continue to grow in the future.
It looks like we have a request to go back a slide. Yeah, we can do that. Let’s go back to the states with the highest pay. Once again, Mississippi, South Dakota, Kansas, Vermont, Nebraska, West Virginia, Colorado, Florida, Missouri, and Delaware.
So, every year CHG Healthcare, which is actually Weatherby’s parent company, conducts a locum tenens awareness and perception survey. Now, 82% of physicians said they had a positive experience during locum tenens. I’d like to share a comment from one of those 82 percenters. Our physician, Dr. Caruso, she’s a pediatrician in Pennsylvania and she told us that locum tenens not only gave her complete schedule flexibility but also provided her with enough supplemental income that she was able to purchase her dream home. You know, it’s stories like Dr. Caruso’s that makes us proud of the work that we do.
So, let’s look at those benefits of doing locums tenens. Now, our physicians have told us that the number one advantage of doing locum tenens is competitive compensation. But as we talked about before, another huge benefit is schedule flexibility. Now, locums also reduces some of the administrative burdens that can come with traditional structures. As we tell our physicians, you help your patients, you complete your charts, and you go home. So, it takes out all those extra things you may have to do as a permanent employee. Another big factor is limited commitment. Have you heard stories of someone who signed a perm contract and regretted it, maybe even moved their entire family there? Well, locum tenens provides flexible commitments and sometimes it’s as little as 30 days, kind of like a try before you buy. Another big one is paid travel. I have an interesting story from when I first started. When I first started here nine years ago I worked on the orthopedic surgery team and I worked with a physician who was out of Georgia and he wanted to vacation in northwest Florida but he had his own practice and he did not want to sacrifice income. So, we were able to find him a locum tenens provider to cover his practice while setting him up with call coverage with one of our clients in Pensacola. He was even able to take his family with him so that’s a win-win.
Now, here is some compensation comparison between fulltime locum providers versus permanent only physicians. Now, data provided to us by our friends over at Locumstory found that locum tenen physicians can make up to 50% more than perm only and that’s an average across all specialties. And the Medscape data supports that finding. Self-employed physicians make on average $374,000 annually and employed physicians make $344,000.
So, now we’re going to dive into some key aspects of locum tenens. Now you see here, locum tenens providers are employed by staffing agencies, not the facility, so we are the ones who pay. You’re a contractor. Weatherby does not take taxes out and we’ll touch a little bit on taxes later. Now pay is usually hourly or a daily rate but it can also include bonuses, overtime, increases for working holidays as well as some other circumstances. We also offer reimbursements for additional state licenses and DEAs. We have an excellent medical support staff who will assist you with obtaining those items.
So, let’s look at some factors that impact locums’ pay. Now, the amount we can pay physicians is dictated on several factors starting with demand in your particular specialty. Now, location, type of facility, all those things matter. A small rural based facility may pay different than one in a major city. The skill set that you need, the patient load that the hospital or the facility sees, the type of shift needed. Day shifts often pay differently than night shifts. Now, a big one is job match. An example of this would be a facility who needs, say, two weeks per month of coverage. Now, if you can provide one week of coverage we may still be able to use you but that also means that ourselves and the facility has to spend the resources to find someone to cover that other week and that could impact your compensation. Now here’s a spicy one. Will the agency impact your compensation? Well, I’ll tell you that choosing your agency does matter. Now, reputable agencies are in a better position to negotiate with facilities than some others. Many times, we are the ones educating the facility on what’s happening in the market and what’s dictating pay.
Now, malpractice and tail insurances, those things are covered by Weatherby, so no other additional coverage is needed. We also have an experienced medical support staff that assists with licensing, credentialing, and housing privileges. Now, because we do these things so much we work with so many facilities and physicians, we have solid relationships with the board so we can often get paperwork pushed through ensuring that you start your assignment on time. Travel and housing are also taken care of directly by Weatherby as we have an internal travel agency and that also helps with collecting some of those travel awards or those frequent flyer miles; we help with that. But of course, we do not outsource for these services, these are directly in-house, so it allows us to minimize the costs and that positively impacts our ability to pay competitive rates.
Let’s jump back to taxes. We talked a little bit about this. Now, we mentioned a couple of slides ago that you’re an independent contractor when you’re working locum tenens. Weatherby does not take out taxes from your pay. We do offer physicians the ability to be paid as an entity, which comes with some big tax advantages but I would encourage you to speak to a CPA for more details on that. The same can be said for medical insurance and retirement plans. Those are not offered to 1099s but experts in those fields can guide you in what options fit your particular situation.
So, let’s jump back to the questions that were asked. Now, someone said, why do some locum agencies offer more pay for the same position than others? Now, I hear that question often and we talked about physicians being employed by the locum agency, and as the employer it is on us to determine pay. Pay rates are largely dictated by how much the facility is willing to pay us and we negotiate on your behalf and that requires us knowing what a competitive rate is for any particular physician. Now, we want to give you the best chance at being selected by the facility as you may be competing with other candidates, and many times you are. So, if you price your services too high you may be passed over for another qualified candidate who is willing to take a lesser pay rate.
Will I make more money if I work directly for the facility? Yeah, please keep your questions coming if you have more. So, let’s answer this question. Once again, will I make more money working directly for the facility as a contractor? Now in some cases, you may, but what I would encourage you to do is weigh the options equally. Now many times, when you work directly for a facility that means you’re covering your own malpractice. That can be very expensive especially if you have to include tail coverage with that. The other questions you have to ask are, is the facility going to pay for your flight if you need one, a rental car, hotel, reimburse you for mileage if you’re driving your own car? We also reimburse you for new state licenses and DEAs if needed, so you have to consider that as well. And besides money, is the value of your time. Time spent finding opportunities. Many opportunities actually are not even advertised and are only sent directly to the staffing agencies. We will do all that for you. Weatherby also assists with your paperwork so that will save you time. If you’re working directly for the facility you may have to complete all those housing privileges and things like that on your own. Just make sure that you’re comparing apples to apples.
Let’s see, we got asked another question. Can I be paid for the amount of work that I will be doing? So, that kind of goes back to what we saw earlier when it came to traditional compensation structures. Now it is rare that locum tenen providers are compensated based on productivity. Now Royce, if your concern is receiving equitable pay based on volume, our consultants would be able to give you an idea of the expected volume. In many cases, you will have a chance to speak directly with the facility where you can ask about volume, case type, and more before committing.
Do we have any more questions out there? Don’t be shy now if you have questions. Dr. Chang asked, “What’s the application process like?” And that’s a good question, Dr. Chang. To be honest with you, it really depends on the facility. Sometimes the application process is very quick and sometimes it can be a little bit cumbersome, so that is something that our specialty experts will be able to let you know, so it just depends. Now what I told you before is that we have a medical staff services team here who helps with many of these things; it doesn’t mean that there won’t be any paperwork for you to do, but we do try to prefill as much as we can to minimize the paperwork for you.
I want to go back a little bit, it looks like – actually one thing I forgot to mention is that if you have more questions about taxes and setting yourself up as a business so that you can take advantage of those tax incentives, we’ll be actually having another webinar before the end of the year that will be going over that so we’ll be able to let you know more then.
Let’s see, Dr. Allen said, are there international opportunities and if so, what differences are there in getting set up for them? Is the pay much different? That’s a great question, Dr. Allen. In fact, there are international opportunities. Now, Weatherby Healthcare does not actually have international opportunities for the most part, but one of our sister companies, Global Medical Staffing, definitely does. But you can contact us here at Weatherby or you can reach out to us at our website CHGhealthcare.com or Weatherbyhealthcare.com and we can put you in touch with that department. As far as pay goes, pay differs, it just really depends the same as working in the states. I can’t tell you if it’s different or not, it just depends on where the facility is and what specialty it is and what the actual need is, but we definitely can set you up with some international opportunities.
Let’s give it another minute and see if anybody has some last minute questions. If you can’t think of your question right now, you can definitely make sure you reach out to us, you can find me as well, you can find me on LinkedIn, you can reach out to me there, Ronnie Davis. You can email us, you can ask for me here, we can definitely help you out.
Someone asked, what is the trend for telehealth opportunities? It’s going up, I’ll tell you that. In all specialties. I’m shocked. The opportunities are popping up, like I said, in all specialties, so if that is something that you are interested in definitely reach out to us. We can definitely help you know what opportunities are out there for telehealth and set you up and see if it’s something that you’re interested in. But they’re popping up. No matter what specialty you’re in, we probably have some opportunities for you.
What resources are best to review to know what is a reasonable pay based on specialty? Well, we use Medscape data a lot. You know, that’s something that we showed here so that’s something that you can definitely look at. But like I said, remember, a lot of times we’re talking about annual pay and even myself, I’m not exactly sure what I get paid hourly or what I get paid daily, I’m also salary. So, all I would tell you is that when you’re comparing Medscape’s data or any other data out there and they’re showing you annual pay rates, make sure you’re taking that into account when you’re looking at locum tenens positions because like I said before, locum tenens usually pays hourly or maybe a daily rate, so just make sure you’re comparing apples to apples. But yeah, I would check out Medscape’s data. You could also check out Locumstory as well and you can also speak to one of our specialty trained consultants here. Our consultants are trained in individual specialties and they can tell you kind of what the average pay is for locum tenens as well.
Can we get access to past tax seminars? That’s a good question, Dr. Parker. I am not sure but that is something that we’ll definitely be able to send out and let you know. But I would definitely encourage you to attend the one that we’re going to have later on this year and if you can’t attend, don’t worry, we do record these and we will send it out. We will email it out for you.
Alright. So, once again, if you have more questions, please feel free to reach out to us. I would encourage you to get in contact with one of our specialty trained consultants that can provide you with additional information. Like one of the questions asked, we can let you know what the average pay in your specialty is right now, we can let you know what job openings we have, also telehealth opportunities, and more. Make sure you visit our website at weatherbyhealthcare.com. You can also see what our current job openings are in your particular specialty. We look forward to speaking with you. And once again, I want to thank you for joining us today. It is our pleasure to have you. We thank you. And thank you for everything that you do to make our communities healthier.
Get in touch with a Weatherby consultant today and start a new, more flexible chapter of your career.