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The Pros and Cons of Locum Tenens for Hospitalists


 

What is Locum Tenens?

The phrase “locum tenens” is Latin and translates to “placeholder.” It can refer to anyone who temporarily fulfills the duties of another person. In the medical world, it refers to staffers who work for a healthcare organization for a defined period of time.

Michael Manning, MD, medical director of Murphy Medical Center in Murphy, N.C., needed a doctor. Tasked with building the hospitalist program for his 57-bed hospital 90 miles from the closest city, Dr. Manning turned to a locum tenens firm for help, and the company seemed to find a perfect fit. They found a physician who wanted to commit to a one-year stint. The physician was eminently competent, had lined up housing for the year, and, perhaps most important, was eager to serve the residents of seven rural counties in western North Carolina, northern Georgia, and eastern Tennessee.

Then the new hire had a change of heart and backed out of the position. As medical director, Dr. Manning has taken on up to 10 hospitalist shifts a month to cover the absence, and the hospital-employed group is now looking at paying temporary staffers even more as the nascent group struggles to reach its optimal staffing level. To Dr. Manning, the hope-to-heartburn scenario typifies the “two-edged sword” that is locum tenens.

“Overall, I would say it’s a necessary evil,” he says. “You’ve got to have your service staffed. You can’t go without physicians filling slots. The evil for us is the cost.”

The cost of paying temporary physicians over the long term can be overwhelming for cash-strapped hospitals and health systems. But that’s done little to stop hospitalists from becoming the leading specialty in the temporary staffing market, according to a proprietary annual review compiled by Staffing Industry Analysis of Mountain View, Calif., on behalf of the National Association of Locum Tenens Organizations (NALTO). Hospitalists accounted for 17% of locum tenens revenue generated in the first half of 2011, the report states. The only other specialty in double-digit figures was emergency medicine, which tallied 14% of the $548 million in revenue measured by the report. Survey respondents reported year-over-year revenue growth of 9.5% in the first half of 2011, with aggregate revenue generated by hospitalists jumping more than 34%.

A survey of hospitalists released in October showed that nearly 12% had worked locum tenens in the previous 12 months; 64% had done the work in addition to their full-time jobs.1 The survey, crafted by Locum Leaders of Alpharetta, Ga., was among the first to capture just how prevalent the practice of temporary staffing is and what motivates physicians to do the work.

The reasons hospitalists choose to work locums are as varied as HM practices. In the short term, hospital-based physicians are looking for geographic flexibility, higher earning potential, and the chance to “try something on for size before they buy,” says Robert Harrington Jr., MD, SFHM, chief medical officer for Locum Leaders and a SHM board member. Early-career hospitalists can use temporary work to determine what they want to do with their careers, while older physicians can use it to finish their careers focused solely on clinical care.

Regardless of motivation, hospital administrators can utilize temporary staffing to save money on health, retirement, and retention benefits, as well as costs related to training and career development. But staffing via locum tenens has downsides, too. Cost is the concern most commonly noted, with expenses including negotiated fees to locum companies and, depending on contracts, travel and lodging costs (most contracts cover malpractice costs, industry players say). Some critics question the quality of temporary physicians, while others worry about the potential of doctors distracted by their “day” jobs.

Detractors also note that using temporary physicians can have a deleterious effect on teamwork, as more transient workers are less invested in an institution’s mission, vision, and long-term goals. Patricia Stone, PhD, RN, FAAN, who has studied the use of agency nurses, says that how well a locum tenens worker integrates into a team setting depends on how willing that person is to bond with colleagues.

“There are things that happen in a hospital for which a team is needed,” says Stone, director of the Center for Health Policy and the PhD program at the Columbia University School of Nursing in New York City. “The nurse needs to know how much she can count on that physician. The physician needs to know how much they can count on that nurse.”

Dr. Stone

Hospitalists = Prime Targets

The use of locum tenens in HM has skyrocketed in recent years, as the number of hospitals adding hospitalists has grown. And, for now, it doesn’t seem like there’s any end in sight, particularly as cost-conscious hospitals look for ways to save money.

“Trees don’t grow to the sky, but...we’ll be very curious to see what the next survey tells us about how the second half of 2011 did,” says Tony Gregoire, senior research analyst for Staffing Industry Analysts. “But as of yet, we just can’t speak to any plateauing. It just seems like there is more room for growth here. The big factor will be supply shortage because there is such demand for hospitalists.”

To wit, the 2011 Survey of Temporary Physician Staffing Trends found that 85% of healthcare facilities managers reported using temporary physicians in 2010, up from 72% in 2009.2 And the number of facilities seeking locum tenens staffers is rising, despite the “downturn in physician utilization caused by the recession,” the report added. Some 41% of those surveyed were looking for locum tenens physicians in 2010, up 1% from the year before.

Brent Bormaster, divisional vice president of Staff Care of Dallas—whose firm publishes an annual report, the 2011 Survey on temporary staffing trends—says that the use of temporary staffing makes economic sense in a growing specialty such as HM because it allows programs to start up and staff up more quickly. And because turnover can be an issue in the early days of any group, temporary staffers can either fill in while the group recruits a permanent physician or can step in when a physician leaves, giving the practice time to run a proper search.

You’re paying us on an hourly basis, and you don’t have any ancillary benefits, healthcare, 401(k), malpractice insurance, anything like that.


—Brent Bormaster, divisional vice president, Staff Care of Dallas

“You can still maintain your continuity of staff and continuity of care,” Bormaster says. “All the while, you’re still recruiting for your permanent physician and permanent replacement, which may take upwards of six to eight months.”

The temporary staffing market in HM has grown so competitive in recent years that one large hospitalist group started its own placement division for physicians. Robert Bessler, MD, president and CEO of Tacoma, Wash.-based Sound Physicians, says his company launched Echo Locum Tenens of Dallas in August 2011 to take advantage of the firm’s economies of scale. Sound employs more than 500 hospitalists and post-acute physicians, and partners with about 70 hospitals nationwide (see “DIY Locum?”, right).

“We felt there was an opportunity to be a niche provider to serve our own needs … to fill the short-term demand for temporary help, whether we’re starting up a program quickly or have a gap in coverage due to illness or maternity leave or something else,” Dr. Bessler says. “We found that we could build a more accountable model by having it be part of our organization.”

Dr. Bessler

Another reason for the growth in temporary staffing may be the appeal it has for physicians who want to focus simply on clinical care, says Dorothy Nemec, MD, MSPH, a board-certified internist who runs MDPA Locums in Punta Gordo, Fla., with her physician assistant husband, Larry Rand, PA-C. The couple started their temporary staffing firm in 1996 and has authored a book, “Finding Private Locums,” that outlines how to launch a career in locum tenens.3

“When we started our own business, what we found was we were able to do what we are trained to do, and you don’t have to deal with the politics,” Dr. Nemec explains. “You don’t have to deal with all of the other things that you get involved with when you’re in permanent practices. So you can devote all of your time to taking care of patients.”

The Cost Equation

The biggest question surrounding the use of locums is the cost-benefit analysis, a point not lost on hospital executives and locum physicians who answered Staff Care’s last report. Eighty-six percent of those surveyed said cost was the biggest drawback to the use of locum doctors, a dramatic increase from the previous year, when just 58% pointed to cost as the largest detriment. Locum physicians can gross 30% to 40% more per year for the same number of shifts as a typical FTE hospitalist.

But Dr. Harrington believes the ability to earn more money continues to push physicians into working locums. “Hospitals now realize that they have to have a hospitalist program,” Dr. Harrington says. “The issue for them is more around reimbursement and where that money is going to come from.”

Bormaster, of Staff Care, says that while the higher salaries for locum physicians can seem like an expensive proposition, the cost has to be viewed in context. Because the typical temporary physician is an independent contractor, compensation does not include many of the costly expenses tied to permanent hires.

“You’re paying us on an hourly basis, and you don’t have any ancillary benefits, healthcare, 401(k), malpractice insurance, anything like that,” Bormaster adds. “All you’re doing is paying straight for the hours worked or hours produced by that hospitalist that is contracted with us.”

Surveys show part-time and temporary physicians’ lack of familiarity with their work setting can be detrimental. It’s shortsighted to undervalue the role continuity plays in the hospital setting, as it can lower the quality of care delivered and impact both patient and worker satisfaction, says Stone, the Columbia University nurse-researcher.

“It’s not necessarily the cheapest way to go because of the decreased quality,” she says, adding she hopes the topic is one tackled in future research. “It needs to be looked at. The hospitalist environment has just grown so much....How to do it right? We just don’t know enough about it yet.”

Is the Sky the Limit?

It is often said that HM is the country’s fastest-growing medical specialty. Combined with the recent reduction in resident work-hours at academic centers and the impending physician shortfall nationwide, there may be a perfect storm looming.

“Supply will eventually adjust to the demand, but that demand is only going to keep increasing,” says Gregoire, the senior research analyst.

MaryAnn Stolgitis, vice president of operations for Boston-based national staffing firm Barton Associates, says hospitals and healthcare organizations will often have little choice but to continue using temporary physicians to bridge personnel gaps.

Stolgitis says that beyond the supply-demand curve, another factor in temporary staffing’s growth is the increased desire of physicians to generate additional revenue. The exact motivation will vary, from new physicians looking to pay off increasingly burdensome student loans to late-career physicians looking for financial security as they transition into retirement. Others will enjoy the idea of traveling the country via a spider web of locum tenens positions.

“We’re recruiting doctors who were full-time doctors, permanent doctors. There are a lot of people making that switch,” she says. “I think there’s not only increased demand for patient care, but there’s also a shortage of physicians out there willing to accept full-time jobs because now they see this other way of life and they’re willing to do that.”

Daeffler

Dr. Manning says that quality locum firms can take advantage of that situation by continually recruiting the strongest physicians.

“When you find a good company providing you physicians that want to work and do their job and are patient-friendly, you just need to go with it,” he says. “The only problem, is you’re going to pay more for it.”

Jason Daeffler, a marketing director for Barton, adds that the physician shortage in the coming years will only exacerbate the issue of staffing issues at hospitals. He says supplementing full-time hospitalists with locum doctors will offer HM group leaders the scheduling flexibility needed to maintain optimal coverage levels and maximize revenue generation. HM groups without that leverage could struggle to cover all shifts as effectively, he adds.

Plus, physicians who take on locum tenens work will create financial flexibility for themselves at a time when payrolls are under tremendous pressure from C-suite executives looking to trim budgets. Individually, each factor might not be as powerful, but when combined, Stolgitis says the stage is set for continued success.

“You’re going to see more and more locum tenens in the future,” she says. “Whether you’re looking at the retiree population, physicians right out of residency or fellowship training, or someone who’s been working two or three years...they are beginning to see locum tenens as a better lifestyle for them.”

Richard Quinn is a freelance writer in New Jersey.

A Part-Timer By Any Other Name

Temporary physicians most often fall into two loose definitions of part-time employee:

Moonlighter: Most often refers to a physician picking up a shift here and there. Often useful to staff particularly hard-to-fill shifts, such as overnights and holidays. Typically, moonlighters have a full-time position and take the shift work to generate extra revenue.

Locum tenens: A formalized agreement to hire a full-time physician for a given period of time. The setup has become so popular that analyst firm Staffing Industry Associates recently estimated the recruitment and placement of locum tenens physicians as a $2 billion segment of the staffing industry.

References

  1. Locum Leaders. 2012 Hospitalist Locum Tenens Survey. Locum Leaders website. Available at http://www.locumleaders.com/assets/downloads/2012_hospitalist_locum_tenens_survey_locum_leaders.pdf. Accessed Oct. 1, 2012.
  2. Staff Care. 2011 Survey of Temporary Physician Staffing Trends. Staff Care website. Available at: http://www.staffcare.com/pdf/2011_Survey_of_Temporary_Physician_Staffing_Trends.pdf. Accessed Sept. 28, 2012.
  3. Nemec DK, Rand LD. Finding Private Locums. 1st edition. MDPA Locums Inc.: Punta Gordo, Fla.: 2006.

Caveat Medicus, or Doctor Beware

Individual physicians or HM group leaders looking to work with a temporary staffing company should do their homework. The National Association of Locum Tenens Organizations (NALTO) suggests:

  1. Check if the company provides malpractice insurance for their physicians. Most locum companies provide coverage, but if they don’t, make sure payment responsibilities are ironed out up front.
  2. Ask the staffing agency about their payroll history. Locums are paid by the agency, so a doctor who stops getting paid could cease working immediately, causing a staffing problem for the group.
  3. Review the firm’s suite of services to ensure that licensure, credentialing, hospital privileges, and other issues are taken care of before a physician begins work.

For more information, contact NALTO at 404-774-7880 or visit www.nalto.org.

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