Temp MD market stays strong, but double-digit hikes are gone

Physician Compensation Report, April, 2003

The market for temporary or "locum tenens" physicians remains active in every sizable specialty, and continues to grow as both physicians and employers turn to it more frequently, but the double-digit pay rate hikes of 2001 and 2002 in shortage specialties are pretty much a thing of the past (see tables, p. 4).

For instance, according to two of the largest "locums" companies--Salt Lake City-based CompHealth Physician Staffing Group and Dallas-based Staff Care--day rates for anesthesiologists, up by 25% to 30% in 2001-02, were flat to down by 17% in 2002-03. The only field that both firms say had a double-digit day rate hike in 2002-03 is gastroenterology.

The malpractice situation is a particular challenge for the locums industry because the placement companies--not the groups and health systems where the physicians work--are the ones who obtain insurance for the physicians (see article, p. 5). In general, the physicians are subcontractors of the placement companies, which in turn are contractors of their clients, the work-site entities.

Echoing her colleagues in other firms, recruiter Kathy Corbett of Davis-Smith in Southfield, Mich., says, "The need will always be there for locums physicians" as physicians in long-term positions get sick, take vacations or are absent for other reasons. Andrea Kloen, a recruiter for Medstaff National Medical Staffing in Durham, N.C., adds that staffing new positions while the client recruits permanent candidates is a major source of demand, as is filling shift slots in fields such as emergency medicine and urgent care that work 24/7 or nonregular hours.

"The cost justification [for hiring temp physicians] works," says recruiter Patrick Donovan of Linde Healthcare in St. Louis. "If you have patients," he explains, "the revenues they generate pay for the locums physician." In addition, Donovan says, the client receives referrals, serves repeat patients, ramps up revenues from planned permanent positions, and offsets fixed overhead.

Similarly, temp practice works for more and more doctors, says CompHealth President Scott Beck. Among key factors he lists that are increasing supply in the field are the desire to focus on patients without administrative concerns, the desire to avoid managed care altogether, the ability to practice without overhead and personal housing and transportation costs, rising malpractice premiums, and decreasing reimbursements (PCR 8/02, p. 8).

Military Situation Adds Demand

The military buildup leading to the current war in Iraq has created more demand for temp physicians, Beck says. His firm has been asked to fill a number of openings, especially in surgical specialties, anesthesiology, and emergency medicine, vacated by physicians called up to serve in the Middle East. Many of these assignments are expected to last from nine to 12 months, he adds, rather than the typical two weeks for a vacationing doctor or three months while a permanent search is conducted.

Several physicians who normally work in CompHealth temp assignments also have been called to military duty, Beck notes.

On the other hand, says Jamey Morgan, president of Concorde Staff Source in Milwaukee, for clients that haven't lost specific physicians due to the war effort, the uncertainty of the war leads many organizations "just to put a lot of things off" such as locums hiring--a common reaction throughout American business. The war effort also discourages traveling, she notes, which can reduce locums demand for physician vacations and continuing medical education.

The slower growth in the economy, the drops in the stock market, and the difficult reimbursement and cost environments in medicine generally also have taken a limited toll on the locums market, Morgan adds. Physicians tell her "they just can't afford to be away from work as much as in the past."

Despite these problems, Morgan emphasizes that the temp physician market remains healthy on both the supply and demand side throughout the specialty spectrum.

Two main factors are holding temp physician percentage pay hikes well below the levels of last year, especially in high-demand fields such as radiology and anesthesiology, she says:

* Sharp malpractice premium hikes--which placement firms pass through to clients--mean clients "just can't afford big pay raises."

* More physicians being open to locum tenens work, which adds to the supply of physicians.

In radiology, notes Trey Davis, vice president at Staff Care, another reason the supply side is easing is that the number of residency trainees has risen sharply in the last few years. Still, Davis says, a radiologist can choose from among seven to 10 locums jobs, while for every primary care locums position, there are six to 10 applicants.

Most of the fields that have had hot locums markets still do, but to a lesser degree with lower pay inflation, he says. These include most specialties, such as cardiology, gastroenterology and anesthesiology. Psychiatry remains a strong locums market, and orthopedics has become one, according to Davis.