The Cost of Hiring Permanent Clinical Staff Vs Locum Tenens

When staffing your healthcare facility, you can choose between permanent clinical staff or locum tenens. Both options have their benefits and drawbacks, but one factor that often plays a significant role in the decision-making process is cost.

In this article, we will explore the cost comparison between hiring permanent staff and utilizing locum tenens, and how each option can impact your budget and bottom line.

The Cost of Hiring Permanent Staff

Salary and Benefits

The most obvious cost associated with hiring permanent staff is their salary and benefits. Depending on the position and experience level, salaries for advanced practice providers and physicians can range from $90,000 to over $500,000 per year. Employers are responsible for more than just salary. They also provide benfits, workers comp and malpractice insurance, retirement plans, paid time off and more.

Recruitment and Onboarding

Recruiting and onboarding new permanent staff members can also be a significant expense. This includes advertising job openings, reviewing resumes, conducting interviews, completing background checks and sign on bonuses. Onboarding costs can include training and continuing medicial education expenses, orientation, and any necessary certifications or licenses.

Turnover Costs

One often overlooked cost of hiring permanent staff is the cost of turnover. When an employee leaves, you not only lose their skills and knowledge, but you also have to spend time and money finding and training a replacement.

According to a study by the Center for American Progress, the cost of replacing an employee can range from 16% of their salary for low-paying jobs to 213% of their salary for high-paying jobs.  As an example, a high end physician gap can cost a health care system upwards of 2.5 million.  

The Cost of Utilizing Locum Tenens

Hourly Rate

The main cost associated with utilizing locum tenens is their hourly rate. This rate can vary depending on the specialty, experience level, and location of the locum tenens provider. On average, locum tenens physicians can cost between $150 and $500 per hour(depending on specialty), while other healthcare professionals such as nurse practitioners can earn between $75 and $300 per hour.

Travel and Housing Expenses

In addition to their hourly rate, employers are also responsible for covering the travel and housing expenses of locum tenens providers. This can include airfare, rental cars, and hotel accommodations.

Licensing and Credentialing

Another cost associated with utilizing locum tenens is the licensing and credentialing process. Depending on the state and specialty, obtaining a temporary license can cost anywhere from $100 to $1,000. Additionally, some facilities may require locum tenens providers to complete specific credentialing processes, which can also come with a fee.

Cost Comparison: Permanent Staff vs. Locum Tenens

When comparing permanent staff vs. locum tenens costs, it's important to consider short-term and long-term expenses.

Short-Term Costs

In the short term, hiring permanent staff may seem like the more cost-effective option. However, when you factor in recruitment and onboarding costs, as well as the potential for turnover, the cost of hiring permanent staff can quickly add up.

On the other hand, utilizing locum tenens may have a higher hourly rate, but you only pay for the hours worked. This can be especially beneficial for facilities that experience fluctuations in patient volume or need temporary coverage for vacations or medical leave.

Long-Term Costs

In the long term, the cost of hiring permanent staff can be significantly higher than utilizing locum tenens. With permanent staff, you are responsible for their salary and benefits, as well as any potential turnover costs. Additionally, as healthcare costs continue to rise, the cost of providing benefits to permanent staff can also increase.

Utilizing locum tenens, on the other hand, allows you to control costs by only paying for the hours worked. This can be especially beneficial for facilities that are looking to reduce their overall staffing costs or are facing budget constraints.

Other Considerations When Choosing Between Permanent Staff and Locum Tenens

While cost is a significant factor when deciding between permanent staff and locum tenens, there are other considerations to keep in mind.

Quality of Care

One concern that some facilities have with utilizing locum tenens is the quality of care provided. However, reputable locum tenens agencies like Alumni Staffing thoroughly vet their providers and ensure that they are qualified and experienced in their specialty. Additionally, locum tenens providers often bring fresh perspectives and ideas to a facility, which can improve the overall quality of care.

Flexibility and Coverage

Another consideration is the flexibility and coverage that locum tenens can provide. With permanent staff, you are limited to the number of employees you have on staff, which can make it challenging to cover vacations, medical leave, or unexpected absences. Utilizing locum tenens allows you to have coverage when you need it, without the added expense of hiring and training new permanent staff members.

Temporary Solutions vs. Long-Term Staffing

Considering the type of staffing solution that best fits your facility's needs is essential. If you have a long-term need for a specific position, hiring permanent staff may be the best option. However, if you have a temporary need or are looking for a more flexible staffing solution, utilizing locum tenens may be the better choice.

Conclusion

When it comes to staffing your healthcare facility, the cost of hiring permanent staff vs. utilizing locum tenens is an important factor to consider. While permanent staff may seem like the more cost-effective option in the short term, the long-term costs can quickly add up. Utilizing locum tenens, on the other hand, allows you to control costs and have more flexibility in your staffing solutions.

Ultimately, the best staffing solution for your facility will depend on your specific needs and budget. By carefully considering the costs and benefits of each option, you can make an informed decision that will benefit your facility in the long run.

Ready to partner? Alumni Healthcare Staffing can help you’re your locum tenens staffing needs. Give us a call at (908) 842-8235 or fill out a form on the web to speak with a consultant.