Negotiating Your First Locum Tenens Contract
/We are physicians, we are exceptionally trained to provide medical care, and we pride ourselves on perfection. We are not trained to be businessmen or lawyers, yet this aspect of our practice impacts so much of our quality of life and day-to-day frustrations. Every single one of us will be forced to interact with a lawyer or agency in regard to a contract at least once in our career. Employed doctors must sign a contract with a health system or hospital, detailing all the nuances of their pay structure and benefits. Private practice groups constantly negotiate with insurance carriers about rates, hospitals coverage and call pay, amongst a sea of other things. Locum Tenens doctors are no different. Understanding the Locum Tenens contract is one of the most daunting and anxiety inducing aspects of what we do. What exactly are you agreeing to and how can you maximize and protect yourself? Well, it’s time to break down the Locum Tenens contract!
There are hundreds of unique reasons an individual doctor would sign up for a locum tenens assignment. Many seek more independence, increased flexibility, or higher pay. Others enter into locums for the allure of travel or to practice without the constraints of a defined boss telling you what to do! However, there are downsides of locum tenens, this unique practice freedom must be protected, and the potential lack of stability and job security must be prevented. Understanding the locum tenens contract, the players involved, and your value to health systems in demand is critical to avoiding any setbacks in your path.
Let’s begin with the players. It is critical to understand that there are three parties involved with any locum tenens contract. We know we say this often at The Locums Life, but you are the one in demand. Never forget that without doctors, there would be no hospitals, administrators, or staffing agencies. You need to look in the mirror and see the new starting first baseman for the New York Yankees, you are the all-star here! The next player in the equation is the hospital or practice looking for a doctor. We cannot stress the diversity here, and it is this diversity that keeps locum tenens work so rewarding. From small hospitals in Hawaii, major academic centers in New York, to family practices in rural West Virginia, the diversity of location and practice type is profound. Many hospitals seek out locum tenens doctors as a short term answer to staffing issues or a long term plan for certain aspects of their care plan. What they are looking for, and their individual situation will define the specifics of the assignment. The final player is the staffing agency. The history of Locum Tenens and the staffing agencies is fascinating, and we recommend everyone reads it. Staffing agencies have evolved over the past decades and become big business. We have to stress that the locum tenens agency represents the hospital in the sense that the staffing agency is being paid by the hospital and legally represents their best interest. Understanding this is key, as staffing agencies need these contracts to continue business. On the other hand, without the doctors feeling reasonable taken care of, staffing agencies would run out of physicians to fill these slots. So while you cannot expect the agency to protect your interests or assume that it is acting in your favor, they are certainly thinking about teaming up for future assignments with you. Understanding the nature of these relationships is critical when evaluating compensation, non-competes, malpractice insurance, cancellations, terminations and the details of your individual locum tenens contract. Let’s get into the weeds with this!
Compensation
Compensation comes in hundreds of flavors, but the vast majority will be specialty specific and fall into two categories. Hourly work or daily rates make up more than 95% of the contracts for locum tenens physicians. We have detailed the common rates for every specialty in a prior article and recommend you review these rates. This rate varies depending on the medical specialty and demand, and compensation is largely driven by market forces. The most important factors in defining compensation are the specialty, the geographic location and the urgency of the assignment. That said, overall specialty demand will most likely trump geography and demand in defining the majority of the compensation amounts offered. In addition, the workload at each assignment will also determine some component of compensation, a high volume or intensity practice should pay more on average. Understanding what others are getting is key and knowing fair market value can put you ahead of the pack when it comes to getting fair rates for your work. When a hospital agrees to a rate, a percentage is assigned to the doctor, a percentage is allocated for covering your malpractice, credentialing, travel, and expenses that the staffing agency must cover. The remaining difference is the profit for the staffing agency. In most scenarios, staffing agencies can be making between 20-50% of the total payment from the health system. Say that again, in some scenarios the staffing agency is making the same hourly rate as you while you are there seeing patients!! We cannot stress enough that you have the ability to negotiate your rate before you make the decision to accept the contract and we strongly advise you determine your numbers before you talk to a staffing agency. Remember, they spend all day handling these assignments and have the benefit of knowing the numbers that you will never see. We have found it vitally important for negotiating to know the rates others have received and your comfort numbers before you start. There may be other elements of your compensation other than your base rate that may be negotiable as well, such as rate premiums for weeknight or weekend on-call, long shifts, and longer work weeks. You may be able to collect a portion of your billed charges. You should have a spread sheet for your specialty of what your “perfect contract” looks like. If you plan on giving up money or time in one category, remember to ask for more of what you want in another. This is your assignment to define, never forget that you are in demand!
Non-Competition Agreements
Simply put, a non-compete agreement is a restrictive covenant in which the physician agrees to not engage in employment as a physician in direct competition with his current employer for a certain period of time within a defined geographic area. We hate them. Non competes for all physicians serve a purpose of protecting the health system or practice but when not fully understood by the doctor, can lead to huge headaches. For locum tenens assignments, there are two main items that need to be addressed. First, your contract will most likely contain a stipulation that you can not accept a permanent position with the hospital or practice for a period of time following the end of your contract, unless the hospital agrees to pay a “recruitment fee” to your locums staffing agency. Second, your locum tenens contract will also contain a stipulation that you cannot work with same hospital or practice through a different locum tenens agency after your contract expires. Typically, for both of these clauses, the duration will be a maximum of two years and should never be longer. We cannot stress how important it is to read each contract very carefully. Most of the non-compete agreements are dictated by their duration (the amount of time the agreement is effective) and the geographic area (the area in which the agreement is effective). If the agreement appears to be too broad in the area or duration, we recommend you negotiate, but always remember there will be some form of non-compete in the contract and this is standard.
Malpractice Insurance
We have covered the details of Malpractice options in a prior post but find it to be important to cover again. Almost all locum tenens contracts will cover the issue of malpractice, as it is a large expense for doctors. Locum tenens medical malpractice insurance policies typically have a twelve-month term and have a “$1 million/$3 million” coverage limit. This means that the insurer will cover up to $1 million of a single claim and an aggregate total of $3 million over the life of the policy.
There are two types of malpractice insurance policies, occurrence policies and claims-made policies. Occurrence policies are more expensive and provide coverage for claims that occur at any time during the policy period, regardless of when the claim is reported to the insurance company. Have a bad outcome in 1998 and get sued in 2020, an occurrence-based policy would still cover you decades later. In fact, if you had an occurrence-based policy your entire career, when you retire the plan would still cover you while you were not practicing. To date, we have found these policies to be rarely offered by locum tenens staffing agencies.
Claims-made policies are far more common in the locum tenens world. These policies provide coverage for claims that are made on or during the plan’s active time frame. When the plan expires, the coverage no longer exists. Have a bad outcome in 1998 and get sued in 2020, if you claims-made policy was no longer active in 2020, you would be exposed. For this reason, if your contract has a claims-made policy it is important to ensure that it includes “tail” coverage. Tail coverage is necessary to protect you for any malpractice claims made after the policy period ends for incidents that occurred during the contract.
In addition, some locum tenens contracts may allow you utilize the hospital’s malpractice policy. Some physicians even seek out and acquire their own independent malpractice coverage. While these options exist, we don’t recommend them for most locum tenens doctors, especially those who are new to the practice.
Getting Paid
When you have done the hard work to define the value of your time and expertise, it is important to understand when and how you will be paid. These items should be clearly spelled out in your locum tenens contract. In most scenarios, the locum tenens staffing agency will ask you to submit your timesheet on a defined schedule. Most of these are done electronically but some still require paper copies to your staffing agent. How quickly you are paid depends on the staffing agency, but we have found that the majority of large agencies will ask for time documentation on a weekly basis and pay out within two weeks. There are horror stories of physicians having pay delayed months, but when we evaluated these, we have found there are unique details or concerns with these assignments or agencies.
Termination
Locum tenens work is incredible unique, and each assignment comes with a backstory. A recently retired ENT doctor in the community leads to the hospital needing 6 months to recruit a new replacement, a seasonal influx of tourists leads to increased demand for hospitalists in a resort town, or a hospital bringing on a new service line are all common scenarios for needing locums work. These situations lead to flux, and the potential for the contract ending early or lasting longer is always on the table with locum tenens work. Imagine the hospital signs you up to cover that ENT practice for 6 months, but hires a full-time replacement 3 months early, what happens? Or perhaps worse, what happens if you overlooked an auto-renew clause? Locum tenens contracts can protect you from the scenario where your contract is suddenly terminated, or you are required to work for months in a position that you wanted to leave. Always review the termination and auto-renew clauses in your locum tenens contract to ensure that you are provided with reasonable notice, and also that you are not locked in for a longer term than you want. We have found that a 30-day notice of termination from either party serves both of our goals, and we have found this to be standard practice from the larger staffing agencies. That said, if you have any concerns with the assignment, we have found it beneficial to limit the assignment to 1-2 weeks with the option to extend the assignment if both parties are happy. Just beware, this provides the opportunity for the hospital to cancel on you with short notice!
Cancellation
Cancellations happen, and locum tenens assignments are no different. There are two sides to this issue, and both need to be defined. You need to understand what happens to you if the hospital cancels your assignment and what happens if YOU cancel the assignment. Any locum tenens assignment should spell out the time needed to cancel, how this cancellation should be documented (who and how you are notified) and what penalty exists if the rules aren’t followed. Similar to termination clauses, most will require the doctor or hospital to give 30 days’ notice of any cancellation. It is critical to understand the proper documentation needed to begin the cancellation process, so the clock is working in your favor. Is a phone call enough or is a signed legal document needed? These details should be spelled out. Some contracts will have a penalty if the cancellation clause is broken. Some will attempt to recoup losses in the forms of cancellation penalties or unrecoverable expenses. We highly recommend sticking to the 30-day, written cancellation policy. We also have found it beneficial to include a non-penalized out clause if a catastrophic scenario like sickness or injury occurs.
In addition to these big components, items such as expenses, individual liability, legal dispute clauses, health insurance, life insurance, time off, and sick time should all be reviewed and spelled out clearly in a locum tenens contract. We know reviewing that first contract can be daunting, and we hope this outline helps you understand exactly what aspects you should be focusing on. Remember, we are doctors helping doctors, don’t hesitate to reach out to us for help!!
~The Locums Life
1) What’s the single biggest mindset shift when negotiating a locum tenens contract?
You’re not “asking for a job.” You’re providing a scarce service to solve a staffing problem. That changes everything: your leverage, your tone, and your expectations. Hospitals and agencies negotiate contracts all day; most physicians don’t. Your advantage is your clinical value—your protection is preparation and a disciplined process.
2) Who actually represents me in a locums deal?
Usually, no one unless you hire someone. The staffing agency is typically paid by the hospital and is motivated to close the assignment. That doesn’t mean they’re “against” you—but it does mean you should assume you are your own advocate. If the contract is complex, high-stakes, or includes restrictive terms, consider having a healthcare attorney review it (even once, early in your locums career—it can pay for itself quickly).
3) What documents should I request before agreeing to an assignment?
Ask for:
The full contract (not just a rate sheet)
The job description / scope (clinic vs OR vs inpatient, procedures, supervision)
Call expectations (frequency, backup, response time, typical volume)
Schedule details (shift times, weekends, holidays, minimum shifts)
Credentialing and onboarding timeline
Any facility policies you must follow (EMR training, prescribing, supervision, documentation expectations)
You’re trying to prevent “verbal promises” from becoming “surprises.”
4) What’s the right order of operations for negotiating?
A clean sequence prevents chaos:
Confirm the clinical scope (what you’re actually doing)
Confirm the schedule and call model
Confirm compensation structure (hourly/daily, call pay, overtime)
Confirm expenses (travel, lodging, rental car, mileage, meals, licensing)
Confirm malpractice details (occurrence vs claims-made + tail)
Confirm termination/cancellation/renewal language
Confirm non-compete / non-circumvention clauses
Confirm pay mechanics (timesheets, pay cycle, approval process)
If you negotiate rate before scope and call are defined, you’re negotiating blind.
5) Hourly vs daily rate—what’s better?
Neither is universally better. The best structure depends on workload certainty.
Hourly is safer when volume is unpredictable, shifts run long, or duties creep.
Daily can be great if the workday is predictable and the facility is efficient.
If daily rate is offered, clarify:
What counts as a “day” (8 hours? 10? 12?)
What happens if you stay late
What happens if they cut you early
Whether call is included or separate
6) What’s the most overlooked compensation lever besides base rate?
Call pay and call burden. A “great” base rate becomes mediocre if you’re doing heavy call with no premium. Clarify:
In-house vs home call
Weekend call
Weeknight call
How often you’re actually called in
Whether post-call time off exists
Whether call is paid even if you’re not called in
If call is real work, it deserves real pay.
7) How do I know if the offered rate is fair?
You don’t need perfect data—you need a reasonable benchmark. Use:
Specialty norms (from colleagues, forums, and trusted peers)
Region and urgency (rural + urgent often pays more)
Assignment intensity (high volume, complex cases, inefficient systems should pay more)
The “replacement cost” (what it costs the hospital if they can’t staff safely)
Even if you don’t have exact market numbers, you can negotiate from scope, burden, and scarcity.
8) Should I ask the agency what the hospital is paying them?
You can ask, but don’t expect transparency. A more effective approach:
State your rate confidently and explain why (scope/call/volume/urgency)
Ask what flexibility exists
Ask for other levers if base rate is capped (travel class, housing quality, guaranteed hours, call premium, cancellation pay)
You’re negotiating outcomes, not their margin.
9) What is a “guaranteed hours” clause and do I need it?
If you’re traveling and blocking your calendar, yes, you should strongly consider it. A guaranteed hours clause ensures you’re paid a minimum number of hours if the facility cancels shifts or underutilizes you. Without it, you carry the downside risk.
10) What expenses should be covered in a typical locums contract?
Commonly covered:
Flights (or mileage)
Lodging
Rental car or local transportation
Some meal/per diem arrangements
Licensing/credentialing fees (sometimes)
Get it in writing. Confirm:
Booking process (agency books vs you book)
Reimbursement timing
Spending caps
What happens if travel changes last minute
11) What’s the best way to structure travel and lodging so it doesn’t become stressful?
Ask for clear standards:
“Hotel vs furnished apartment?”
“Kitchen required?”
“Distance to hospital?”
“Parking included?”
“Quiet environment for sleep post-call?”
Travel quality matters. Burnout isn’t only clinical—it’s logistical.
12) What’s a non-compete in locums, and what should I watch for?
Locums non-competes usually include:
No direct-hire clause (you can’t take a permanent job at that hospital for X months unless a fee is paid)
No switching agencies clause (you can’t work the same facility through a different agency for X months)
Watch for:
Duration longer than 24 months
Overly broad geographic radius (especially if it affects multiple facilities)
Language that blocks you from working in an entire region
Reasonable limits are common; extreme ones should be negotiated.
13) Is it normal that I can’t take a permanent job at the facility after locums?
Yes, it’s common. Agencies protect their recruiting investment with “conversion” clauses. What you can negotiate:
Shorter time window
Clear definition of what counts as “working there”
Limits so it doesn’t block you from being hired by an affiliated system indefinitely
If you think there’s a real chance you’ll want to stay permanently, negotiate this early.
14) What’s the difference between “non-compete” and “non-circumvention”?
In locums, non-circumvention often means you agree not to bypass the agency to work directly with the facility (or through another agency). It’s designed to protect the agency’s relationship. It’s normal—but again, duration and scope must be reasonable.
15) Malpractice: what should I insist on?
At a minimum, you need:
Clear policy type (occurrence vs claims-made)
Coverage limits (often $1M/$3M)
If claims-made: tail coverage must be addressed explicitly
Confirmation the policy covers your exact scope (procedures, supervision, etc.)
Never assume “malpractice is covered” means you’re fully protected.
16) Claims-made vs occurrence—why should I care?
Because claims-made can leave you exposed after the contract ends if tail isn’t included. Occurrence is simpler (coverage follows the time of the event), but less commonly offered by agencies. If your contract is claims-made and tail isn’t clearly provided, that’s a major red flag.
17) Who should pay for tail coverage?
Often the agency arranges it; sometimes the facility’s policy covers you; sometimes it’s negotiable. What matters most is that tail is included without ambiguity if the policy is claims-made. Tail can be expensive—don’t let it become a surprise bill.
18) What about “consent to settle” and other malpractice details?
If you can get them, great. Some policies include:
Consent-to-settle clauses
Reporting requirements (how quickly you must notify carrier)
Coverage exclusions
Not every locums contract will spell these out, but if you’re concerned, ask for the certificate of insurance and basic policy terms.
19) How do I make sure I actually get paid on time?
Confirm the pay mechanics:
Timesheet submission cadence (weekly is common)
Who approves (facility supervisor? department admin?)
What happens if approval is delayed
Pay schedule (net 7? net 14? net 30?)
Whether you’re paid for orientation, training, or admin time
Tip: ask the recruiter, “Where do payments get stuck most often?” and build your prevention plan.
20) What should I track on my timesheet besides hours?
Track anything that changes pay:
Call shifts
Call-backs (if paid differently)
Holiday rates
Overtime triggers
Travel days (if compensated)
Any guaranteed hours language
Keep your own records (calendar + notes). Your paper trail is your leverage if disputes occur.
21) What termination clause is “fair”?
A 30-day notice from either party is a common standard. It protects you from sudden loss of income while also allowing flexibility if the assignment is not a fit. If the contract has “termination at will with no notice,” negotiate that.
22) What’s the difference between termination and cancellation?
Termination: ending the contract relationship
Cancellation: canceling scheduled shifts within a contract
You need protection for both. A contract can have a decent termination clause but terrible shift cancellation language that leaves you exposed.
23) Should there be a cancellation fee if the hospital cancels last minute?
Ideally, yes—especially if you traveled or blocked your calendar. Common protections include:
Reimbursement of non-refundable travel costs
Payment for guaranteed minimum hours
A defined notice period (e.g., 30 days)
Without it, the facility can externalize the risk onto you.
24) What if I need to cancel because of illness or a family emergency?
Life happens. Negotiate a reasonable “force majeure” or non-penalized out clause for catastrophic events (serious illness, injury, family emergency). At minimum, understand the penalties and documentation required.
25) What is an auto-renew clause and why is it dangerous?
Auto-renew can lock you into an assignment longer than intended. If present:
Make sure the notice window is clear
Ensure you can opt out with reasonable notice
Confirm the renewal doesn’t change terms without your written consent
Auto-renew should never be a “gotcha.”
26) Should I ask for the assignment to start as 1–2 weeks “trial”?
Yes, when uncertainty is high (workflow, volume, team fit, call burden). A short initial term with mutual option to extend reduces risk. However, be aware: shorter terms can also enable the facility to cancel more easily. Counterbalance with guaranteed hours or clear notice requirements.
27) What is “scope creep” and how do I prevent it?
Scope creep is when your duties expand beyond what you agreed to—extra call, extra procedures, supervision, covering additional locations. Prevent it by insisting the contract (or addendum) specifies:
Clinical setting(s)
Core responsibilities
Procedures expected
Supervision expectations
Call model
Patient volume expectations (if possible)
If they want flexibility, you want rate premiums and clear boundaries.
28) What about EMR training and onboarding—should I be paid?
Often you won’t be paid for onboarding, but you can negotiate:
Paid orientation hours
Guaranteed minimum hours on first week
Travel covered for onboarding days
A start date that acknowledges credentialing/training realities
At minimum, insist the expectations are clear so you don’t “donate” a day.
29) Should I have my own lawyer review every contract?
Not always. Many physicians do a deep legal review for their first few contracts, learn the patterns, then become more efficient. But if any of these are true, consider legal review:
Unusually restrictive non-compete
High financial stakes (long term assignment)
Non-standard malpractice language
Unclear termination/cancellation penalties
Multiple facilities/sites involved
A one-time review can teach you what to look for forever.
30) What are “red flags” that should make me walk away?
Vague scope (“help where needed” without boundaries)
No clear call expectations
Claims-made malpractice without explicit tail
Termination/cancellation with little or no notice
Excessively broad non-compete/non-circumvention
Payment terms that are unclear or overly delayed
Recruiter avoids putting promises in writing
If it feels slippery now, it will feel worse later.
31) How do I negotiate without sounding difficult?
Be calm, precise, and professional. Use “collaborative firmness”:
“To make this work, I need clarity on X.”
“Given the call burden, my rate would need to be Y.”
“I’m happy to be flexible on A if we can improve B.”
“Please add that to the contract or an addendum.”
Negotiation isn’t conflict—it’s defining expectations.
32) What should my “perfect contract spreadsheet” include?
Create a template with:
Base rate targets (ideal / acceptable / walk-away)
Call pay targets
Minimum guaranteed hours
Housing requirements
Travel standards
Malpractice requirements
Termination/cancellation minimums
Non-compete maximum duration
Payment schedule expectations
This prevents emotional negotiation and keeps you objective.
33) Can I negotiate non-monetary terms instead of rate?
Absolutely. Sometimes rate is capped. Alternative wins:
Better housing (or stipend)
Guaranteed hours
Less call
Defined scope
Better schedule (block shifts)
Shorter contract commitment
Faster pay cadence
Paid travel day
Covered licensing/DEA fees
A “good deal” is the full package, not just hourly.
34) What if the recruiter says “This is standard and cannot be changed”?
“Standard” often means “common,” not “immutable.” Reply with:
“Understood—what can be adjusted?”
“If rate can’t move, can we add guaranteed hours / call premium / clearer cancellation protection?”
“Can you show me where that’s written in the contract?”
You’re not arguing—you’re clarifying and trading.
35) What’s the cleanest way to close a negotiation?
Summarize in writing:
Rate + call pay + schedule
Expenses covered
Malpractice type + tail
Termination/cancellation notice
Non-compete duration
Pay schedule
Then ask: “Can you update the contract to reflect these points and send the revised version for review?” If it’s not in the contract, it doesn’t exist.