When considering the switch to locums work, one of the most common concerns is the loss of benefits typically provided by corporate medical groups. These include healthcare, retirement plans like 401(k)s, job security, and other perks. While it’s true that locums work doesn’t come with the same packaged benefits, that doesn’t necessarily mean you’ll be worse off. In fact, with the right approach, you might find that managing your own benefits is more advantageous—and the trade-off for increased job flexibility and autonomy might be worth it.
First, it’s important to understand the different ways you can work as a physician, particularly in emergency medicine. I’m not here to tell you there’s a right or wrong way to practice. The standard business model works well for many physicians, but my goal is to educate you on another viable and potentially rewarding work model—one that gives you more control over your career, but requires you to understand what you're getting into.
We’ll delve into different work models in a future post, but for now, let’s focus on two main models: Corporate Medical Groups (CMGs) and locums work. CMGs are the big-name groups you're probably familiar with, and typically, physicians work with just one of these at a time. Some doctors choose to work with multiple CMGs for job security or to pick up extra shifts, often within driving distance of home.
Corporate medical groups (CMGs) are businesses designed to generate profit, which isn’t a bad thing—it's simply the nature of any business. Their primary goal is to ensure financial sustainability, which means a portion of the revenue generated from your medical services goes towards administrative overhead, management salaries, and shareholder returns.
In contrast, locums companies may operate with leaner structures and can afford to offer higher pay rates. Here’s why you might find increased compensation through locums work:
Market Demand: Hospitals in urgent need of staffing are often willing to pay premium rates to locums physicians to ensure they can continue operating effectively.
Operational Efficiency: Locums companies may have more streamlined operations with lower overhead costs, allowing them to pass on more earnings directly to physicians.
Negotiation Power: As a locums physician, you may have greater leverage to negotiate your pay rates and contract terms, tailoring them to fit your professional and financial goals.
Understanding these factors can help you make an informed decision about which working model aligns best with your career objectives and lifestyle preferences.
At its core, locums allows you to practice medicine with a level of independence that harkens back to the early days of the profession. Ultimately, our primary responsibility is to provide the highest quality care to our patients—not to debate which employment model is superior. If you’ve noticed that locums physicians are sometimes paid more for similar work, it’s natural to feel unease. There are several sacrifices locum physicians make that others are unwilling to which accounts for a higher pay and other benefits which as credit card travel points. However, this disparity often reflects the flexibility, negotiation, and efficiency inherent in the locums model.
Instead of letting this difference bother you, consider what locums work could offer you and the impact you could make. There are patients in resource-limited areas across the country who could greatly benefit from your expertise. Even picking up just a few shifts a month could make a significant difference to fellow countrymen who desperately need great doctors. This is an opportunity to reconnect with the reasons you became a physician in the first place—to help those in need.
Taking the leap into locums might seem daunting, but it’s often more manageable than it appears. And if you’re willing to embrace the challenge, I’m here to offer guidance and support.
Corporate Medical Group Benefits vs. Locum Independence
1. 401(k) Plans: One of the most promoted benefits in a corporate medical group is the 401(k) retirement plan, often with employer matching. While this sounds great on the surface, it might not be the best option for everyone, especially if you’re aiming to retire early. A 401(k) locks away your money, limiting your access until you're 59½ unless you’re willing to face penalties. This restriction hinders your ability to invest in opportunities that could grow your wealth more rapidly.
Alternative Tip: Consider opening a solo 401(k) or a SEP IRA as a self-employed locums physician. These options offer tax advantages while giving you more control over your investments. Additionally, exploring other asset classes like real estate, dividend-paying stocks, or even starting your own business could potentially provide better returns and more flexibility.
It’s also worth noting that as a physician working in a high-risk job, a 401(k) may offer some protection against lawsuits or bankruptcy if an investment doesn’t pan out.
2. Healthcare: Healthcare is a significant concern, and it’s often the primary reason doctors hesitate to leave a traditional job. However, healthcare can be purchased independently, often at a lower cost than expected. For many physicians, the cost of a private healthcare plan may be equivalent to just a couple hours of work each month.
Alternative Tip: Shop around for healthcare plans on the open market. Consider high-deductible health plans (HDHPs) paired with a Health Savings Account (HSA) to save on premiums while still having access to quality care. HSAs also offer triple tax advantages and can be a great way to save for future medical expenses.
3. Guaranteed Shifts and Job Security: Corporate medical groups often tout guaranteed shifts and job security as major benefits. However, these guarantees can be misleading. You can still be let go due to downsizing, changes in administration, or a myriad of other reasons. The sense of security may be more illusionary than real.
Alternative Tip: As a locums physician, you have the flexibility to work as much or as little as you want. This control over your schedule can offer more security than a traditional job, as you’re not reliant on a single employer. You can also diversify your work locations to mitigate the risk of losing income if one contract ends unexpectedly.
4. W-2 vs. 1099 Employment: Many doctors are W-2 employees in corporate settings, meaning taxes are taken out of their paychecks, and they have fewer opportunities for deductions. As a locums physician, you’ll likely be a 1099 independent contractor, which allows for a wide range of tax deductions and greater control over your finances.
Alternative Tip: While this topic warrants a deeper dive, it’s worth noting that as a 1099 contractor, you can deduct business expenses like travel, continuing education, and even your home office. Consulting a tax professional can help you maximize these deductions and significantly reduce your taxable income, effectively increasing your take-home pay. If you need a great CPA, drop me a line—I can connect you to a CPA who can be instrumental in helping you rapidly growing your wealth.
5. Other Corporate Perks: Some corporate groups offer perks like CME allowances, malpractice insurance, and other small benefits. While these can be convenient, they aren’t irreplaceable.
Alternative Tip: You can purchase your own malpractice insurance, often at competitive rates, though locums companies typically provide this for you. For CME, consider setting up a budget yourself and choosing the most relevant and useful courses rather than being limited to what your employer approves.
Final Thoughts
The transition to locums work can seem daunting, especially when you’re used to the comfort of corporate benefits. However, with a bit of planning and the right mindset, you can not only replicate these benefits independently but often do so in a way that better aligns with your personal goals and financial strategy.
Personally, I’ve found that locums has allowed me and my fiancée to travel the world together while maximizing my earning potential and accelerating our investment growth. This approach has given us the option to consider an early retirement, where I can practice medicine because I want to, not because I have to. For those willing to take the leap, locums can be an incredibly rewarding career path.
In future posts, we’ll delve deeper into each of these topics, providing more detailed guidance on how to navigate the world of independent contracting as a locums physician.
If you’re curious about whether locums is the right fit for you, feel free to reach out. I’d be happy to discuss your goals and help you determine if this adventurous career path aligns with your aspirations.
Financial Disclosure:
Just a quick note: This is for educational purposes only. The opinions expressed in this blog post are my own and are provided for informational purposes only. I’m not a licensed financial advisor, and the information shared here should not be considered financial, legal, or tax advice. Please consult with a qualified financial planner or tax professional before making any financial decisions. While I may discuss certain products, services, or financial strategies, it’s important to conduct your own research and consider your individual circumstances when making financial decisions.
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