An honest, data-driven comparison of locum tenens and permanent physician positions covering true costs, net income analysis, and career considerations.
Locum Tenens vs. Permanent: Salary Comparison by Specialty
Locum rates are quoted in daily or hourly terms, which makes direct comparison to permanent salaries harder than it appears. The table below converts locum daily rates to annualized equivalents based on 200 working days per year — a conservative but realistic figure that accounts for credentialing gaps, time between assignments, and intentional time off.
| Specialty | Permanent Salary (Median) | Locum Daily Rate | Annualized Locum (200d) | Gross Premium |
|---|---|---|---|---|
| Family Medicine | $260,000 | $1,200–$1,600 | $240,000–$320,000 | -8% to +23% |
| Internal Medicine | $270,000 | $1,300–$1,800 | $260,000–$360,000 | -4% to +33% |
| Hospitalist | $310,000 | $1,500–$2,200/shift | $270,000–$396,000 | -13% to +28% |
| Emergency Medicine | $350,000 | $250–$350/hr | $360,000–$504,000 | +3% to +44% |
| Psychiatry | $300,000 | $1,800–$2,800 | $360,000–$560,000 | +20% to +87% |
| Anesthesiology | $420,000 | $2,500–$3,500 | $500,000–$700,000 | +19% to +67% |
| Radiology | $450,000 | $1,800–$2,800 | $360,000–$560,000 | -20% to +24% |
| General Surgery | $420,000 | $2,200–$3,200 | $440,000–$640,000 | +5% to +52% |
| Neurology | $310,000 | $1,600–$2,400 | $320,000–$480,000 | +3% to +55% |
| Pediatrics | $240,000 | $1,100–$1,600 | $220,000–$320,000 | -8% to +33% |
Annualized figures assume 200 working days per year for full-time locum practice, accounting for credentialing delays, assignment gaps, and time off. EM and hospitalist rates are per 12-hour shift. Actual results vary by geography, facility type, and agency negotiation.
The hourly rate gap is real, but smaller than it looks. A family medicine physician earning $260,000 in a permanent position works roughly 2,200 clinical hours per year, equating to about $118/hour. A family medicine locum at $1,400/day for a 10-hour day earns $140/hour — a 19% premium. In psychiatry, the hourly premium often exceeds 50%. In radiology, where permanent salaries are strong, the premium can be negative.
For specialty-specific benchmarks against which to measure any offer you receive, the SalaryDr specialty salary database provides median, 25th, and 75th percentile data across 90+ specialties.
The True Cost of Locum Tenens: What Agencies Don't Tell You
Staffing agencies have a financial incentive to show you the most attractive number — the gross daily rate. They collect a margin (typically 20–35% of the facility's total spend) on every physician they place, so their interest is in getting you to accept assignments. The costs below are real, and they add up fast.
1. Self-Employment Tax: The Extra 7.65% FICA
As a W-2 employee, your employer pays half of FICA taxes (7.65% of wages up to the Social Security wage base, plus the employer's share of Medicare). As a 1099 locum physician, you pay both halves: 15.3% on net self-employment income up to the wage base ($168,600 in 2026), plus 2.9% Medicare tax on income above that.
The additional burden versus W-2 employment is approximately:
- 7.65% on the first $168,600 in earned income: up to ~$12,900/year
- 2.9% on all earned income above $168,600 (permanent employees pay this too, but not the employer's 1.45% share): additional ~$3,000–$8,000/year depending on total income
For a physician earning $400,000 net as a locum, additional self-employment tax versus W-2 employment is approximately $13,000–$17,000 per year — before factoring in deductions. You can deduct half of self-employment tax from gross income, which reduces the effective cost, but the burden is still substantial.
2. Health Insurance: $18,000–$30,000/Year for Family Coverage
Employer-sponsored health insurance is one of the most undervalued physician benefits. A hospital or group practice typically contributes $15,000–$25,000 per year toward family health coverage. You pay a fraction of that in payroll deductions.
As a self-employed locum physician, you purchase individual or family coverage through the ACA marketplace or a broker. Comprehensive family plans with networks adequate for a physician's family run $1,500–$2,500/month ($18,000–$30,000/year). The premiums are tax-deductible as a self-employed health insurance deduction, which reduces the effective cost — but the cash outflow is real and predictable.
3. Retirement: No Employer Match, No Pension
Permanently employed physicians at hospitals and large groups often receive:
- 401(k) or 403(b) employer match: $5,000–$20,000/year
- Defined benefit pension (rare but present in some academic and government positions)
- Profit sharing contributions: $10,000–$40,000/year at some private groups
Locum physicians receive none of this. You can open a Solo 401(k) (contribution limit up to $69,000 in 2026 as both employer and employee) or SEP IRA (up to 25% of net self-employment income), which allows aggressive retirement saving — but every dollar contributed is your own. The lost employer match alone costs $5,000–$20,000/year in deferred compensation that never appears on any agency rate sheet.
4. Malpractice: Claims-Made Tail Coverage Risk
Most locum agencies provide malpractice insurance during your assignment — this is standard. The complexity arises with tail coverage. If the agency provides a claims-made policy (which most do), claims arising after your assignment ends may not be covered unless you or the agency purchases a tail policy.
Tail coverage for a claims-made policy costs 150–300% of the annual premium. For high-risk specialties like surgery or OB/GYN, annual premiums can be $30,000–$80,000, making tail coverage $45,000–$240,000 per transition. Not all agencies provide free tail — verify this in writing before signing any assignment agreement.
Occurrence-based malpractice (which covers claims regardless of when the policy ends) eliminates tail risk but is less commonly offered by agencies. If you do full-time locum work across multiple short assignments, the cumulative tail liability exposure is a real financial risk that needs explicit contractual protection.
5. Multi-State Licensing: $500–$1,500 Per State, Every 2–3 Years
Each state requires its own medical license. A physician practicing locum work in 3–5 states can pay $1,500–$7,500 in initial licensing fees plus renewal costs every 2–3 years. Add DEA registration ($888 every 3 years, per state for some jurisdictions), state-specific CME requirements, and NPDB registration maintenance.
The Interstate Medical Licensure Compact (IMLC) reduces this burden significantly — eligible physicians can obtain licenses in 40+ member states through an expedited process. But the IMLC is not free, and not all desirable locum states participate. Factor $2,000–$5,000/year in ongoing licensing overhead for a multi-state locum practice.
6. Travel, Housing, and Unpaid Gaps
Locum agencies typically provide travel reimbursement and housing stipends for assignments away from your tax home. These stipends are tax-free when structured correctly, which is a genuine financial advantage. But not all travel costs are covered, and housing quality varies significantly by agency and facility.
More importantly: time between assignments is unpaid time. New locum physicians typically experience 2–4 months of near-zero clinical income while credentialing at their first facilities. Experienced locums manage this by overlapping credentials at multiple facilities, but even then, gaps of 1–4 weeks between assignments are common. Annualized, these gaps reduce effective working days from a theoretical 240 to a realistic 180–210, directly compressing the annualized income comparison.
The Net Income Calculation: A Worked Example
Let's compare a permanently employed emergency physician and a full-time locum EM physician with identical gross incomes:
| Line Item | Permanent EM ($350K) | Locum EM ($420K gross) |
|---|---|---|
| Gross clinical income | $350,000 | $420,000 |
| Extra FICA (SE tax) | $0 (employer pays) | -$15,000 |
| Health insurance (family) | -$5,000 (employee share) | -$24,000 (full premium) |
| Employer 401k match | +$15,000 (received) | $0 |
| Disability insurance | -$1,000 (employee share) | -$6,000 (full premium) |
| Licensing / CME fees | -$1,000 | -$4,000 (multi-state) |
| Income gap (credentialing) | $0 | -$20,000 (est. 3 weeks) |
| Effective adjusted income | $358,000 | $351,000 |
In this example, a locum physician earning $70,000 more in gross income ends up with roughly equivalent adjusted income — before federal and state income tax, which applies equally to both. This is not a universal outcome: the locum advantage is real in high-premium specialties like psychiatry and anesthesiology. But in primary care and many hospital-based specialties, the net difference is far smaller than agencies suggest.
Use the SalaryDr take-home calculator to model your specific situation with your specialty's actual numbers.
Who Should Consider Locum Tenens?
Locum tenens is not universally better or worse than permanent employment — it is right for specific physicians in specific circumstances. Here are the profiles where it genuinely makes sense.
Early-Career Physicians: Explore Before You Commit
If you have completed residency or fellowship and are uncertain about geography, practice setting, or specialty focus, locum work offers a low-risk way to sample options. You can spend 3 months at a rural critical access hospital, followed by 6 months at an urban academic-affiliated community hospital, before committing to a permanent position. The financial premium helps pay down student loans while you gather real-world data.
The risk for early-career locums is career development. Mentorship, procedure volume building, and reputation development all happen slower without a stable institutional home. If partnership track or academic promotion matters to you, time-limited locum work (12–24 months) is reasonable; indefinite locum work can limit career options in some specialties.
For a detailed framework on the first-attending transition, see our guide on navigating the residency-to-attending transition.
Pre-Retirement: Wind Down on Your Terms
Physicians in their 50s and 60s who want to reduce their clinical commitments without fully retiring find locum work ideal. You can choose how many days you work, take extended time off without career consequences, and continue practicing medicine in settings you find fulfilling. Benefit needs are typically reduced at this stage (Medicare approaching, retirement accounts funded), which addresses the biggest financial disadvantage of locum status.
Burnout Recovery: Regain Control of Your Schedule
For physicians experiencing burnout, the ability to control your schedule is not a minor perk — it is clinically meaningful. Locum work eliminates the administrative burden of a permanent position (EMR ownership, quality metrics, committee obligations) and lets you focus purely on clinical care. You choose how many shifts you work and take breaks when you need them.
Research consistently links schedule control to burnout reduction. Our analysis of physician burnout and career satisfaction in 2026 explores this connection in detail. Locum tenens is not a long-term solution for systemic burnout, but it can provide the reset many physicians need before they are ready to re-engage with a permanent position on better terms.
Geographic Exploration: Try Before You Buy
If your spouse is job searching, your family is considering a relocation, or you want to compare cost-of-living in different regions before committing, locum work lets you audition locations. A 6-month locum assignment in the Pacific Northwest or the Southeast gives you and your family real-world data that no amount of Zillow browsing can match.
Aggressive Debt Payoff Sprint
Physicians with high student loan balances sometimes use locum tenens as a deliberate sprint: maximize income for 2–3 years, aggressively pay down debt, then transition to a permanent position. This works best when a partner provides health insurance coverage (eliminating the largest locum cost) and when the physician is in a high-demand specialty with consistent assignment availability. In psychiatry or anesthesiology, a 2-year locum sprint can retire $200,000–$400,000 in student debt faster than any permanent position strategy.
Locum Tenens by Specialty: Where Demand Is Highest
Locum demand is not uniform across specialties. It is driven by national physician shortages, the nature of the specialty (shift-based vs. panel-based), and the geographic distribution of facilities that need coverage.
Psychiatry: Highest Premium, Highest Demand
The United States has a well-documented psychiatrist shortage, with over 60% of counties lacking a single psychiatrist. Inpatient psychiatric units, community mental health centers, and correctional facilities struggle to maintain coverage. Locum psychiatrists can command $1,800–$2,800/day — premiums of 40–100% above permanent salary in many markets. Assignment availability is consistently strong, and telepsychiatry locum positions have further expanded the market. If you are a psychiatrist considering locum work, this is the specialty where the financial case is strongest.
Emergency Medicine: Bread and Butter Locum Market
Emergency medicine has the most developed locum ecosystem of any specialty. The shift-based structure is inherently well-suited to temporary coverage, and virtually every emergency department in the country uses some combination of permanent staff and locum physicians. Rates range from $250–$350/hour for locum EM, with the highest rates in rural and critical access settings. The credential transferability is also better in EM than most specialties — board certification, ATLS, and BLS are standardized across facilities, reducing the onboarding burden.
Anesthesiology: Premium Rates, Procedural Complexity
Locum anesthesiology commands $2,500–$3,500/day in most markets, with some rural and critical access hospitals paying higher. Demand is strong and assignment availability is good. The complexity is credentialing and privileging — surgical privileges are facility-specific, and some procedures (cardiac, neuro, pediatric) require additional facility credentialing that extends the onboarding timeline. Anesthesiologists who are broadly trained and flexible on case mix have the easiest time maintaining full assignment calendars.
Hospitalist Medicine: High Volume, Variable Rates
Hospitalist locum is the highest-volume segment of the locum market. Every hospital needs hospitalists, creating a near-unlimited supply of assignments. The tradeoff is that hospitalist locum rates are more compressed than EM or psychiatry — $1,500–$2,200/shift — and the permanent salary comparison is more favorable for permanent hospitalists. The best hospitalist locum opportunities are in underserved geographic areas and short-staffed facilities willing to pay premium rates for reliable coverage.
Surgical Specialties: Higher Rates, Fewer Opportunities
General surgery, orthopedics, urology, and neurosurgery have locum opportunities, but the market is smaller and more episodic than shift-based specialties. Surgical locum assignments typically arise when a practice loses a partner unexpectedly or when a rural hospital needs to maintain surgical capability. Rates are high ($2,200–$4,000/day for complex surgical specialties), but the time between assignments can be longer, and privileging requirements make rapid deployment harder. Surgeons considering locum work should be prepared for a longer pipeline development period before achieving consistent assignment availability.
For more on how specialty choice affects both permanent and locum compensation trajectories, see the specialty comparison tools on the SalaryDr careers page.
The Hybrid Model: Combining Locum and Permanent Work
The financially optimal arrangement for many physicians is not a binary choice between locum and permanent — it is a hybrid that captures the stability of permanent employment while adding locum income during available time.
Part-Time Permanent + Locum Supplement
Common hybrid structures include:
- 0.8 FTE permanent + locum weekends: Maintain benefits, reduce required permanent shifts, supplement with 2–4 weekend locum shifts per month. Net income often increases $40,000–$80,000/year.
- Full-time permanent + vacation-week locums: Use PTO strategically, or forgo some vacation in exchange for locum income during high-rate holiday periods. Holiday and weekend locum premiums can be 20–40% above standard rates.
- Geographic hybrid: Maintain a permanent position in a desirable urban market, accept occasional rural locum assignments at premium rates to supplement.
Tax Implications of Mixed Income
When you have both W-2 employment income and 1099 locum income in the same year, the tax situation is complex. Key considerations:
- The additional self-employment tax applies only to your 1099 income, not your W-2 income
- Deductions (home office, travel, equipment) apply to your locum business activities
- You can open a Solo 401(k) for your locum income and make both employee and employer contributions, separate from your W-2 retirement contributions
- Quarterly estimated payments are required on 1099 income to avoid underpayment penalties
- Health insurance deductions flow to your locum business if you are not eligible for employer-subsidized coverage
A physician-focused CPA is essential for optimizing the hybrid model. The interplay between W-2 withholding, 1099 estimated taxes, retirement account limits, and deduction strategies requires professional guidance to navigate correctly.
How Employers View Moonlighting
Most physician employment contracts address outside clinical work explicitly. Provisions vary:
- Prohibited without approval: Most hospital employment agreements require written approval for outside clinical work. Approval is often granted but not guaranteed — particularly if the locum assignment would be with a competing facility.
- Geographic restrictions: Some contracts prohibit outside work within a defined radius. Locum assignments outside this radius may be permitted even when local moonlighting is not.
- Disclosure requirements: Even when moonlighting is permitted, some contracts require disclosure of outside clinical activities for malpractice coordination purposes.
- Academic conflicts: Academic medical centers often have the most restrictive outside work policies, particularly where Stark Law or research funding creates compliance concerns.
Review your employment contract before accepting any locum assignment. Our guide on academic medicine vs. private practice discusses how contract structure differs across employment settings.
How to Get Started with Locum Tenens
If you have decided that locum work fits your career and financial goals, the path from decision to first paid assignment involves several concrete steps. Plan for a 3–6 month runway from initial contact with agencies to first paycheck.
Step 1: Credentialing Timeline (Allow 3–6 Months)
Credentialing is the rate-limiting step in locum work. Each facility must independently verify your training, licensure, board certification, malpractice history, and references. This process takes 60–120 days per facility regardless of how good your credentials are.
To minimize gaps:
- Compile a complete credentials file before contacting any agency — include certified copies of medical school diploma, residency certificate, all state licenses, DEA certificates, board certification, and malpractice certificates with limits history
- Apply to multiple facilities simultaneously through your agency
- Maintain credentials at 2–3 facilities even when you don't have active assignments, so you can accept coverage quickly when needs arise
- Complete your CAQH ProView profile thoroughly — this is the universal credentialing database used by most payers and many facilities
Step 2: Agency Selection (Large vs. Niche)
Hundreds of locum agencies exist, ranging from national firms to specialty-specific boutiques. The right choice depends on your specialty and geographic preferences.
Large national agencies (CompHealth, AMN Healthcare, Weatherby Healthcare, Staff Care) offer the widest assignment inventory, established facility relationships, and full-service support (travel coordination, licensing assistance, housing). They earn higher margins but provide more hand-holding — useful for first-time locums.
Specialty-specific and regional agencies often have deeper relationships in niche markets. A psychiatry-focused agency may have better psychiatric facility relationships and higher-quality assignments than a generalist firm. Regional agencies know their local markets better and may provide faster credentialing through established relationships.
Work with 2–3 agencies simultaneously during your first year to maximize assignment options. Agencies are not exclusive partners — you can and should compare their offerings.
Questions to ask every agency before committing to an assignment:
- Is malpractice coverage claims-made or occurrence-based?
- Who pays for tail coverage, and what are the policy limits?
- What is the weekly rate, and what does housing/travel cover specifically?
- What is the cancellation policy if the facility terminates early?
- How is overtime compensated if shifts run long?
Step 3: State Licensing via the Interstate Compact
The Interstate Medical Licensure Compact (IMLC) allows eligible physicians to obtain licenses in multiple member states through a single application processed by their principal state of licensure. As of 2026, 40+ states participate. For locum physicians working across state lines, the IMLC can reduce licensing time from 3–6 months per state to 2–4 weeks per additional state.
Eligibility requires board certification, a clean license history, and designation of a principal state of licensure. The fee structure varies but is generally lower than individual state application processes. If you plan to practice in 3+ states, the IMLC is strongly recommended.
Step 4: Contract Red Flags to Watch For
Locum contracts are rarely negotiated to the same degree as permanent employment agreements, but certain provisions warrant attention:
- Unilateral cancellation clauses: Some contracts allow the facility to cancel your assignment with 24–48 hours' notice with no financial penalty. Negotiate for at least 2 weeks' notice and a kill fee for assignments cancelled after you have booked travel.
- Non-compete provisions: Some agencies include clauses restricting you from working directly with facilities they introduced you to for 12–24 months. These are common — understand them before signing.
- Reimbursement caps: Read the fine print on what housing and travel reimbursements actually cover. "Housing provided" sometimes means a budget motel; "travel reimbursed" may cap flights at a rate below actual cost.
- Malpractice exclusions: Verify that the malpractice policy covers all procedures you perform, all conditions you treat, and all states in which you practice. Exclusions for off-label drug use or unlicensed-in-state procedures create uncovered liability.
- Payment timing: Agencies typically pay within 30 days of invoice. Understand the payment cycle and whether delays are common before you depend on that income to cover monthly expenses.
Making the Decision: A Decision Framework
Use this checklist to evaluate whether locum tenens is the right move at this point in your career:
Locum tenens is likely a strong fit if:
- You or your spouse has health insurance through another source
- You are in a high-demand specialty (psychiatry, EM, anesthesiology) with consistent premium rates
- You value schedule flexibility more than income predictability
- You have a specific financial goal (debt payoff, home down payment) and a defined locum timeline
- You are in a transition period (post-training, pre-retirement, burnout recovery) where flexibility is essential
Permanent employment is likely stronger if:
- You need employer-provided health insurance (especially with a family or pre-existing conditions)
- You are in a specialty with a smaller locum premium (primary care, radiology in high-salary markets)
- You value continuity of care and long-term patient relationships
- Partnership track, academic promotion, or leadership development is a career goal
- Income predictability is essential for your family's financial planning (mortgage qualification, school tuition)
The hybrid model is likely optimal if:
- Your current employer permits outside clinical work
- You have available time (weekends, evenings, unused PTO) that you are willing to exchange for income
- You want to test locum work without abandoning the stability of permanent employment
- Your specialty commands a meaningful locum premium even for supplemental shifts
Whatever path you choose, benchmark your compensation against market data before making any major career decision. Use SalaryDr's specialty compensation data to understand where your current or target permanent salary stands, and the Offer Analyzer to convert any locum rate or permanent offer into a comparable net income figure.