Choosing to work a locum tenens is an attractive option for many physicians. For some, it’s a temporary measure to earn income and pay down debt while they look for a more permanent position. For others, the autonomy and work-life balance a locum provides can turn into a long-term career decision.
If you choose to work a full-time locum, you can benefit from the elimination of the overhead expenses that typically accompany a private practice, freeing up additional savings. If you decide to work a part-time or occasional locum to supplement your core income, you can choose to direct these earnings for a specific goal, such as paying off student loans, saving for a home down payment or retirement.
1. To assess potential future practice location
2. To learn/ get experience
3. For financial reasons
Source: 2012 National Physician Survey (students and residents)
Career independence can mean financial challenges
One of the main benefits of locum work is the work-life balance it can allow. Locums allow you to focus on patient care while avoiding many of the administrative tasks and expenses that doctors deal with. However, that independence can also create challenges because you’re forgoing the financial security of a regular, full-time job.
Create a solid financial plan
It sounds simple, but creating a financial plan is crucial to ensure you are budgeting enough money to pay down debt, invest and save, while leaving enough money to support your lifestyle.
Consider these three components of a solid financial plan before choosing to work a locum.
- Cash flow analysis
If you’re working as a full-time locum physician, especially at the start of a placement, a delay in remittance payments could mean an income gap. It’s important to plan ahead and prepare for income flow that many vary based on billing periods. An extensive cash flow analysis allows you to see where your money is going on both a monthly and annual basis. Your advisor will consider your short- and long-term goals for income, expenses, debt reduction and savings.
Part of this analysis should be a plan to repay any debts you may have. Many new in practice physicians choose locum work as a way to get ahead on debt repayment. Compensation can be quite attractive, particularly in underserved or remote areas. You can virtually custom-design your career path specifically to pay off medical school debt using locum work. Your MD Advisor can also help you strike the right balance between debt repayment and investments.
- Health and disability insurance
Your biggest asset as a physician is your ability to earn income, so maximizing your insurance coverage is crucial. As a locum physician, you don’t have access to the health benefits that are typically part of the traditional employer/employee relationship so it is especially important to purchase health and disability insurance to ensure you are well covered. The best time to think about insurance is when you’re young and healthy. The older you get, the more costly it becomes. The sooner you can get your insurance needs covered, the more cost-effective it will be. If your health suffers, it may be much more difficult to qualify for insurance.
- Estate planning
Estate planning is an important consideration for every physician, whether you decide to work a locum or not. A proper estate plan will ensure that your assets are transferred according to your wishes, and your estate is administered efficiently. Even if a locum is your first job, and you’re single with no dependents, there may be others you want your estate plan to provide for – elderly parents, other family members or friends. Setting up a will, financial power of attorney and a healthcare directive is something you should do early in your career, and revisit on an annual basis.
Keep thorough financial records
As a locum physician, you are essentially an independent contractor, and may be eligible to deduct a variety of business expenses. It’s important to keep all receipts, maintain good records and work with both your financial advisor and your own accountant to ensure you can take advantage of every possible deduction.
Whether you choose to work a locum for the practical experience, the financial benefits, or both, collaborating with your MD Advisor to create a solid financial plan will ensure you make the most of the opportunity.