3 Reasons Hospitals Should Move Away From Physician Staffing Agencies

physician staffing agencies

In recent years, physician recruiters have been increasingly turning to physician staffing agencies to meet their immediate needs—hurting their bottom line in the long term. Also known as locum tenens staffing, these agencies fill physician positions on a temporary basis.

What’s causing this trend?

  • High demand for doctors due to an aging population
  • A low supply of physicians, with the shortage expected to rise to over 121,000 by 2032
  • Time to hire of 88 to 226 days for physicians, and the issue is even worse in rural areas
  • Huge physician vacancy costs that can range anywhere from $600 to $2,500 per physician per day
  • Harder-to-measure vacancy costs, including poorer quality of care, reduced patient retention, fewer referrals, and employee burnout

While the locum tenens route may make sense in a pinch, it has major drawbacks as a long-term strategy. Here are the biggest reasons to go with a physician staffing agency alternative instead.

Drawback #1:

You’re Paying Locum Physicians 30% to 40% More Than Full-Time Doctors

The Extra Costs of Paying Locum Doctors


of hospital executives see cost as biggest reason not to use locum doctors

30 – 40%

more spent on locum doctors for the same number of shifts


paid to urologists instead of $540,000

Imagine if you live in Chicago and want to fly to Miami in a few weeks. The ticket cost will likely range between $150 and $300. But what if there was an emergency and you needed to get to Miami tomorrow afternoon? Get ready to pay a premium of $700 to $3,000.

Doctor staffing agencies work in much the same way. When health systems can’t find physicians—their most important asset—they’re losing big money every single day, which means they’re willing to pay temporary physician staffing agencies a premium to meet their immediate needs. However, they can cut costs significantly by going with a physician staffing agency alternative.

The bottom line: With the high price tag on temporary doctor staffing services, it’s no surprise that in one survey, 86% of hospital executives cited cost as the biggest drawback of utilizing locum physicians. In fact, hospitals can pay 30% to 40% more per year for the same number of shifts. For a big-city hospital, that can mean paying a urologist $756,000 a year instead of $540,000. And that’s just one position.

Drawback #2:

Your Team Morale Suffers, Which Means Absurd Turnover Costs

The Costs of Physician Turnover at Hospitals


overall cost per physician


in lost revenue per physician


in onboarding costs per physician

To get the best patient outcomes and prevent medical errors, your healthcare teams need excellent collaboration, communication, and camaraderie. However, these can take several months or even years to foster, and locum physicians are often only around for a short period. At the same time, the temporary-nature of the position means the locum doctors may not be as emotionally invested or motivated to integrate into the team, negatively impacting morale and patient care.

Additionally, when a doctor staffing company fills a position, the locum physician will need to be onboarded, which can mean days to weeks where the clinical team has no “quarterback.” What does this mean for your full-time physicians? They’ll need to pick up the slack during the onboarding process, leading to:

More pressure to cover calls

Longer hours at work

Less time with family and friends

Increased anxiety and stress

The bottom line: Your team morale will suffer even more, and the full-time doctors will quickly burnout, leading to a higher physician turnover rate. The costs for your hospital?

Drawback #3:

Your Hospital’s Patients Get Lower Quality of Care, Bolstering Your Competitors’ Revenues

The Costs to Health Systems of Poor Quality Patient Care


revenue loss due to patient leakage


revenue loss for every lost referral


lost to competitors

Now, let’s look at how the locum tenens option negatively impacts patient care and your bottom line. Studies have shown that the locum doctors’ lack of familiarity can negatively affect patient satisfaction. Additionally, while the locum doctor is getting up to speed, the other physicians will need to carry the load. This means doctors will give less time and attention to each patient, causing frustration and leading them to doubt the quality of care.

Even if there’s a perception that the quality of care is declining, patients will quickly migrate to competitors, affecting referral patterns, the speciality, and other service lines associated with the health system. As revenues are impacted, the organization will have less money to reinvest in new technologies, making it harder to attract new patients in the future.

The bottom line: When quality of care suffers, hospitals lose big:

  • Patient leakage reduces a health system’s revenues by 20% per year
  • Every lost referral or appointment costs the health system $210 on average
  • $200 to $500 million per year in revenue lost to competitors

How Health Systems Can Reduce Dependency on Temporary Doctor Staffing Agencies

While using a locum doctor may be necessary in a squeeze, you want to avoid this strategy as much as possible, opting for a physician staffing agency alternative.

How can physician recruiters do that? Build a robust and reliable talent pipeline that lowers your time to fill, reducing the need for temporary staffing solutions.

As physician recruiters know, attracting clinical talent isn’t easy. At the moment, most healthcare recruiters are relying on referrals and job boards to fill positions. However, a successful strategy goes after active and passive candidates on the marketing channels where no one is competing: email marketing, live calls, direct mail, social media, and paid search.

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