The Cost Comparison: Hiring Full-Time Physicians vs. Locum Tenens

7/24/25, 6:15 AM

Compare the costs of hiring full-time physicians versus locum tenens. Learn which option offers better flexibility, coverage, and value for your facility.

The modern healthcare environment continues to present medical institutions with the challenge of striking the right balance between physician staffing and cost management. The physician shortage, increasing patient demand, and high burnout rates mean administrators are frequently forced to decide whether to hire full-time physicians or use locum tenens providers.

You should be aware of the actual cost of recruiting a doctor—this includes not only the fee but also the year-long economic ripple effect on your organization. From filling short-term gaps to expanding the size of your practice, the cost differences between locum tenens and full-time providers enable you to make decisions based on both the quality of care and the bottom line.

The Costs of Hiring Full-Time Physicians

On the surface, hiring a full-time doctor appears to be the more cost-effective option. But the price of hiring a doctor is more than the salary. Here is a closer look at the actual cost of onboarding a permanent physician:

a) Salary and Benefits

The average physician salary ranges from $250,000 to $500,000 per year, or higher (according to the MGMA). Other than compensation, employers typically offer:

· Health insurance
· Retirement plans (401k, pensions)
· Paid time off (PTO)
· Continuing medical education (CME) stipends
· Malpractice insurance
· Disability and life insurance

These perquisites typically represent an additional 20% to 30% over the base salary, significantly increasing the total salary package.

b) Recruitment Costs

Bringing on a full-time doctor is costly and a long process. Hiring a physician can take, on average, at least 6 to 12 months and even much longer in some high-demand specialties. Recruitment costs include:

· Advertising fees
· The typical commission for the physician recruiter, by the way, is 20% to 30% of the doctor’s first-year salary.
· Interview travel expenses
· Signing bonuses (usu­ally $10,000–$50,000)
· Reimbursement of relocation expenses (typically $10,000 to $15,000)

Those can easily add up to $100,000 or more per hire.

c) Credentialing and Onboarding

It usually takes 60 to 120 days to credential a new doctor with hospitals and insurance companies. During this time, you may have to bear the administrative costs and not generate any revenue from the new hire. Training and onboarding also generate soft costs due to staff time and disruptive workloads.

d) Retention and Turnover

A similar hidden cost is physician turnover. If a full-time physician leaves early, you get:

· Loss of productivity
· Dissatisfaction of the patient, loss of patients
· Repeat recruitment expenses

Replacing a physician is estimated to cost between $500,000 and $1 million, including lost revenue, recruitment, and onboarding expenses.

The Costs of Using Locum Tenens Physicians

Physician staffing with locum tenens means hiring physicians on a temporary, on-call, contract, or per-diem basis, often with the assistance of a staffing agency. Locum physicians can provide temporary coverage during vacations, seasonal peaks, or while practices are searching for staff.

Locum tenens rates may first seem higher, but let’s consider both sides of the coin.

1. Hourly or Daily Rates

Locum tenens doctors receive an hourly or daily rate that varies based on specialty, location, and demand. For example:

· Primary Care: $120–$150 per hour
· Emergency Medicine: $160–$250 per hour
· Surgical Specialties: $200–$400+ per hour
Daily rates typically range from $1,000 to $3,000/day.

2. Agency Fees

You can also pay a premium when partnering with a staffing agency, including:

· Physician pay
· Agency fees
· Malpractice insurance (usually included)
· Travel and lodging expenses

While these seem like expensive fees, they cover a lot of the costs you would be obliged to cover when working a full-time job independently.

3. No Long-Term Commitment

Flexibility is one of the key financial benefits of working locum for locum staffing. You pay only for the coverage you need — whether it be a few days, weeks, or months. This minimizes downtime, PTO, and benefits overhead.

4. Avoided Costs

Locum tenens providers are under no obligation to:

· Health benefits
· Retirement contributions
· Paid vacations
· CME stipends
· Recruitment bonuses
· Relocation expenses

Moreover, locum agencies typically oversee credentialing, reducing the costs and headaches associated with administrative work.

Cost Comparison: Locum Tenens vs. Full-Time Physicians

The cost comparison between locum tenens physicians and full-time hires extends beyond simply examining hourly rates or annual salaries. Full-time doctors may appear cheaper on paper because they have a fixed annual salary; however, the overall cost is much higher, including recruiting costs, benefits, malpractice insurance, paid time off, retirement savings, and onboarding. Those extra costs can increase a physician’s total compensation by 20% to 30% and, in some cases, even more, with the cost of turnover growing to $500,000 to $1 million, factoring in lost revenue and recruitment costs.

However, locum tenens typically charge higher hourly or daily rates, and healthcare facilities also cover agency fees that factor in malpractice insurance, travel and lodging, and credentialing. However, with locums, there are no long-term commitments, benefits, or recruiting costs, resulting in reduced overhead.
Locum tenens providers are eminently affordable because hospitals don’t have to pay for staff when they don’t have to, and without any of the financial risks associated with downtime, sick days, or slow business days. Although a permanent hire may be the most cost-effective option for regular, sustained work, locum tenens helps address a wide range of issues, from temporary positions to backfilling locum work and filling in to cover shifts that, with a long-term placement, would require a significant up-front investment.

When Full-Time Physicians Are More Cost-Effective

The full-time doctors are usually the preferred choice when:

You see enough patients that you require a full-time salary.

Primary care is really about long-term relationships with patients.

You can afford upfront hiring costs and have the resources to invest in retention.

Healthcare systems that value stability and sustainability usually prefer the permanent hire model, as long as they can absorb the up-front costs.

Conclusion: Strategic Staffing Decisions for Cost Control

Where Is the “Average Answer” When Analyzing the Cost of Physician Recruitment? The choice of locum tenens vs full-time physicians varies according to your facility’s specific circumstances, budget, and strategic vision.

In most cases, the blended staffing model is the least expensive. Leveraging locum tenens providers for short-term coverage or tough-to-fill shifts while keeping a solid core full-time staff empowers you to:

· Control costs
· Maintain care quality
· Avoid burnout
· Protect revenue streams

When you understand the full impact of costs—beyond salaries—you can make smarter staffing decisions based on data that benefits both your facility and your patients.