Locum Tenens vs. Permanent Physician: The Real Cost Comparison (Including the Breakeven Point)

There is a number most locum tenens cost articles never get to.

Past roughly 665 hours of coverage, about 11 weeks at 60 hours a week, hiring a full-time physician becomes cheaper than continuing to run locums. That figure comes from a 2024 Monte Carlo simulation published in Cureus, not from a vendor blog.

It is also more specific than it first looks, and the specificity is the useful part. Here is what the number actually says, what it does not say, and how to calculate your own version of it.

The short answer

The breakeven point between locum tenens and a permanent physician is the number of coverage hours at which cumulative locum spend equals the loaded cost of a permanent hire plus the one-time cost of making that hire.

The formula:

Breakeven hours = one-time hiring cost ÷ (locum hourly bill rate − loaded permanent hourly cost)

Below that number of hours, locums are the cheaper option. Above it, the permanent hire pays for itself.

For anesthesiology in the Northeastern US, the published average lands at 665 hours. For your specialty and your market, it will land somewhere else. The formula travels. The number does not.

Why hourly comparisons mislead

The comparison people usually run is a locum bill rate against a permanent salary. That is not a fair fight, because the two numbers are measuring different things.

A locum bill rate is close to all-in. It typically wraps malpractice, travel, housing, credentialing support, and the agency's margin into one hourly figure. What you see is roughly what you pay.

A permanent salary is a fraction of what the physician costs you. According to Bureau of Labor Statistics data on private industry compensation, benefits add roughly 30% on top of base wages. Broader workforce research puts the true cost of an employee at 1.25 to 1.4 times salary once overhead is counted.

Put a $225 locum bill rate next to a $300,000 salary and locums look expensive. Put it next to the loaded hourly cost of that same physician and the gap narrows sharply. This is the same reason agency markup is so hard to pin down: the bill rate hides the composition.

What a permanent physician actually costs

Build the loaded number before you compare anything. A hospitalist example, using illustrative figures:

Recurring annual cost

Line itemAmountBase salary$300,000Health, dental, vision$25,000Retirement contribution$18,000Employer payroll taxes$14,000Malpractice premium$20,000Disability and life$8,000CME, licensing, dues$5,000Loaded annual total$390,000

One-time year-one cost

Line itemAmountRecruitment or search fee$25,000Signing bonus$30,000Relocation$15,000Credentialing and onboarding$10,000One-time total$80,000

Now convert to an hourly figure. A 2,080-hour year minus PTO, CME, and holidays leaves roughly 1,872 clinical hours.

$390,000 ÷ 1,872 = $208 per clinical hour, recurring.

That $208 is the number to compare against a locum bill rate. Not the $144 you get from dividing the base salary alone.

What locum coverage actually costs

Locum bill rates for physicians run roughly $150 to $500 an hour depending on specialty, geography, and urgency. Rural emergency departments in a squeeze can go past $325 an hour. Specialty spread matters more than most budgets assume, and it is moving in different directions by role right now.

Most of the bill rate is not physician pay. It is markup plus pass-through. Confirm what your rate includes before you model anything, because travel, housing, and malpractice responsibility are negotiable line items, not fixed features of the model.

Two costs sit outside the bill rate and get missed:

Credentialing time. Every facility credentials every locum. Sixty to 120 days is normal. If you are cycling through providers on short assignments, you are paying that overhead repeatedly. Front-loading the process is the only real lever here.

Ramp and handoff. A locum on a two-week assignment is productive on day three and gone on day fourteen. Repeat that six times and you have paid for the same orientation six times.

Where the 665-hour number comes from

Cross and colleagues published the study in Cureus in April 2024. They built a Python model comparing the cost of locum tenens against full-time anesthesiologists, ran 10,000 Monte Carlo iterations against Northeastern US market data, and found an average breakeven at 665 hours, which they describe as just over 11 weeks of 60-hour weeks.

Three things about that result deserve attention.

It is anesthesiology. Anesthesiology carries one of the widest gaps between locum bill rates and loaded permanent cost. A wide gap produces an early breakeven. Specialties with a thinner spread break even much later.

It is regional. Northeastern US rates and salaries. Your market will produce a different answer.

The average hides the range. The study found that 28% of scenarios broke even in under 60 days. The authors' own conclusion emphasizes that variability is the finding, not the headline number.

So 665 is a real, defensible, peer-reviewed figure. It is not a rule of thumb you can apply to a rural family medicine vacancy in Missouri.

Run your own breakeven

Take the formula and your own inputs.

Breakeven hours = one-time hiring cost ÷ (locum hourly bill rate − loaded permanent hourly cost)

Using the hospitalist figures above, with a $265 locum bill rate:

• One-time hiring cost: $80,000
• Locum bill rate: $265/hour
• Loaded permanent hourly: $208/hour
• Spread: $57/hour
• Breakeven: 80,000 ÷ 57 = 1,404 hours, roughly 35 weeks at 40 hours

Same formula, very different answer. That is the whole point.

Notice what drives the result. The one-time cost sits in the numerator, so a cheap hire lowers the breakeven. The spread sits in the denominator, so it does the heavy lifting. Narrow the spread by $20 an hour and the breakeven moves by hundreds of hours.

Which means the highest-leverage move available to you is not choosing locums or permanent. It is reducing the spread.

When the breakeven does not apply

The math assumes you can actually hire. Often you cannot, and then the comparison changes shape.

There is no candidate. If the permanent role has been open for nine months, the real comparison is locum coverage against no coverage. Locums win that comparison on every axis that matters, including revenue.

The need is seasonal or bounded. Maternity leave, a sabbatical, an EHR go-live. You are not choosing between staffing models. You are covering a gap with a defined end date, and the breakeven never enters the picture.

You are hiring anyway. If the permanent search is already running, locum coverage during the search is not an alternative to the hire. It is bridge coverage, and its cost should be compared against the revenue lost from an empty schedule.

Temp-to-perm is on the table. A locum who converts turns the assignment into a paid working interview. The placement fee is often higher than a straight permanent search, but the match rate tends to be better because both sides have already tested the fit.

The quality objection

Someone in the room will argue that locums cost more in outcomes even when they cost less in dollars.

The evidence does not support that. Blumenthal and colleagues published a JAMA study in 2017 examining 30-day mortality among hospitalized Medicare patients treated by locum tenens internists. They found no higher mortality rate. Subsequent work has not found elevated adverse event or malpractice payout rates either.

The research base is thin, and thin is worth acknowledging. But the burden of proof sits with the claim, and the claim currently lacks support.

The lever most employers skip

Go back to the formula. The spread between locum bill rate and loaded permanent cost is the denominator, and the denominator is where the leverage is.

Most of that spread is agency margin. Cut the margin and you push the breakeven out, which means locum coverage stays economical for longer and your options stay open.

Two structural approaches do this:

Direct marketplace sourcing. Removing the intermediary removes the markup layered on top of clinician pay. Comparing this against a traditional agency model usually shows the gap immediately.

An internal resource pool. Building your own bench of per diem and float clinicians eliminates the markup entirely for recurring coverage. An IRP changes the shape of the curve rather than moving a point along it.

If you are new to the category, the 2026 guide to locum tenens for employers covers the fundamentals this post assumes.

Frequently asked questions

What is the breakeven point between locum tenens and a permanent physician?

‍It is the number of coverage hours at which cumulative locum spend equals the loaded cost of a permanent hire plus the one-time cost of making that hire. Calculate it as one-time hiring cost divided by the difference between the locum hourly bill rate and the loaded permanent hourly cost. A 2024 Cureus study put the average at 665 hours for anesthesiology in the Northeastern US.

Is locum tenens more expensive than hiring a permanent physician?

‍Per hour, usually yes. Over a full year of coverage, often yes. For short-term or bounded needs, usually no. The crossover depends on your specialty's rate spread and your one-time hiring cost, and it varies widely.

How much does a permanent physician really cost beyond salary?

‍Roughly 30% on top of base wages for benefits, per BLS private industry data, covering health insurance, retirement, payroll taxes, malpractice, disability, and CME. Add one-time costs of recruitment, signing bonus, relocation, and onboarding, which commonly run $50,000 to $150,000 in year one.

What do locum tenens physicians cost per hour?

‍Roughly $150 to $500 an hour depending on specialty, geography, and urgency. Rates typically include malpractice, travel, and housing, though this varies by contract and should be confirmed line by line.

Why is the 665-hour figure specialty-specific?

‍Because the breakeven is driven by the spread between locum bill rate and loaded permanent cost. Anesthesiology has a wide spread, which produces an early breakeven. Specialties with a narrow spread break even much later, sometimes past a full year of coverage.

Does using locum tenens physicians affect patient outcomes?

‍Available evidence says no. A 2017 JAMA study of hospitalized Medicare patients found no difference in 30-day mortality between locum tenens internists and permanent staff. The overall research base on this question remains limited.

What to do with this

Stop comparing bill rates to salaries. Build the loaded hourly number for the permanent role, get a real all-in bill rate for the locum, and divide your one-time hiring cost by the difference.

Then ask whether the spread is something you have to accept or something you can negotiate down.

Book a demo and we will run the breakeven against your actual specialty mix and market rates.

Sources

• Cross J, Lolla Y, Fichman C, et al. The Cost of a Locum: A Simulation to Determine When You Are Paying Too Much for Your Anesthesia Locum Tenens Coverage. Cureus. 2024;16(4):e58853.
• Blumenthal DM, Olenski AR, Tsugawa Y, et al. Association Between Treatment by Locum Tenens Internal Medicine Physicians and 30-Day Mortality Among Hospitalized Medicare Beneficiaries. JAMA. 2017;318(21):2119-2129.
• Bureau of Labor Statistics, Employer Costs for Employee Compensation.
• Anesthesia Patient Safety Foundation, Patient Safety with a Transient Workforce.