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Posted by Sarah Ramsey

  • Jun 27, 2020

5 Most Costly Temporary Labor Management Mistakes

 Staffing locums can get complicated. Not only are there a lot of parties involved but there are also multiple functional areas to manage. We have experienced some costly mistakes firsthand and we hope that we can prevent you from doing the same.

When staffing locums, it can feel like you are cramming a puzzle piece in a hole that does not quite fit – a ‘locum piece’ cannot fit into a space made for normal operations. In this setting, things can go wrong. We have encountered some of these mistakes along the way and wanted to share our experiences in hopes that it may help prevent you from making the same costly errors. Below are the 5 most costly locum management mistakes and tips on how to avoid.


1. (Not) Setting Expectations


In a recent round of interviews with locum physicians we asked the question:


What is the worst locum assignment you have ever had. Out of the 30 providers, 90% responded with an experience in which the reality of the job responsibilities did not align with expectations communicated (or not communicated) during hiring. Almost all of these resulted in the locum physician immediately removing themselves from the practice. Not only are unsuccessful hires extremely costly from the acquisition cost stand point (vetting, credentialing, orientation/ training, see our article on How to Evaluate Acquisition Costs), but they could also be easily prevented. Tip #1: We suggest you provide a detailed and accurate practice description of schedule and workload.


This can help providers prepare for the job they signed up for and have a positive impact on your retention rates.


2. Buy-out fees


Today, it takes roughly 204 days to hire a physician. When you find a locum physician who understands your practice and is a good fit, hiring should be a no-brainer. But this decision gets complicated when large buy-out fees come with a potential new hire. Paying attention to buy-out fees and negotiating terms prior to legal agreements ensures you are protected in the future. Understandably, if your primary goal is to fill the schedule, it is easy to skim past the fine print of a confirmation letter listing a $50,000 buy-out fee. Tip #2: Always name clear providers to prevent buy out fees with providers you already know. Do your research on market buy-out rates based on specialty and geography.


3. Missed Collections


One of the primary reasons healthcare organizations use locums is to capture potentially missed revenue. But this is only effective if you are collecting timely and effectively. There are three primary variables that impact collections: acuity/documentation, volume (encounters/Patients), and collection rates (impacted by denials, insurance type, etc). Every variable needs to be managed in order to optimize collections. That is why timely review of acuity and productivity is crucial for locum providers. In an acuity analysis of full time physicians and locum providers across the same practice (sample of 20 practices) we saw that locum acuity was about 14% lower on average compared to the full-time physician teams. Poor training on EMR or documentation protocol can also result in missing notes and a decrease in productivity. Tip #3 During orientation provide documentation protocol and coding nuances at your program like split shared services or teaching services. After the first week, review locum providers documentation and productivity and provide timely feedback.


In terms of collecting cash, new providers are always at risk for timely filing, collections denials, or system holds. Often, because cash is lagged, issues surface months later and can be tough to fix. Tip #4: Timely review of payment holds or no payments in collections can help identify enrollment/billing issues. Paying 2x premium on hourly rates with little to no offsetting revenue collections can quickly lead to financial problems.


4. Scheduling


Scheduling in advance is possibly the most important part of locum staffing. Scheduling last minute can result in costly mistakes:

  • Booking 2 locums on the same day (extremely expensive)

  • Hiring last minute (exorbitant rates and bonuses)

  • Delaying other important, less urgent, work (inefficient)

Tip #5: Best practice is to schedule 3 months ahead. Doing so allows you to get priority shifts from your best and most cost-effective locum providers before they are committed elsewhere, and it allows you more time to react to scheduling gaps. Tip #6: If you are scheduling far enough in advance you can also try to cross credential full-time providers from other practices in your system or group.


5 Team Alignment


Ensuring your full-time team is engaged in your staffing plan is crucial. This is not so much a costly mistake but more a potential area for cost savings and culture preservation. Tip #7 It is important to both communicate the locum staffing solution to your full-time team and to keep an open dialogue on what is and what is not working. This will help to integrate the locum provider on the team and has an impact on locum provider retention. Aligning team with compensation incentives can also be effective for alignment. Because the premium cost on a locum shift is about $2,000, you can offer your full-time team $500 bonus per shift and save $1,500 per locum shift avoided. Tip #8 It can be cost effective to offer temporary compensation opportunities to your full-time team. Just make sure your creative compensation plan is easy enough to implement so that you can explain to the team and calculate.


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