Advantages of being an independent contractor
Although physicians are typically not as likely to be "laid off" from a job as, say, someone in banking, manufacturing, or the construction trades, the concept of job security - even in healthcare - certainly isn't what is once was. The days of taking a position right out of training and staying put until retirement are, for most people, long gone. One sure fire way to make sure that you have job security is to be your own boss. For some doctors this involves owning and managing a private practice or being a partner in a group. For locum tenens physicians, it means you can run your own show without having to commit to a single location, buy or lease a building, and pay office overhead like staffing, utilities, and malpractice insurance.
Locum tenens physicians work as independent contractors, a status that comes with a number of advantages, the first of which is that you have a high degree of autonomy. You decide where, how many weeks or months out of each year, and with whom you practice. By working closely with a limited number of highly regarded locum tenens agencies and building up your reputation for being clinically competent, reliable, and easy to get along with, you will - after a period of time - be able to pick and choose from any number of good engagements.
For example, if you practice a small community in Tennessee for a month and find the work satisfying, the patients pleasant, and your colleagues helpful, you can request that community again the next time an opening comes up. On the other hand, if you take an engagement in a location and find that you don't enjoy the practice setting, the people, or even the weather, let your recruiter know that you don't want to be considered for that location again. Being an independent contractor means just that - you're independent and you decide what's best for you.
There are also financial benefits associated with being an independent contractor. Because you're essentially self-employed, you can take advantage of a number of deductions at tax time. Some of these include unreimbursed travel expenses (although most of your travel will be paid for), medical license application and renewal fees, journal subscriptions and books, CME, clothes you wear exclusively for work (lab coats, for example), equipment used for business, a portion of your telephone bill, and possibly home office expenses. You can also deduct 100% of your health insurance premiums. Check with your accountant about how to maintain thorough records throughout the year and be sure to set aside money from each engagement to pay quarterly taxes. As a "1099er" you're responsible for your own income and social security taxes.
As an independent contractor, you have a great deal of flexibility when it comes to retirement planning. Assuming you don't have a retirement plan through an employer (which might be the case if you practice locums only part-time), look into setting up a plan of your own as a way to reduce your tax burden now and build up a nest egg for the future. A SEP-IRA (simplified employee pension-individual retirement account plan) is a good vehicle, as are traditional IRAs and Roth IRAs. Talk to your accountant or a "fee only" financial planner for advice on which type of account is most advantageous in your situation. Once you've set up your plan and begin making contributions to it, you'll also have control over how to invest your retirement funds. Depending on how savvy you consider yourself in this area, you can either invest on your own (mutual funds, individual stocks, bonds, etc.) or engage a financial planner, money manager, or stock broker to assist you. Either way, be sure to factor in fees and commissions when looking for the best return on investment.
So, the bottom line is that that being an independent contractor gives you the freedom to make your own decisions about where and when to work and how to best manage your income. If that level of autonomy appeals to you, contact a NALTO (www.nalto.org) agency about engaging in locum tenens practice on either a part-time of full-time basis. Be sure to ask them for more information on what it means to work as an independent contractor. Many firms have educational materials on their websites or available upon request for doctors they work with.
View Printable Article