Locum tenens is no longer a rounding error on the budget. The U.S. locum tenens market reached $9.6 billion in 2025 and is projected to hit $9.9 billion in 2026 [Staffing Industry Analysts], with growth forecast at 4% in both 2026 and 2027 [Staffing Industry Analysts].
Yet ask what locum tenens cost a hospital and the answers get vague fast. Search for locum rates and most of what comes back tells physicians what they can earn. The pages written for hospitals mostly come from the agencies selling the coverage.
That leaves finance and physician recruitment leaders working without a clear benchmark on one of their fastest-growing spend categories. Most organizations already use locums: in AMN Healthcare's 2022 survey, 88% of healthcare organizations used locum tenens providers in the prior year, and 85% named cost as a significant disadvantage [TechTarget].
This guide breaks down what goes into locum tenens cost, how agency markups work, the costs that never show up on the bill rate, and how to build a locum tenens budget you can defend.
Pay Rate vs Bill Rate: The Number That Drives Locum Tenens Cost
Almost every confusing conversation about locum pricing comes back to two different numbers.
- The pay rate is what the physician or advanced practitioner earns for the assignment.
- The bill rate is what your organization is invoiced by the staffing firm. It includes the pay rate plus everything the agency covers and keeps.
The Alliance for Academic Internal Medicine puts it plainly in its 2026 hospitalist rate guide: "The pay rate is what the clinician is paid for the assignment. The bill rate is what the hospital… is invoiced by the staffing firm." The same guide found that none of the four national locum firms it reviewed publicly posts a hospitalist bill rate. Hospitals have to request a quote [IM Career Source].
That's the core problem. The number hospitals pay is the one number the market doesn't publish.
What's Inside a Locum Tenens Bill Rate
LOCUM TENENS COST, ITEMIZED
What's inside a locum tenens bill rate
Proportions are illustrative. Ask every vendor to itemize its bill rate.
Physician pay rate: what the clinician earns per hour or shift
Malpractice coverage: the policy for the assignment
Recruiting and overhead: commissions, account management, credentialing support
Agency margin: profit on the placement
Often billed separately or never tracked: travel and lodging, privileging and onboarding time, invoice reconciliation, and open days while a shift sits unfilled.
A locum tenens bill rate usually bundles four things:
- Physician pay. The largest share of the bill rate, driven by specialty, location, call requirements, and urgency.
- Malpractice coverage. Many agencies carry the policy for the assignment and price it into the rate.
- Recruiting and overhead. Recruiter commissions, account management, and credentialing support.
- Agency margin. The staffing firm's profit on the placement.
Travel, lodging, and rental cars are often billed on top as pass-through expenses, and they can add up quickly on longer assignments. Ask whether they're included in the quoted rate or invoiced separately before you compare two proposals.
Locum Tenens Pay by Specialty in 2026
Physician-facing pay ranges are the best public signal of where bill rates start. CHG Healthcare's Locumstory published these 2026 hourly ranges for several specialties [Locumstory]:
| Specialty | Typical physician pay per hour (2026) |
|---|---|
| Anesthesiology | $300 – $425 |
| Radiology | $320 – $360 |
| Emergency medicine | $250 – $300 |
| Psychiatry | $220 – $250 |
| Internal medicine | $120 – $130 |
Keep in mind that these are what physicians earn, not what hospitals pay. The IM Career Source guide warns against pricing an opening from a physician-facing hourly ad for exactly this reason. Your bill rate will sit above these figures by the amount of the agency's markup and hard costs.
How Much Do Locum Tenens Agencies Mark Up?
There's no independent benchmark for locum tenens agency markup, which is part of why pricing feels opaque. The estimates that exist come from staffing companies themselves. One staffing platform, DirectShifts, puts traditional agency markups at 30% to 50% of what the facility pays, with reported ranges from 15% to 60% depending on specialty, geography, and how urgently coverage is needed. It estimates that hard costs consume 10 to 15 percentage points of that markup [DirectShifts].
Treat those figures as a starting point for questions, not a benchmark. What moves markup in practice:
- Urgency. A shift that needs coverage next week costs more than one planned three months out.
- Specialty scarcity. Anesthesiology, radiology, and other hard-to-fill specialties command higher rates across the board.
- Location. Rural and hard-to-reach facilities often pay more to attract coverage.
- Competition. If one agency is the only one seeing your order, there's little pressure on the rate.
The most useful question you can ask any vendor is simple: can you itemize this bill rate? A partner that shows you the pay rate, malpractice, and margin separately is a partner you can negotiate with.
The Costs That Never Show Up on the Bill Rate
The hourly rate is only part of what locum coverage costs your organization. The rest is spread across departments, which is why it rarely gets counted.
Credentialing and privileging time
Provider credentialing commonly runs 90 to 120 days [TechTarget]. Every day a locum waits on paperwork is a day the service line is short, and a day someone on your medical staff office team is chasing documents instead of doing other work.
Unfilled days
The most expensive locum shift is often the one that never gets filled. Merritt Hawkins' 2019 revenue survey found that physicians generate an average of about $2.4 million a year for their affiliated hospitals [Healthcare Dive]. When a vacancy sits open, that revenue walks out the door with it.
Invoice reconciliation
Locum invoices carry daily rates, call pay, overtime, and travel expenses, often from several agencies at once. Matching each one to approved timesheets takes real hours from finance and department administrators.
Onboarding and orientation
EHR access, orientation shifts, and department onboarding all take time from staff who are already stretched.
How to Build a Locum Tenens Budget
A defensible locum tenens budget starts with the coverage you actually need and prices it the way you'll actually pay for it. The IM Career Source guide offers a simple way to frame it:
Locum coverage cost = shifts × hours per shift × bill rate + travel and housing
From there, build it out in five steps:
- Set a baseline. Pull 12 months of locum spend by specialty, department, facility, and agency. Include pass-through expenses.
- Forecast demand. Map known vacancies, planned leaves, recruiting timelines, and seasonal volume to the shifts you'll need covered.
- Price with bill rates, not pay rates. Use itemized quotes from your vendors, not physician-facing ads.
- Add the hidden costs. Account for credentialing lead time, onboarding, and the revenue at risk if a shift goes unfilled.
- Compare against a permanent hire. For long-term gaps, set locum costs next to the fully loaded cost of recruiting and employing a permanent physician. Sometimes locums is the bridge. Sometimes it's the plan.
Ringo's ROI calculator is a quick way to see how small changes in average provider billing, time to fill, or total positions affect annual program spend.
Why Rate Visibility Changes the Math
Most of what makes locum tenens cost hard to control comes down to visibility. Rates aren't published. Markups aren't itemized. Spend is spread across agencies, departments, and invoices that nobody sees in one place.
A vendor-neutral vendor management system changes that. As Ringo puts it, "all staffing firms have equal access to job orders, creating a level playing field that promotes quality, cost savings, and workforce efficiency." Every approved agency sees the same requisition at the same time, so rates reflect real competition. Ringo gives you real-time visibility into all vendor rates, markups, and spending trends, with no preferential treatment of any agency's rates.
On the back end, consolidated billing turns a stack of agency invoices into one invoice and one payment, with 98% invoice accuracy reported by Ringo. Credentialing and reporting sit on the same platform, so you can see locum spend by specialty, department, and vendor without building the report yourself.
For a deeper look at the operations side, read why most hospitals still manage a $10 billion locum market with spreadsheets and how locum tenens staffing supports revenue stability.
The Bottom Line
Locum tenens coverage isn't going away. Physician shortages and steady market growth make it a permanent part of how hospitals staff. What can change is how clearly you see what you're paying.
Start with the bill rate, not the pay rate. Ask every vendor to itemize. Count the costs that live outside the invoice. And make sure every approved agency competes for your orders on the same terms. That's how locum tenens cost goes from a line item you react to into one you manage.
Ringo is the leading vendor-neutral workforce management platform purpose-built for healthcare, managing locum tenens, nursing, allied health, APP, and nonclinical staffing in one place with no agency affiliations. Ringo earned a 94.2 overall satisfaction score in the KLAS 2025 First Look Report, with 100% of interviewed customers saying they would buy again.
Frequently Asked Questions
How much does locum tenens cost hospitals?
It depends on specialty, location, and urgency. Physician-facing pay ranges for 2026 run from roughly $120 to $130 per hour in internal medicine to $300 to $425 per hour in anesthesiology, according to CHG Healthcare's Locumstory. The bill rate a hospital pays sits above those figures once the agency's markup and hard costs are added, and travel and housing are often billed separately.
What is a typical locum tenens agency markup?
There's no independent benchmark. Staffing company estimates put traditional agency markups at roughly 30% to 50%, with wider ranges depending on specialty, geography, and urgency. The best way to understand your own markup is to ask each vendor to itemize its bill rate.
Is locum tenens cheaper than hiring a permanent physician?
For short-term gaps, leaves, and coverage while you recruit, locum tenens is often the practical choice. For long-term vacancies, compare the full cost of locum coverage, including travel and credentialing time, against the fully loaded cost of a permanent hire. The IM Career Source formula (shifts × hours × bill rate + travel) is a good place to start.
How can hospitals reduce locum tenens costs?
Send every requisition to all approved agencies at the same time so vendors compete on rate. Ask for itemized bill rates. Plan coverage earlier to avoid urgency premiums. Consolidate invoicing, and track spend by specialty and vendor so you can see which partners deliver the best value.
Want to see what your locum tenens program is really costing you?
