By FlexMedStaff
The growth of the “middleman economy” that was once created to help build supply chains has now become an extremely profitable industry for many. This is especially true in the healthcare industry, where the middleman has prospered in everything from selling toilet paper, medications, medical equipment, and surgical implants to hospitals and clinics. Rather than being able to purchase directly from the manufacturer, facilities are forced to work thru a middleman. If you know it or not, you are often working through one or multiple middlemen.
As the middleman economy has grown, so too has the number of individuals looking to get a cut of the pie. The locums industry is no different. Locums agencies have become an extremely profitable middlemen, brokering short and long-term deals between medical facilities and practitioners. This has led to more locums companies and the presence of 2nd and 3rd party middlemen. In short, there might be more than one middleman making money off your services as a locums practitioner.
The lack of transparency in the locums industry is frustrating. That includes the lack of clarity on who the middleman is, the number of them, and the profits made off the practitioner’s services. This article focuses on LocumsMart, likely one of the largest locums’ middlemen you have not heard of. We highlight how LocumsMart is run and how they have been able to profit as a middleman. The purpose is to educate practitioners about one of the additional middlemen taking a cut from your services.
About LocumsMart.
LocumsMart is an online marketplace for medical facilities to post locums assignments and for locums agencies to bid on those assignments. LocumsMart was purchased in 2020 by CHG, the nation’s largest privately held healthcare staffing company. CHG also owns the following staffing agencies: CompHealth, Weatherby Healthcare, Global Medical Staffing, RNnetwork, and Foundation Medical Staffing. LocumsMart has around 2,000 facilities and more than 100 locums agencies on its platform.
The LocumsMart Business Model.
Medical facilities with staffing shortages can sign up with LocumsMart for free. On the other hand, locums agencies must pay a non-refundable $15,000 to create an account with LocumsMart. After six months, LocumsMart charges a fee of $1,000 per month. LocumsMart collects 3.5% on each deal between facilities and locums agencies for a practitioner’s services as a processing fee. This means that LocumsMart makes 3.5% off what the locums agencies charge the facilities. These fees count toward the $1,000 monthly fee. LocumsMart does not offer anything directly to the practitioners, such as malpractice insurance. LocumsMart is not involved in every locums transaction as most facilities do not participate in the LocumMart marketplace.
Interpretation: Can you believe this LocumsMart is making 3.5% off your services? It is reasonable to assume that the locums companies are billing, on average, at least $3,000 per day for a practitioner’s services. Now, let’s do some math….
-3.5% x $3,000 = $105 per day in fees going to LocumsMart.
-$105 x 5 days per week = $525 per week in fees going to LocumsMart.
-$525 x 52 weeks per year = $27,300 per year in fees going to LocumsMart.
What could you do with an additional $27,300 per year? Buy a Boat? It seems like a lot of money for a middleman not offering anything directly to the practitioners or facilities rather than a job board for the locums agencies.
The LocumsMart Bid Process.
Once a facility posts a locums assignment, any of the locums agencies on the platform can respond with a “bid.” The locums agencies must include the practitioner’s name, CV, and rates. These rates are hidden from other locums agencies from viewing. The facility has 48 hours to respond to the bid by Accepting or Denying it.
Interpretation: Have you ever felt pressured by locums companies to agree to an assignment and provide a CV? This might be because the locums companies are bidding against other agencies on LocumsMart. The locums agencies what their bid to review first and accepted before other companies have an opportunity to bid on it. The fact that LocumsMart requires the facilities to decide on the bid within 48 hours is likely more beneficial to those that submit bids earlier.
If your name is a part of a bid for an assignment, there should be minimal delay in hearing back from your recruiter. Knowing that the facility must respond to the bid within 48 hours on LocumsMart, you should hear back soon after that. The problem is that your recruiter does not disclose the LocumsMart bid process or if they are dealing with the facility differently.
LocumsMart Buyout fees.
If a practitioner is introduced to a facility thru the bid process, an automatic non-compete is enacted. If the facility contacted the practitioner to work directly with them, they would be responsible for paying a $22-25,000 buy-out fee to the locums company.
Interpretation: How much are you worth to LocumsMart? LocumsMart is pro-locums companies. Well, heck, they are owned by CHG, which has five locums companies. Even though you are unaware of the back door dealings that go thru LocumsMart, they feel that the introduction that the locums company made thru the bid process makes you worth up to $25,000, depending on your specialty.
LocumsMart Non-compete.
Medical facilities and locums agencies engaged with LocumsMart must work thru the platform at all times. Locums agencies cannot go outside LocumsMart to work directly with facilities and vice versa. LocumsMart does not deal directly with practitioners. Thus, they cannot place a non-compete on the practitioners.
Interpretation: LocumsMart does not want facilities to avoid having to pay them their cut of 3.5%.
Do it Yourself with LocumsMart.
It’s not difficult as a practitioner to sign up for LocumsMart as your own locums agencies. Create an LLC, get malpractice insurance, and pay the $15,000, then start using the LocumsMart platform and start bidding against other locums agencies.
Interpretation: Cut out the need for locums recruiters and companies by creating your own solo locums company. Score a bid with a facility for your services and make great money.
Conclusion:
In some cases, the middleman is necessary, but at other times it simply adds to the cost of the product and services without adding significant value. There may be value in having one middleman, but why two or three? Are you comfortable with a 2nd middleman in the locums industry making 3.5% off your services? If not, you could always consider contracting directly with facilities or forming your own locums company and competing with other locums agencies on LocumsMart.
