The physician’s guide to locum tenens and per diem jobs

More physicians are exploring work outside the traditional employment model to boost their income, set their own schedules, or both. The two most common paths are per diem shifts and locum tenens contracts. Both offer flexible work, but they operate under different structures with distinct financial implications.

Locum tenens demand is concentrated heavily in a few specialties, with emergency medicine accounting for 51% of locum spending and 65% of anesthesiology units relying on interim coverage. Per diem hiring is growing too, as facilities lean on shift-based physicians to fill everyday scheduling gaps. But the jump from a W-2 paycheck to 1099 income comes with self-employment taxes, benefits gaps, and specialty-specific pay differences that can make or break the value proposition.

Physicians on Sermo are already vetting agency reputations, sharing real-time hourly rates, and trading referrals for locum-literate CPAs. Join the conversation to see what your peers are saying.

Per diem vs. locum tenens: Which fits your goals?

Per diem, which means “per day” in Latin, is shift-based work where you pick up individual days at a nearby facility. There’s no long-term contract, and most per diem physicians hold a full-time W-2 position, so they use these shifts to supplement their income.

Locum tenens, meaning “to hold the place of,” is a contracted temporary assignment where you step into an existing role for weeks to several months. These positions are coordinated through staffing agencies, often involve travel, and function more like a standalone career path than a side gig.

Here’s how the two compare:

• Duration: Per diem work has no obligation beyond a single shift. Locum tenens contracts typically run two weeks to six months or longer, with defined start and end dates.
• Flexibility: The per diem model offers maximum daily schedule control. Locum tenens gives you flexibility between assignments, but during a contract, schedules are fixed and often full-time.
• Scope of work: Per diem physicians fill gaps in the existing schedule. Locum tenens physicians step into a defined role, often replacing a specific provider with a broader clinical scope.
• Compensation: Per diem pays higher hourly rates than salaried positions to offset the lack of benefits.  Locum tenens compensation is negotiated as a daily or weekly rate and frequently includes travel reimbursement, housing, and malpractice coverage. In high-demand specialties, locum physicians can significantly out-earn their permanently employed peers.
• Benefits: Per diem roles almost never include benefits. Locum tenens contracts often include malpractice insurance, and agencies may cover licensing, credentialing, and travel, but locum physicians are still typically classified as 1099 independent contractors.

Both paths are legitimate ways to practice medicine on your own terms. The question is whether you want to stay local and supplement your income with maximum day-to-day flexibility, or commit to defined contracts that may require travel and longer-term planning.

 Pros and cons of locum tenens work

Locum tenens can be a genuinely great career move for the right physician at the right time, but it can also come with financial and logistical surprises that catch people off guard.

Pros of locum tenens work

• Premium pay: Locum tenens hourly rates are typically higher than staff positions to account for the lack of traditional benefits. Emergency medicine locums currently average around $320 per hour, and anesthesiology rates have climbed to $300 to $400 per hour. Rural and underserved areas often offer even more to attract candidates.
• Paid travel and housing: Most staffing agencies cover flights, rental cars, and lodging for the duration of your assignment. Shorter gigs or contracts arranged directly with a hospital might not include those perks.
• Clinical variety: Working across different hospital systems, EHRs, and patient populations builds a skill set that’s hard to develop in a single institution. A pediatric infectious disease physician on Sermo described the value of that exposure. “It is a great opportunity to meet people and see how other institutions and practices run. It can be a nice way to fill a gap of time before a more permanent position or career starts.”
• Strategic sabbaticals: Locum tenens lets you design your year around your priorities instead of having to request time off. You can work intensely for six months and then take three off without asking anyone’s permission. A radiologist on Sermo used exactly this approach. “I used my vacation time from my hospital job to do locum tenens so that I could pay for law school in cash. It was great as an earnings source and I had interesting experiences in places I would never have visited.”

Cons of locum tenens work

• The 1099 tax burden: As an independent contractor, you’re responsible for the full 15.3% self-employment tax and quarterly estimated payments to the IRS. The jump from a W-2 where taxes are automatically withheld to a 1099 where nothing is taken out can create serious sticker shock. Physicians should consult a qualified tax professional, especially when working across multiple states.
• Licensing and credentialing: Working in more than one state means maintaining multiple medical licenses and completing separate credentialing processes for each facility. Some agencies help with these tasks, but the administrative burden ultimately falls on you.
• The “outsider” factor: You’re often the new person on the unit. Permanent staff may be less invested in helping someone who’s leaving in a few weeks, and you might get assigned the least desirable shifts. A urology physician on Sermo shared practical advice. “Make sure you set the expectations before you sign a contract to determine the acuity of care you are comfortable seeing, if doing surgery, the types of surgery you don’t or can’t do, and the volume of work you do.”
• The benefits gap: Leaving a W-2 position means losing employer-subsidized health insurance, 401(k) matching, disability coverage, and malpractice tail insurance. The higher hourly rate can offset these costs, but only if you account for them carefully.

An obstetrics physician on Sermo summed up the importance of doing your homework. “I quickly learned that not all locum tenens companies are created equal. Some offered impressive rates upfront but had hidden deductions or limited contract durations. A clear pay structure is key.” Physicians on Sermo are vetting locum agencies, comparing contract terms, and sharing what they wish they’d known before their first assignment. See what your peers are saying before you sign your next contract.

Pros and cons of per diem work

Where locums appeals to doctors who want to travel, earn aggressively, or take extended breaks between contracts, per diem tends to draw physicians who want to keep their life exactly where it is and layer in extra shifts on their own terms.

Pros of per diem work

• Maximum schedule control: You pick up only the shifts that fit your life with no need to negotiate PTO, swap shifts with a colleague, or justify your availability to anyone.
• Zero travel stress: Per diem shifts are typically at facilities near your home, which means you keep your routines and sleep in your own bed.
• No long-term politics: You’re there to do the clinical work and go home. You’re rarely pulled into committee meetings or departmental politics.
• Moonlighting potential: Per diem is the most straightforward way to supplement a full-time W-2 income, whether you’re paying down student loans, saving for a house, or building an emergency fund. Sermo’s guide to physician moonlighting covers more ways to make this work.

Cons of per diem work

• Income instability: If the patient census drops, the hospital can cancel your shift at the last minute, and you don’t get paid.
• No “tail” coverage: Many per diem roles don’t include malpractice tail insurance, which protects you against claims filed after you stop working at a facility. Purchasing it on your own can be a significant out-of-pocket expense.
• Lower scheduling priority: Since permanent staff and contracted locum physicians are likely to get first pick, per diem doctors may get whatever’s still left, which often means nights, weekends, and holidays.

Per diem work is at its best when used strategically as a tool for earning extra income, maintaining clinical skills across settings, or bridging gaps between permanent positions.

Avoiding the most common 1099 tax pitfalls

Any income reported on a 1099 comes with tax responsibilities that W-2 physicians never have to think about. The rates look great on paper, but physicians who don’t plan for the tax side often lose a significant portion of that premium to avoidable mistakes. As a pediatric infectious disease physician on Sermo noted, “Taxes are sometimes not taken out of your paycheck and advice from a tax expert may be helpful.”

The pitfalls that cost 1099 physicians the most:

• Treating 1099 income like take-home pay: A reasonable rule of thumb is to set aside 25 to 35% of every payment for taxes from the beginning.
• Missing quarterly estimated payments: The IRS expects independent contractors to pay taxes in April, June, September, and January. If you wait until your annual return, you’ll owe underpayment penalties on top of the tax itself.
• The 15.3% self-employment tax: As a W-2 employee, your employer pays half of your Social Security and Medicare taxes, but as an independent contractor, you pay the full 15.3%. On $300,000 in locum income, that’s roughly $23,000 that wouldn’t be owed in a salaried role.
• Overlooking the QBI deduction: The Qualified Business Income deduction allows eligible self-employed individuals to deduct up to 20% of qualified business income. Income thresholds can limit this for physicians, but the savings are substantial when they apply, so it’s worth evaluating.
• Neglecting tail coverage costs: Claims-made malpractice insurance from your agency typically ends when the contract does. Tail insurance, which covers claims filed after your policy lapses, can cost tens of thousands of dollars and is easy to overlook during contract negotiations.  These premiums are deductible as business expenses if you properly track them.
• Mixing business and personal expenses: The IRS expects a clear separation, with a dedicated business bank account, a separate credit card for work-related expenses, and clear documentation for all deductions. Commingled accounts make audits painful and can result in legitimate deductions being challenged.
• Staying a sole proprietor too long: Once your 1099 income reaches approximately $150,000 or more per year, forming an S-corp can meaningfully reduce your self-employment tax burden by letting you pay yourself a reasonable salary and take the remaining profit as distributions not subject to the 15.3% SE tax.
• The “commute” deduction myth: Driving to a facility where you regularly work is considered a commute and not deductible under the IRS rules.  However, travel to a temporary work location, which most locum assignments qualify as, is generally deductible and should not be overlooked when you file.  

None of this replaces advice from a qualified tax professional. If you don’t already have a Certified Public Accountant (CPA) who specializes in physician contractor income and multi-state filings, finding one should be your first move before accepting a 1099 assignment.

Physicians on Sermo are sharing referrals for locum-literate CPAs and comparing strategies for managing multi-state tax obligations. See what your peers recommend.

Specialty pay gaps in locums work

The gaps in locum tenens pay between specialties are significant enough to change whether the math works for you. Here’s where the money is concentrated:

• Emergency medicine: This specialty consistently ranks at the top, with rates of $250 to $350 per hour or more. About 51% of locum spending is concentrated in EM, driven by persistent staffing shortages and the 24/7 nature of emergency departments.
• Anesthesiology: The highest reliance on interim coverage of any specialty, with around 65% of units using locum providers. Hourly rates run $300 to $400, and opportunities are especially concentrated in the Midwest.
• Surgery: General and subspecialty surgeons command high daily rates, especially for on-call coverage. Neurosurgery and vascular surgery top the pay scale, with neurosurgeons earning a median annual salary of $788,000 and vascular surgeons earning a median of $558,000.
• Psychiatry: There’s an ongoing demand from the national behavioral health shortage. Favorable schedules and lower acuity make the effective hourly value competitive, with locum psychiatrists earning $185 to $220 per hour.
• Internal medicine: More moderate rates of $120 to $145 per hour, but consistently high volume nationwide.

Beyond specialty, rural and underserved areas almost always pay more than urban centers. Physicians who are flexible about location can use that to their advantage. For a full breakdown, Sermo’s 2026 locum tenens salary guide covers current rates by specialty in detail.

Per diem vs locum tenens: Which is best for you?

The right answer depends on what you’re trying to accomplish and what your life looks like right now.

Choose locum tenens if you want higher earning potential, are open to travel, and prefer the structure of a defined contract. It’s well-suited for physicians targeting a financial milestone, those between permanent positions, or anyone exploring different clinical environments. Physicians interested in practicing abroad or becoming a travel doctor will find locum tenens the natural entry point. Choose per diem if you want to stay local, need daily schedule control, and are looking to supplement income from a primary position.

But there’s also no need to permanently adopt one model. A physician might use per diem shifts for supplemental income during a staff position and then switch to locum tenens contracts during a career transition or when pursuing a specific financial goal. A family medicine physician on Sermo captured that flexibility. “It is a valid option to consider extra income and be able to combine it with your regular schedule and life.

Key takeaways

• Per diem is ideal for local moonlighting and supplemental income with maximum daily flexibility. Locum tenens is built for higher earnings, travel, and the opportunity to hit major financial milestones through defined contracts.
• The real cost of switching from W-2 to 1099 isn’t just the salary change. Losing employer benefits like health insurance, 401(k) matching, and malpractice tail can significantly reduce total compensation if you don’t plan for it.
• Specialty pay varies widely in locums. Emergency medicine and anesthesiology command the highest locum rates, while internal medicine offers moderate pay but high volume.
• The 1099 tax burden catches physicians off guard. The 15.3% self-employment tax, quarterly payments, and multi-state filings require a CPA who understands physician contractor income.

The bottom line for 1099 physicians

The physicians who get the most out of per diem and locum tenens approach their clinical work with sound business principles. They understand the tax implications, negotiate contracts carefully, and choose assignments strategically. By getting the financial math right and picking the model that fits, gig work becomes a tool for reclaiming autonomy in your career. Sermo is where physicians compare locum tenens staffing companies, discuss contract terms, share tax strategies, and talk through alternative career paths with peers who’ve been on both sides. Join the community to make your next move with better information.