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How to Start a Locum Tenens Company Even If You Have No Experience

A locum tenens company is a business that provides temporary physician staffing solutions to healthcare facilities facing physician shortages or staffing gaps.

Locum tenens companies recruit healthcare professionals, such as physicians, nurse practitioners, and physician assistants, who are available to work on short-term contracts.

Please note that locum tenens arrangements can be short-term, ranging from a few days to several months, or long-term, depending on the facility’s needs.

They offer flexibility for healthcare providers seeking temporary work assignments, allowing them to fill in for permanent staff on leave or to supplement existing staff during busy periods.

Available data shows that the global locum tenens market was valued at approximately $3.4 billion in 2020 and is expected to reach over $6 billion by 2027, with North America dominating the market due to the increasing demand for temporary healthcare staffing solutions.

Steps on How to Start a Locum Tenens Company

  1. Conduct Market Research

Conducting market research for a locum tenens company involves several key steps to understand the industry landscape, identify target markets, and assess competition.

Firstly, gathering data on the healthcare sector’s demographics and trends is crucial. This includes analyzing population demographics, healthcare infrastructure, and regulatory factors influencing physician demand and staffing shortages.

Next, researching specific geographical areas is essential to pinpoint regions with the highest demand for temporary physician staffing.

Factors such as population growth, aging demographics, and the presence of healthcare facilities contribute to market viability.

Furthermore, understanding healthcare facility preferences and pain points is vital. Surveys, interviews, and focus groups with hospital administrators, HR professionals, and physicians provide insights into their staffing needs, preferences for locum tenens providers, and challenges they face in hiring temporary staff.

Lastly, leveraging online resources and industry reports can provide comprehensive market data and forecasts. Platforms like industry associations, government healthcare databases, and market research firms offer valuable insights into market size, growth projections, and emerging trends.

a. Who is the Target Market for Locum Tenens Company?
  • Hospitals, clinics, medical centers, and other healthcare institutions facing physician shortages or temporary staffing gaps
  • Hospital Administrators.
  • Private medical practices, group practices, and specialty clinics.
  • Rural and underserved areas with limited access to healthcare providers.
  • State and federal government agencies involved in healthcare, such as public health departments or military healthcare facilities.
  • Emergency Medical Services (EMS) providers, including ambulance services and urgent care centers.
  • Teaching hospitals, medical schools, and research institutions.
  • Integrated healthcare networks, accountable care organizations (ACOs), and managed care organizations (MCOs).
b. Is Locum Tenens Company a Profitable Business?

Yes, locum tenens companies can be profitable due to the increasing demand for temporary healthcare staffing. The global market was valued at $3.4 billion in 2020 and is projected to exceed $6 billion by 2027.

Factors like physician shortages, demographic shifts, and healthcare reforms contribute to sustained growth, making it an attractive business opportunity.

c. Are There Existing Niches in the Industry?

No, there are no niche ideas when it comes to locum tenens business.

d. Who are the Major Competitors?
  • CompHealth
  • Weatherby Healthcare
  • Staff Care
  • Barton Associates
  • Global Medical Staffing
  • VISTA Staffing Solutions
  • Interim Physicians
  • Floyd Lee Locums
  • Hayes Locums
  • Mint Physician Staffing
  • Fusion Healthcare Staffing
  • Consilium Staffing
  • Pacific Companies
  • MPLT Healthcare
  • Premier Physician Services
  • Integrity Locums
  • Alliance Recruiting Resources
  • Medicus Healthcare Solutions
  • Delta Locum Tenens.
e. Are There County or State Regulations or Zoning Laws for Locum Tenens Company?

In the United States, regulations and zoning laws for locum tenens companies primarily fall under healthcare and business licensing requirements rather than specific county or state zoning laws.

These regulations ensure compliance with healthcare standards, patient safety, and business practices. Each state mandates licensure for healthcare staffing agencies, including locum tenens companies, to operate legally within its jurisdiction.

These licenses typically involve thorough scrutiny of business operations, background checks, and adherence to specific healthcare laws and regulations.

While county or city zoning laws may not directly apply to locum tenens companies, they may still need to comply with general business zoning regulations.

These regulations dictate the types of businesses allowed in specific areas, such as commercial or industrial zones, and may impose restrictions on office locations or signage.

Furthermore, locum tenens companies must adhere to federal regulations governing healthcare staffing, such as the Health Insurance Portability and Accountability Act (HIPAA). Compliance with HIPAA ensures patient privacy and confidentiality.

Additionally, some states may impose specific regulations or requirements for locum tenens companies, such as background checks for healthcare providers, liability insurance, or bonding.

These regulations aim to protect patients, ensure quality healthcare delivery, and maintain ethical standards within the industry.

f. Is There a Franchise for Locum Tenens Company?

No, there isn’t a dedicated franchise model for locum tenens companies, but there are opportunities for collaboration and partnership within the broader staffing and healthcare industries.

g. What Do You Need to Start a Locum Tenens Company?
  • Business Plan
  • Legal Entity Registration
  • Healthcare Staffing License
  • Office Space or Virtual Office Setup
  • Staffing Software
  • Recruitment Team
  • Healthcare Provider Database
  • Marketing and Branding Materials
  • Insurance Coverage
  • Contracts and Agreements
  • Billing and Payment Systems
  • Compliance and Credentialing Processes.
  1. Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with.

It is essential that the name you come up with can easily be pronounced, is unique and easily memorable. Some of the catchy business name ideas suitable for a locum tenens business are;

Creative Locum Tenens Business Name ideas
  • Pro Health® Locum Tenens Company, Inc.
  • Chris Harrison® Locum Tenens Company, LLC
  • Johnson Williams™ Locum Tenens Company, Inc.
  • Eddie Mack™ Locum Tenens Company, Inc.
  • Sean Thierry® Locum Tenens Company, LLC
  • Health Spot® Locum Tenens Company, Inc.
  • Stanley Wenger® Locum Tenens Company, Inc.
  • Health Care® Locum Tenens Company, Inc.
  • Timmothy Halley® Locum Tenens Company, Inc.
  • Lisa Bally® Locum Tenens Company, LLC
  • Jarome® Locum Tenens Company, LLC
  • Medic Pro® Locum Tenens Company, LLC
  • Health Frontal® Locum Tenens Company, Inc.
  • Health Plus® Locum Tenens Company, Inc.
  • Robin Hood® Locum Tenens Company, Inc.
  • Health Solutions® Locum Tenens Company, Inc.
  • The Eagle® Locum Tenens Company, Inc.
  • Joel Stevenson® Locum Tenens Company, LLC
  • Kelvin George® Locum Tenens Company, LLC
  • McQueen Philips® Locum Tenens Company, Inc.
  1. Register Your Business

a. What Type of Business Structure is Best for Locum Tenens Company?

The best type of business structure for a locum tenens company depends on several factors, including the size of the business, the number of owners, and the level of personal liability exposure the owners are willing to accept. However, we usually recommend a limited liability company (LLC).

An LLC is a popular choice for small businesses because it offers personal liability protection for the owners while allowing them to be taxed as a pass-through entity. This means that the profits and losses of the business are passed through to the owners’ tax returns, avoiding double taxation.

b. Steps to Form an LLC
  • Choose a Name for Your LLC.
  • File Articles of Organization.
  • Choose a registered agent.
  • Decide on member vs. manager management.
  • Create an LLC operating agreement.
  • Comply with other tax and regulatory requirements.
  • File annual reports.
c. What Type of License is Needed to Open a Locum Tenens Company?
  • Business License
  • Healthcare Staffing License
  • Professional Liability Insurance, and General Liability Insurance
  • Employer Identification Number (EIN)
  • State Tax ID Number
  • DEA Registration (if dealing with controlled substances)
  • NPI (National Provider Identifier)
  • State Medical License (if required by state law)
  • State Nurse Practitioner License (if applicable)
  • State Physician Assistant License (if applicable)
  • State Business Registration or Certificate of Authority.
d. What Type of Certification is Needed to Open a Locum Tenens Company?
  • Healthcare Staffing Certification
  • Business Management Certification
  • Compliance Certification
  • Professional Recruitment Certification
  • Credentialing Certification.
e. What Documents are Needed to Open a Locum Tenens Company?
  • Business Plan
  • Articles of Incorporation (or other legal entity formation documents)
  • Business License
  • Healthcare Staffing License
  • Tax Identification Number (EIN)
  • Professional Liability Insurance Policy
  • General Liability Insurance Policy
  • Lease Agreement (if renting office space)
  • Staffing Contracts and Agreements
  • Employee Handbook
  • Marketing and Branding Materials
  • Compliance Policies and Procedures
  • Credentialing Documentation for Healthcare Providers
  • Financial Projections and Budget
  • Operating Policies and Procedures Manual.
f. Do You Need a Trademark, Copyright, or Patent?

For a locum tenens company, securing a trademark is essential to protect its brand identity, logo, and slogan from unauthorized use by competitors.

However, copyright protection is not typically necessary for a locum tenens company unless it develops original content, such as marketing materials or software.

Similarly, patents are not usually relevant to locum tenens companies, as their business model involves providing temporary staffing services rather than inventing new products or processes.

  1. Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Locum Tenens Company?

The startup costs primarily involve licensing, insurance, software, recruitment, and marketing. Costs can vary widely based on factors like location, size of the operation, and technology requirements.

On average, startup costs for a small locum tenens company may range from $50,000 to $150,000, while larger operations could require investments upwards of $500,000 or more.

b. What are the Costs Involved in Starting a Locum Tenens Company?
  • Business Registration Fees – $750.
  • Legal expenses for obtaining licenses and permits – $6,300.
  • Marketing, Branding, and Promotions – $2,000.
  • Business Consultant Fee – $2,500.
  • Insurance – $2,400.
  • Rent/Lease – $150,000.
  • Operational Cost (salaries of employees, payments of bills et al) – $150,000
  • Equipment and supplies – $250,000
  • Website: $700
  • Opening party: $6,000
  • Miscellaneous: $5,000
c. What Factors Determine the Cost of Opening a Locum Tenens Company?
  • The size of the locum tenens company
  • The choice of location
  • The required licenses and permits
  • The cost of hiring and paying a business consultant and attorney
  • The cost of branding, promotion, and marketing of the locum tenens company
  • The cost of furnishing and equipping the locum tenens company
  • The cost of the insurance policy covers
  • The cost of registering the business
  • The cost of recruiting and training your staff
  • The cost of the grand opening of the locum tenens company.
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

No, building a facility is not typically required for a locum tenens company as it primarily operates in an office setting.

e. What are the Ongoing Expenses of a Locum Tenens Company?
  • Payroll and Employee Benefits
  • Marketing and Advertising Costs
  • Insurance Premiums (e.g., liability, malpractice)
  • Licensing and Credentialing Fees
  • Software and Technology Expenses (e.g., staffing software, IT support)
  • Office Rent or Mortgage Payments
  • Utilities (e.g., electricity, internet, phone)
  • Travel and Accommodation for Healthcare Providers
  • Continuing Education and Training for Staff
  • Professional Association Memberships and Dues.
f. What is the Average Salary of Your Staff?
  • CEO (Chief Executive Officer): $140,000 per year
  • CFO (Chief Financial Officer): $100,000 per year
  • HR Manager (Human Resources Manager): $90,000 per year
  • Recruitment Manager: $85,000 per year
  • Marketing Specialist: $60,000 per year
  • Administrative Assistant: $50,000 per year
  • Customer Service Representative: $45,000 per year
g. How Do You Get Funding to Start a Locum Tenens Company?
  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank/banks
  • Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
  • Source for soft loans from your family members and friends.
  1. Write a Business Plan

a. Executive Summary

Dr. Chris Williams™ Locum Tenens Company, Inc. is a premier provider of temporary physician staffing solutions based in Los Angeles, California.

Our company is dedicated to addressing healthcare staffing shortages by connecting healthcare facilities with highly qualified and experienced physicians temporarily.

Operating in the vibrant healthcare hub of Los Angeles, we aim to meet the diverse staffing needs of hospitals, clinics, and medical practices across the region.

Leveraging our extensive network of healthcare professionals, we ensure seamless placements that meet the unique requirements of each facility.

At Dr. Chris Williams™ Locum Tenens Company, Inc., we prioritize quality, professionalism, and reliability in all our services.

Our team of experienced recruiters and support staff work tirelessly to match skilled physicians with facilities in need, maintaining the highest standards of patient care and satisfaction.

As a trusted partner in the healthcare community, we are committed to providing exceptional service, building lasting relationships, and making a positive impact on the delivery of healthcare in the Los Angeles area.

With our dedication to excellence and innovation, we strive to be the premier choice for locum tenens staffing solutions in Southern California and beyond.

b. Products and Service

At Dr. Chris Williams™ Locum Tenens Company, Inc., based in Los Angeles, California, we specialize in providing temporary physician staffing solutions to healthcare facilities.

Our comprehensive range of services includes connecting hospitals, clinics, and medical practices with highly qualified physicians temporarily to address staffing shortages and ensure continuous patient care.

With a focus on quality, professionalism, and reliability, our experienced team of recruiters meticulously matches skilled healthcare professionals with facilities in need, maintaining the highest standards of patient care and satisfaction.

c. Mission Statement

At Dr. Chris Williams™ Locum Tenens Company, Inc., our mission is to bridge healthcare gaps by providing exceptional temporary physician staffing solutions.

We are dedicated to ensuring uninterrupted patient care by connecting healthcare facilities with highly qualified physicians temporarily.

Our commitment to excellence, professionalism, and reliability drives us to deliver superior service and make a positive impact on healthcare delivery in the communities we serve.

Vision Statement:

Our vision at Dr. Chris Williams™ Locum Tenens Company, Inc. is to become the premier provider of locum tenens staffing solutions in the healthcare industry. We aspire to be recognized for our unwavering dedication to quality, integrity, and innovation.

By continuously exceeding expectations and fostering lasting partnerships with healthcare facilities and providers, we aim to set the standard for excellence in temporary physician staffing, making a meaningful difference in patient care nationwide.

d. Goals and Objectives

At Dr. Chris Williams™ Locum Tenens Company, Inc., our goal is to become a leading provider of temporary physician staffing solutions nationwide.

We aim to consistently exceed client expectations by delivering exceptional service, maintaining the highest standards of professionalism, and fostering lasting partnerships.

Our objectives include expanding our network of healthcare professionals, optimizing operational efficiency, and continuously improving our processes to ensure seamless placements and maximize positive outcomes for both healthcare facilities and providers.

e. Organizational Structure
  • CEO (Chief Executive Officer)
  • CFO (Chief Financial Officer)
  • HR Manager (Human Resources Manager)
  • Recruitment Manager
  • Marketing Specialist
  • Administrative Assistant
  • Customer Service Representative.

Marketing Plan

a. SWOT Analysis
  • Extensive Network: A broad network of highly qualified healthcare professionals.
  • Reputation: Strong reputation for professionalism, reliability, and quality service.
  • Experience: Experienced team of recruiters with expertise in matching providers with facilities.
  • Location: Strategic location in Los Angeles, a vibrant healthcare hub.
  • Innovation: Embracing technology to streamline operations and enhance client experience.
  • Market Competition: Facing competition from established and emerging locum tenens companies.
  • Dependency: Reliance on external factors such as healthcare industry trends and regulatory changes.
  • Scalability: Challenges in scaling operations while maintaining quality and client satisfaction.
  • Market Expansion: Opportunities to expand services to new geographic regions and healthcare sectors.
  • Industry Growth: Increasing demand for temporary physician staffing solutions due to physician shortages.
  • Diversification: Diversifying services to include other healthcare professions and specialties.
  • Regulatory Changes: Potential changes in healthcare laws and regulations impacting the locum tenens industry.
  • Economic Factors: Economic downturns affecting healthcare spending and demand for temporary staffing.
  • Talent Acquisition: Intense competition for recruiting and retaining top healthcare professionals.
  • Technological Disruption: Rapid advancements in technology affecting traditional staffing models and processes.
b. How Do Locum Tenens Company Make Money?

Locum tenens companies make money by providing temporary physician staffing solutions to healthcare facilities. They charge a fee for matching healthcare professionals with facilities in need, typically based on a percentage of the physician’s compensation or a flat rate per placement.

Locum tenens companies may also make money from contract negotiation fees, credentialing services, and markup on hourly rates for physicians.

c. Payment Options
  • Cash
  • Credit Card
  • Debit Card
  • Mobile Payment Apps (e.g., Apple Pay, Google Pay)
  • Contactless Payment (e.g., NFC-enabled cards)
  • Digital Wallets (e.g., PayPal, Venmo)
  • QR Code Payments.
d. Sales & Advertising Strategies
  • Utilize targeted online advertising, search engine optimization (SEO), and content marketing to reach healthcare facilities and professionals actively searching for locum tenens services.
  • Implement email campaigns to nurture leads, provide valuable industry insights, and promote services to healthcare administrators, HR professionals, and physicians.
  • Establish a strong presence on platforms like LinkedIn, Twitter, and Facebook to engage with healthcare professionals, share success stories, and showcase job opportunities.
  • Incentivize current clients and healthcare providers to refer new businesses or candidates through referral bonuses or discounts on future services.
  • Attend healthcare industry conferences, trade shows, and networking events to connect with potential clients, physicians, and industry stakeholders.
  • Develop a targeted sales strategy to proactively reach out to healthcare facilities, present solutions tailored to their needs, and build long-term relationships.
  • Position the company as an industry leader by publishing white papers, hosting webinars, or speaking at conferences to demonstrate expertise and attract clients seeking trusted locum tenens partners.

Financial Projection

a. How Much Should You Charge for Your Product/Service?

Standard Fingerprinting Session:

Percentage of Physician Compensation: They may charge a percentage of the physician’s compensation for each placement, ranging from 20% to 40% of the physician’s hourly rate or total earnings for the assignment.

Flat Rate Per Placement: Some companies charge a flat fee per placement, which can vary widely depending on factors such as specialty, location, and duration of the assignment. This fee can range from $500 to $5,000 or more per placement.

Contract Negotiation Fees: Locum tenens companies may charge additional fees for negotiating contracts between healthcare facilities and physicians, typically ranging from $500 to $2,000 per contract.

Credentialing Services: They may offer credentialing services to ensure that physicians meet facility requirements, charging fees ranging from $100 to $500 per physician.

Markup on Physician Rates: Some locum tenens companies add a markup on the hourly rates paid to physicians, typically ranging from 20% to 40%, which is included in the overall cost paid by the healthcare facility.

Travel and Accommodation Reimbursement: They may also charge fees for managing travel and accommodation arrangements for physicians, usually reimbursed by the healthcare facility.

Additional Services: Depending on the company, additional services such as licensing assistance, malpractice insurance, and continuing education support may be offered for additional fees, typically ranging from $100 to $500 per service.

b. How Much Profit Do Locum Tenens Company Owners Make a Year?

The profit for locum tenens company owners can vary widely depending on factors like company size, operational efficiency, and market demand. On average, owners may earn annual profits ranging from $100,000 to $500,000 or more.

However, it is important to note that these figures are estimates, and actual profits can be influenced by factors such as overhead costs, competition, and the ability to attract and retain clients and healthcare professionals.

c. What Factors Determine the Amount of Profit to Be Made?
  • The type of services and the capacity of the locum tenens company
  • The location of the locum tenens company
  • The management style of the locum tenens company
  • The business approach of the locum tenens company
  • The advertising and marketing strategies adopted by the locum tenens company.
  • The number of years the locum tenens company has been in business
d. What is the Profit Margin of a Locum Tenens Company?

The profit margin of a locum tenens company typically ranges from 10% to 30%, with variations depending on factors like operational efficiency, overhead costs, and competitive pricing strategies.

e. What is the Sales Forecast?
  • First Fiscal Year (FY1): $650,000
  • Second Fiscal Year (FY2): $900,000
  • Third Fiscal Year (FY3): $1.3 million
  1. Set Up your Shop/Office

a. How Do You Choose a Perfect Location for Locum Tenens Company?
  • Select a location with a high concentration of healthcare facilities, such as hospitals, clinics, and medical centers, to access a larger pool of potential clients and healthcare professionals.
  • Choose an area with a significant population of healthcare providers to facilitate recruitment and networking opportunities, ensuring a steady supply of qualified professionals for locum tenens placements.
  • Choose a location with convenient access to transportation hubs, major highways, and airports to facilitate travel for both clients and healthcare professionals, enhancing the company’s reach and efficiency.
  • Consider factors like business-friendly regulations, tax incentives, and support services available in the area to foster growth, streamline operations, and create a favorable business environment for the locum tenens company.
b. What State and City is Best to Open a Locum Tenens Company?
  • Los Angeles, California
  • New York City, New York
  • Miami, Florida
  • Denver, Colorado
  • Seattle, Washington
  • Chicago, Illinois
  • San Francisco, California
  • Boston, Massachusetts
  • Charlotte, North Carolina
  • Nashville, Tennessee.
c. What Equipment is Needed to Operate a Locum Tenens Company?
  • Computers
  • Phones
  • Internet Connection
  • Printers and Scanners
  • Office Furniture
  • Software
  • Communication Tools
  • Office Supplies
  • Security Measures
  • Backup Systems.
  1. Hire Employees

Hiring employees for a new locum tenens company is crucial for expanding operations, managing workload, and achieving business growth.

Employees bring diverse skills, expertise, and perspectives that can enhance service delivery, client satisfaction, and overall company performance.

When hiring, it is essential to look for candidates who possess relevant experience in healthcare staffing, strong communication and interpersonal skills, and a passion for making a difference in the healthcare industry.

Additionally, prioritize individuals who are adaptable, detail-oriented, and capable of thriving in a fast-paced and dynamic work environment to ensure the success and sustainability of the business.

  1. Launch the Business Proper

Organizing an official launch for a new locum tenens company requires careful planning and execution to create a memorable event that generates excitement and establishes credibility in the industry. Start by setting a date and location for the launch event, ensuring it aligns with the company’s vision and target audience.

Develop a comprehensive marketing strategy to promote the launch through various channels, including social media, email campaigns, and industry publications.

Consider inviting key stakeholders such as healthcare professionals, potential clients, industry influencers, and local media to build relationships and generate buzz.

During the event, showcase the company’s services, values, and unique selling points through presentations, demonstrations, and networking opportunities.

Finally, follow up with attendees to express gratitude, gather feedback, and nurture potential partnerships to ensure a successful launch and long-term success.

a. What Makes a Locum Tenens Company Successful?
  • Building and maintaining a robust network of healthcare professionals and facilities to facilitate placements and meet client needs.
  • Providing high-quality, reliable, and responsive service to healthcare facilities and professionals, ensuring satisfaction and repeat business.
  • Having a deep understanding of the healthcare industry, including market trends, regulations, and staffing challenges, to offer effective solutions.
  • Leveraging innovative staffing software and digital tools to streamline operations, enhance efficiency, and improve client and candidate experiences.
  • Remaining adaptable to changing market dynamics, client preferences, and industry shifts, while continuously innovating and improving services to stay competitive.
b. What Happens During a Typical Day at a Locum Tenens Company?

A typical day at a locum tenens company involves a variety of tasks aimed at facilitating placements between healthcare facilities and professionals.

Recruiters review client requests, match them with available providers, and coordinate interviews and credentialing. They communicate with clients to understand staffing needs, negotiate contracts, and ensure client satisfaction.

Administrative staff manage paperwork, handle inquiries, and maintain databases. Sales and marketing teams promote services, nurture client relationships, and generate leads.

Additionally, management oversees operations, sets strategic goals, and monitors performance metrics to ensure efficient service delivery and meet company objectives.

c. What Skills and Experience Do You Need to Build a Locum Tenens Company?
  • Understanding of the healthcare industry, including staffing trends, regulations, and market dynamics.
  • Ability to source, screen, and match healthcare professionals with facility needs.
  • Experience in sales, contract negotiation, and client relationship management.
  • Strong verbal and written communication skills to effectively interact with clients, providers, and internal teams.
  • Capacity to manage multiple tasks, prioritize workload, and meet deadlines in a fast-paced environment.
  • Ability to lead and motivate a team, delegate tasks, and foster a collaborative work environment.
  • Aptitude for identifying issues, analyzing data, and implementing solutions to address challenges.
  • Dedication to providing exceptional service, resolving client concerns, and exceeding expectations.
  • Understanding of business operations, financial management, and strategic planning.
  • Flexibility to adjust to changing priorities, industry trends, and client needs.