Freelance-Physician Market Growth Accelerates with ‘Nomad Health’

Published June 5, 2017

Doctors, nurses, and hospitals are finding each other in the sharing economy with help from Nomad Health, a company placing freelance physicians in short-term service arrangements.

More than 90 percent of U.S. hospitals hire physicians to fill approximately 50,000 locum tenens (Latin for “placeholder”) positions, and the market for such assignments is growing by 6 percent per year, The Wall Street Journal reported in March.

Obtaining locum jobs can cost physicians hours of application paperwork, months of waiting, and a 30–40 percent finder’s fee paid to brokers, whose contracts with physicians and hospitals forbid each party from disclosing compensation paid to and from the broker, Nomad Health cofounder and CEO Dr. Alexi Nazem told The Wall Street Journal.

Founded in April 2016, Nomad Health streamlines the physician application process by making it 100 percent online. It charges a 15 percent fee, which is “up to five times less expensive than staffing agencies,” states.

A potential barrier to the growth of locum physician supply and demand is state medical licensing agencies, which are “impeding the liquidity of the market” by requiring doctors to register and pay fees in each state where they treat patients, Nazem told The Wall Street Journal.

Free(lance) Market

Dr. Brian Sachs is a family-practice-trained physician currently working as a full-time hospitalist in Hamlet, North Carolina, in addition to treating patients on a locum basis in a clinic. Sachs says locum tenens is not a new model but a system in which physicians contract with an agency that in turn connects them with hospitals or clinics.

“This model can be found across all fields of medicine, from surgery to primary care to psychiatry,” Sachs said. “Contracts can vary tremendously, depending on patient needs and physician preference.”

Intermediary parties often increase the cost of health care services, Sachs says.

“The markup on these contracts is often hidden and often quite lucrative for the locums company,” Sachs said. “There are some new companies attempting to disrupt the locum tenens market via cost transparency and lower retainer rates, companies such as Lucidity and Nomad Health. Instead of keeping negotiations separate and commissions secret, they open up the discussion directly between hospitals and physicians to work out a mutually agreeable deal at a flat rate.”

Industry (Sub)Standard

Formerly a direct-pay primary care provider, Sachs says the domination of the locum tenens model by middlemen raises costs and is characteristic of the health care industry.

“That is why insurance is so powerful at the moment and why health care is so expensive: [because] they control every financial transaction between the patient and doctor,” Sachs said. “And government, whose private contracts with physicians and hospitals effectively become rule-of-law, has the utmost power over the financial transactions between patient and doctor.”

The rise in freelance physicians is a grassroots response to restrictions imposed by insurers, government agencies, and medical bureaucracies, Sachs says.

“Since nothing has been done over the last 20 years to relieve physicians of these crushing requirements, individual doctors have taken it upon themselves to get out, whether by limiting their practice, dropping insurance contracts—particularly Medicare and Medicaid—retiring, or transitioning to locum tenens,” Sachs said.

Room to Grow

Nazem says the freelance-physician model appeals particularly to doctors newly entering the health-care-provider market.

“In the last three years, there’s been a 50 percent increase in the number of doctors who go straight from their residency into this kind of freelance work,” Nazem told The Wall Street Journal.

Sachs says one attraction of locum positions is a light administrative burden.

“From a physician’s standpoint, the pros are clear: less paperwork, avoiding the difficulty of billing insurance, and the ability to walk away if corporate relationships sour or income suddenly drops,” Sachs said.

Locum positions enable employers to staff vacancies on a trial basis with prospective full-time employees, Sachs says.

“They can fill a vacancy faster while still recruiting for a full-time physician, they can sometimes fill niche services without full-time employment, and they can see if a physician is a good fit without a long-term commitment,” Sachs said.

Undermining Doctor-Patient Relationship?

Sachs says the transience of physicians in the locum model could cause patient-doctor relationships to deteriorate.

“Cons for everyone include lack of continuity and relationship between doctor, patient, and community,” Sachs said. “This is very much underappreciated by politicians, bureaucrats, and the business world. The doctor-patient relationship is the most important aspect of medical care, as it provides the trust and understanding required to offer high-quality care.”

Sachs says the practice of medicine has become impersonal, regardless of whether patients obtain treatment from freelance physicians or full-time staff at a hospital or medical practice.

“Currently, the average face-to-face time with a doctor is seven minutes,” Sachs said. “This hardly leaves time to obtain an adequate history, let alone discussion of possible workup and treatment options.”

The success of start-ups like Nomad Health indicates doctors’ level of frustration with administrative and regulatory burdens, Sachs says.

“Everyone has their breaking point, and it seems that physicians are finally reaching theirs,” Sachs said.

Emma Vinton ([email protected]) writes from Troy, Michigan.

Internet Info:

Allysia Finley, “High-Tech Help for the Freelance Physician,” The Wall Street Journal, March 24, 2017: (behind paywall)

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