Locum Doctors: Higher Cost or Higher Value?

Across Australian health services, locum recruitment is frequently criticised as an excessive cost that must be “reined in”. This view is repeated often but examined rarely. When the full economic cost of permanent medical staffing is properly measured, locum doctors are not only defensible - they are often better value.

Much of the opposition to locums comes from commentators who:

• Have never costed the full employment burden of permanent doctors
• Are ideologically opposed to contractors
• Operate within unionised frameworks resistant to workforce flexibility

Cost control should be driven by evidence, not ideology.

The True Cost of Permanent Medical Staff Is Routinely Underestimated

Headline salary figures significantly understate the real cost of employing a permanent doctor.

In addition to base salary, health services pay for:

• Paid sick leave
• Annual leave
• Paid conference and professional development leave
• Long service leave accrual
• Employer superannuation contributions
• Professional development allowances
• Medical indemnity and other insurances (often subsidised or fully covered)
• Credentialing, onboarding, and HR overhead
• Ongoing management, rostering, performance, and leave backfill

None of these costs apply to locum doctors.

Locums are paid only for the days they work. If they are sick, on leave, attending a conference, or between contracts, they are unpaid. The financial risk sits entirely with the clinician, not the health service.

Wage Growth: The Compounding Cost Few Budgets Acknowledge

Enterprise Bargaining Agreements (EBAs) for doctors across Australia typically deliver annual wage increases of approximately 3–4% per annum, often compounded and backdated.

Over time, this leads to:

• Escalating senior medical costs
• Structural wage inflation that cannot be easily reversed
• Increasing long-term liabilities, particularly long service leave and superannuation

Locum engagement avoids this compounding effect entirely. Rates are transparent, time-limited, and non-escalating by default.

Superannuation, Insurance, and Risk: Shifted Away from the System

Permanent doctors attract employer superannuation contributions (currently 11%, legislated to rise to 12%). This alone represents a significant hidden cost.

Locum doctors:

• Do not receive superannuation
• Cover their own medical indemnity
• Pay for income protection, public liability, and other insurances
• Carry the commercial risk of downtime between contracts

Again, these are real costs - they are simply not borne by the health service.

What Does a Locum Agency Actually Cost?

Australian locum agencies typically charge 12–15% of the locum’s daily rate to deliver a complete end-to-end service, including:

• National and international doctor sourcing
• Credentialing and compliance (AHPRA, college requirements, references, police checks, immunisations)
• Contracting and payroll administration
• Travel and accommodation logistics
• Ongoing workforce management and problem resolution

This margin funds entire recruitment, HR, compliance, and logistics functions.

Replicating this internally would require:

• Dedicated recruitment teams
• Compliance and credentialing officers
• Payroll and contracting specialists
• Travel coordinators
• Legal and industrial relations infrastructure

When fully costed, public health systems cannot match private agency productivity or efficiency, particularly at scale.

Why Agencies Can Deliver This at 12–15%

Agencies achieve this efficiency only through:

• Deep specialisation
• Technology-enabled workflows
• Automated compliance and credentialing systems
• Virtual assistant (VAS) and offshore administrative support

Public systems, constrained by legacy IT, rigid procurement rules, and inflexible workforce structures, are not designed to operate at this level of output per dollar.

Locum Spend Goes Directly to Frontline Care - Not Bureaucratic Absorption

Another frequently ignored reality is where the money actually goes.

Every dollar spent on a locum doctor is directly invested in frontline clinical care. It pays for:

• A qualified doctor delivering patient care
• The minimal recruitment, compliance, and logistics infrastructure required to place them safely

There is no bureaucratic absorption, no internal drift, and no expanding administrative tail.

By contrast, when equivalent funding is allocated to health services to “solve staffing internally” a substantial proportion is commonly lost within the bureaucratic system, including:

• Expansion of non-clinical administrative roles
• Layered management and reporting structures
• Internal HR, industrial relations, and governance overhead
• Inefficiencies driven by rigid workforce and procurement frameworks

These costs rarely translate into additional patient-facing clinical hours.

Locum Funding Is Ring-Fenced to Patient Benefit

Locum engagement creates a rare feature in public healthcare funding: direct accountability.

• No doctor → no payment
• No shift worked → no cost
• No patient care → no invoice

This makes locum expenditure:

• Transparent
• Time-limited
• Directly linked to service delivery

In economic terms, locum spending has near-zero leakage. Funds are converted into clinical hours almost immediately.

Permanent staffing budgets, once absorbed into the system, become diffuse. Money is often redirected toward non-clinical functions that do not reduce waiting lists, increase throughput, or improve patient outcomes.

A Simple Test: Where Does the Patient Benefit Appear?

If a service invests an additional $1 million in locums:

• More shifts are filled
• More clinics are run
• More patients are seen
• Rosters are safer and burnout reduced

If the same $1 million is absorbed into a health service budget:

• There is no guaranteed increase in patient-facing activity
• The link between spend and outcome becomes opaque
• Funds often disappear into operational overhead

Locums convert funding into measurable clinical output. Bureaucratic systems convert funding into process.

Locums Are a Strategic Workforce Tool - Not a Failure

Locums are not evidence of poor planning. They are a strategic workforce lever that allows health services to:

• Maintain service continuity
• Avoid unsafe staffing gaps
• Manage leave, vacancies, and demand peaks
• Protect permanent staff from burnout
• Control long-term fixed costs

Used properly, locums reduce risk, stabilise services, and protect patient care.

Conclusion: Measure the Whole Cost - Then Decide

The claim that locums are “too expensive” rarely survives serious scrutiny.

When you properly account for:

• Leave entitlements
• Superannuation
• Insurance and risk
• Wage escalation
• HR and compliance overhead
• Bureaucratic leakage

Locum doctors are often equal or better value, with far lower long-term liability.

If governments and health executives are serious about efficiency, transparency, and patient outcomes, locums should not be viewed as a cost to be cut but as a high-value clinical investment that directs funding to the bedside, not the back office.