As a DHB manager, trying to work the conflict between “keeping to budget” while optimising the “number of patients seen/treated” (productivity) can be challenging. 

Even more challenging is the human resource cost in your budget can be served in a number of different ways (e.g. Permanent, Locum, outsource to Private, Insource (SEQURE Health), etc.

It’s about productivity – Patients being seen

One way to reduce the challenge of Ignoring the cost, the most important outcome for you as a patient is that you are seen, diagnosed and treated/managed as soon as possible.

For the DHB this is also important, but it has a cost associated to it as well.  Ideally the DHB wants this cost to be fixed or constant, but this cost is variable as it depends on the cost of the doctor and their speed of seeing patients. 

As a patient, you will not see any difference between a DHB employed Doctor and a Locum Doctor.  For the DHB there is a difference in cost and productivity.  When the DHB pays for a Locum, the Locum is always seeing patients whereas when they pay for a permanent doctor they will not, eg during Annual Leave.

While the hourly rate for an employed doctor looks lower when compared to a Locum, it does not take into account the hours that a doctor is paid for not seeing patients. The hourly rate for the employed doctor must also include the additional costs (superannuation, relocation expenses, statutory holidays, insurance, recruitment etc.) which is in addition to their base annual salary.

The calculator on this page helps you see the true cost for an employed doctor and give you a rate for what you could pay for a Locum at the same ASMS MECA salary step. More importantly you can see the real cost of a employed doctors productivity (seeing patients).

DHB’s perceive that Locums are expensive because on paper the hourly rate appears to be higher than that of a permanent doctor. The Locum doctor rate has all the additional costs included in it unlike the permanent doctor rate. 

Try the Calculator

(Most Locums in New Zealand are paid less than the Equivalent Locum Rate.) 

Ask your doctor if SEQURE Health can help them with seeing more patients?

COVID-19 effect – NZ’s reliance on overseas doctors,  high cost of bringing doctors into the country.  New measures and being put in place to fix the locum rates in NZ which in some cases date back to rates paid to Locum Doctors 20 years ago.  

While we are discussing costs – where is the focus for 

This perception – that Locum is more expensive compared to Permanent is not necessarily true as the calculation normally made is not taking into account the many benefits Locums don’t get paid for.   

When you hire a Permanent you are also obliged to provide a lifestyle that goes with it – eg Annual Leave, CME Leave, Superannuation, Stat Holidays, etc.  A Locum on the other hand can also take annual leave but no one pays them for the time.  Locums are paid when they are available and productive – seeing, diagnosing, and treating patients. 

Cost of Productivity

A Permanent Employee’s productive time Rate (ie cost of productive time including Annual Leave, Super, Stat holidays etc) can be used as an equivalence to a Locum Rate.  You may believe as many of your colleagues do as well that Locums are more expensive.  Surprise yourself – pick an ASMS MECA salary on our Calculator to see what your productivity costs are versus equivalent Locum rate and Onboarding expenses.   

Although it would be right to also add on a factor for the Locum to be continually employed (downtime – contingency) we have not included this here (e.g. a plumber may get paid by employer $35 / hour but is charged to you at a much higher rate to account for down-time (when there is no work for the plumber)).

Our calculator works out for you the productive time a Permanent employee has available, and the resulting cost of this productive time based on ASMS MECA Step.  The result is an equivalent rate and cost for a Locum to see the same amount of patients (assuming Locums are only paid to see, diagnose, treat a patient – not take leave, attend meetings, etc). 

Productivity – 1 year FTE = 6 months Locum

Two Locums You will see that if you hire a Locum for a year then your total cost is almost twice that of an Employee.  The other way to look at this is that if a Locum works all 260 days per year (8 hours per day & no leave) then they are actually providing the work for almost 2 FTE employees!

In general, you can conclude that hiring a Locum is cost-effective, highly productive, and useful for balancing productivity and department budget/culture/management.

How to use Calculator

Simply select the ASMS MECA Annual Base Salary on the left and the equivalent Locum hourly and daily rate will be displayed below. 

This gives you an accurate comparison of the cost of seeing a patient between a locum and a FTE. 

Why only productive time?

Because when a locum is hired and is working the hourly rate they are being paid is only for the time they are seeing patients (productive hours).

To find the Total productive hours of an FTE on the ASMS MECA you deduct all the inclusions (in time) of the total working hours (52 wk/annum * 40hr/wk) you will find an FTE will have approx 1064 hours seeing patients annually.