Most locum agencies won\'t show you this math. We will.
The locum tenens industry runs on 30–60% markups, buried VMS pass-through fees, and bill rates that never reveal what the physician actually takes home. We built Locums One to end that. Below is a real Hospital Medicine coverage week, fully unpacked — every dollar, every fee, every line item.
The Shift
- Specialty: Hospital Medicine (Internal Medicine)
- Facility: Regional health system, 180-bed
- Coverage: 7-on / 7-off block, 12-hour shifts
- Physician take-home rate: $210/hr ($2,520 per 12-hour shift)
- Hospital bill rate: $265/hr ($3,180 per 12-hour shift)
What The Hospital Sees
| Line Item | Per Shift | Per Week (7 shifts) | % of Bill |
|---|---|---|---|
| Hospital bill rate | $3,180 | $22,260 | 100.0% |
| Physician pay | $2,520 | $17,640 | 79.2% |
| Locums One gross markup | $660 | $4,620 | 20.8% |
Hospital bill rate
Physician pay
Locums One gross markup
That $660/shift markup — the spread between bill rate and physician pay — is the full amount Locums One earns on this shift. It falls within our published <a href="/blog/how-locums-pricing-works">15–22% markup band</a>. No hidden add-ons. No MSP pass-through. No "administrative" line items. One bill rate, one invoice.
What Happens Inside That 20.8%
The 15–22% markup is gross. Before we keep a dollar, two external costs come out of it — paid to third parties, not to us. Here\'s the full internal breakdown:
| Line Item | Paid To | Per Shift | Per Week | % of Bill |
|---|---|---|---|---|
| Gross markup (bill − pay) | — | $660 | $4,620 | 20.8% |
| Platform / VMS fee (3.75%) | → paid to third-party credentialing + vendor-management platform | ($119) | ($835) | 3.75% |
| Factoring / finance fee (1.95%) | → paid to our factoring partner so physicians get paid weekly, not on hospital\'s 60–90 day cycle | ($62) | ($434) | 1.95% |
| Malpractice coverage | → paid to our malpractice carrier | included | included | — |
| Locums One net (what we actually keep) | — | $479 | $3,353 | 15.1% |
Gross markup (bill − pay)
Platform / VMS fee (3.75%)
Factoring / finance fee (1.95%)
Malpractice coverage
Locums One net (what we actually keep)
Those two fees — 5.7% of the bill — leave Locums One and go to outside vendors. They\'re not revenue we retain. We disclose them because pretending they don\'t exist is exactly the kind of opacity the rest of the industry relies on.
All of this comes out of our gross markup — not added on top of the hospital\'s bill. The hospital pays $265/hr. That number doesn\'t move.
What the physician sees: $2,520/shift ($17,640/week), direct-deposited weekly, 1099.
What the hospital sees: One invoice, $3,180/shift ($22,260/week), 20.8% gross markup.
The Same Shift Through A Traditional 45% Markup Agency
Most large locum agencies operate at 40–60% margin of bill rate. If the physician still earns $210/hr, here\'s what the hospital pays:
| Line Item | Per Shift | Per Week (7 shifts) | % of Bill |
|---|---|---|---|
| Hospital bill rate | $4,582 | $32,074 | 100.0% |
| Agency margin (45%) | ($2,062) | ($14,434) | 45.0% |
| Physician pay | $2,520 | $17,640 | 55.0% |
Hospital bill rate
Agency margin (45%)
Physician pay
The physician earns the same $2,520/shift. The hospital pays $1,402/shift more — $9,814 more per week — for the exact same coverage.
Side-By-Side: What It Costs The Hospital
| Locums One | 45% Markup Agency | Hospital Savings | |
|---|---|---|---|
| Per shift | $3,180 | $4,582 | $1,402 |
| Per week (7-shift block) | $22,260 | $32,074 | $9,814 |
| Per month (avg 15 shifts) | $47,700 | $68,730 | $21,030 |
| Per year (180 shifts, 7-on/7-off coverage) | $572,400 | $824,760 | $252,360 |
Per shift
Per week (7-shift block)
Per month (avg 15 shifts)
Per year (180 shifts, 7-on/7-off coverage)
*Same physician. Same quality. Same credentialing. The only difference is the markup.*
Where Does The 45% Actually Go?
Traditional agency bill rates absorb costs the hospital never sees itemized:
- Recruiter commissions — often 20–30% of agency margin
- VMS pass-through fees — the staffing vendor\'s cut added on top
- MSP overhead — layered when a managed service provider is involved
- Back-office and marketing overhead — lead-gen, sales teams, office leases
At Locums One, we cut that entire stack. We run on software, not layers of middlemen. Every day a position goes unfilled costs hospitals real money — see exactly how much in our guide on the true cost of unfilled physician shifts.
The Locums One Standard
Our "No Hidden Fees" Commitment — in every contract, in writing.
Every Locums One contract includes, in writing:
- Published gross markup band: 15–22% over physician pay. We disclose the exact figure on every engagement. Platform and factoring costs come out of our margin, not on top of your bill.
- No VMS pass-through. If an MSP sits between us and the hospital, we absorb that cost — we don\'t add it to your bill.
- No "administrative" surprises. One bill rate. One invoice line per shift. No fine-print charges.
- Physician pay disclosed to the hospital. You see what the physician earns. No black boxes.
This is the Locums One Standard.
How We Can Do This
Three structural choices:
- AI-driven matching replaces manual recruiter hours. One platform does the work of 3–5 traditional recruiters per assignment.
- Self-service platform for hospitals. You bid, review, and approve locums directly. No 48-hour email threads.
- Lean team, no sales overhead baked into rates. We don\'t fund a 200-person sales organization through your bill rate.
See the full picture of how we\'re built differently on our Why Locums One page — including our 21-day credentialing standard and what that means for your bottom line.
Request Your Own Invoice Breakdown
Every bid we send includes the full waterfall. Not an estimate — the exact dollars.
- For hospitals: Send us a current locum invoice. We\'ll rebuild the math at Locums One margins and show you the annual savings.
- For physicians: Ask us what the hospital is paying for your assignment. We\'ll tell you.
📧 info@locums.one
🌐 locums.one/transparency
Why Transparency Matters
The opacity in locum tenens pricing isn\'t accidental. It\'s structural. When hospitals can\'t see the markup, they can\'t negotiate it. When physicians can\'t see the bill rate, they can\'t evaluate whether they\'re being paid fairly. The entire traditional agency model depends on both sides staying in the dark.
We think that\'s wrong. And we think the math above proves it doesn\'t have to be that way.
A hospital paying $265/hr for a hospitalist through Locums One pays $1,402 less per shift than through a 45% agency — for the same physician, the same credentials, the same quality of care. Over a year of 7-on/7-off coverage, that\'s $252,360 in savings that stays in the hospital\'s budget instead of going to a staffing company\'s overhead.
For a deeper look at how agency markups work across specialties, see our guide on how locum tenens pricing works. For what unfilled shifts cost when you can\'t find coverage, see our guide on the true cost of unfilled physician shifts.
Frequently Asked Questions
What is a typical locum agency markup?
Most locum tenens agencies operate on a 30–60% markup over physician pay. Locums One publishes a 15–22% markup band and discloses the exact figure on every engagement.
How do you calculate locum agency markup?
Markup percentage is calculated as: (Bill Rate − Physician Pay) ÷ Bill Rate. If the hospital pays $3,180/shift and the physician earns $2,520/shift, the markup is $660 ÷ $3,180 = 20.8%.
What\'s the difference between bill rate and pay rate?
The bill rate is what the hospital pays the agency per hour or per shift. The pay rate is what the physician earns. The spread covers operating costs, platform fees, factoring, malpractice, and profit.
What is a VMS fee in locum tenens?
A Vendor Management System (VMS) fee is charged by third-party credentialing and vendor-management platforms like LocumSmart. At Locums One, the VMS fee is 3.75% and is paid out of our margin — not added on top of the hospital\'s bill.
What is factoring in locum tenens?
Factoring is a financial service that pays physicians weekly instead of waiting for the hospital\'s 60–90 day payment cycle. Locums One uses a factoring partner at 1.95%, absorbed by our margin rather than passed to the hospital.
Is malpractice insurance included in the locum bill rate?
Yes. Reputable locum agencies include occurrence-based malpractice insurance in the bill rate. Locums One\'s malpractice coverage is included in the published 15–22% markup and never billed separately.
Why do traditional locum agencies charge 40–60%?
Traditional agency markups absorb recruiter commissions (typically 20–30% of margin), VMS pass-through fees, MSP overhead, and large sales and marketing teams. Locums One runs on AI-driven matching and a lean team, which is why we can publish a 15–22% markup.
Should I ask my locum agency for their markup percentage?
Yes. A transparent agency will disclose the exact markup on every engagement. If an agency refuses to share the spread between bill rate and physician pay, that signals the markup exceeds industry norms.
How much does Locums One save hospitals compared to a 45% markup agency?
For a hospital medicine 7-on/7-off coverage block, Locums One costs $22,260/week while a 45% markup agency costs $32,074/week — a savings of $9,814 per week, or $252,360 per year for continuous coverage.
What's included in the Locums One bill rate?
The Locums One bill rate includes physician pay, malpractice insurance, factoring for weekly pay, VMS/platform fees, and our margin. There are no VMS pass-through fees, MSP surcharges, or administrative line items added on top.
The 15–22% Standard
Locums One is the first U.S. locum tenens platform to publish its margin range in every contract. If you\'re paying more than 22% above your physician\'s take-home rate, you\'re subsidizing someone else\'s overhead. We built this company to fix that.
For the full picture of how agency markups affect physician pay, see our guide on how locum tenens pricing works. For what hospitals pay when shifts go unfilled, see our guide on the true cost of unfilled physician shifts. For physician compensation by specialty, see our 2026 Locum Tenens Salary Guide. For contract protections before signing, see our contract negotiation guide.
