Corporate Practice of Medicine Legislative Brief

Texas law prohibits the corporate practice of medicine — essentially it is illegal for big corporations, hospitals, or anyone who is not a licensed physician to employ physicians. The reason for this prohibition is simple. The direct employment of physicians by big corporate hospital systems and Wall Street business entities — outside the jurisdiction of the Texas Medical Board — threatens to overrule physicians’ independent medical judgment and hurt patient care. We need to stop Washington-style health care from creeping into Texas.

Physicians should work for the patient not the insurance company, hospital, or anyone else who might have incentives contrary to the patient’s best interests. Direct employment of physicians by corporations is divisive to local medical communities by setting up dynamics that favor the business interests of the corporation over the medical needs of the community. Tools currently exist for counties to recruit physicians to their communities without compromising the physician’s independent medical judgment or eliminating the private practice of medicine. These include (1) the formation of a nonprofit health care organization, where physicians, and only physicians, supervise medical care and physician services, and (2) the physician loan repayment program, which encourages physicians to practice in medically underserved and rural communities by helping them repay their staggering medical school loans.

Medicine’s 2011 Agenda

  • Oppose efforts that will allow employment of physicians by nonphysician entities or that will threaten the patient-physician relationship.
  • Strengthen TMB oversight of existing employment exceptions.
  • Expand TMB’s authority to establish mechanisms and processes that protect physicians’ responsibility to make clinical decisions in the best interest of their patients.

Medicine’s Messages

  • Physicians should work for the patient not the insurance company, hospital, or anyone else not directly responsible for the care of the patient.
  • The state should identify and correct barriers to physicians locating in medically underserved areas, for example through payment formulas and incentives.
  • Tools currently exist, such as the physician loan repayment program, for counties to recruit new physicians to their communities without compromising the physician’s independent medical judgment or eliminating the private practice of medicine.
  • TMB has the ultimate authority to regulate the practice of medicine in Texas on behalf of all our patients. The state should look to TMB not only to maintain high standards of ethical practice but also to establish mechanisms and processes that protect physicians’ responsibility to make clinical decisions in the best interest of their patients.


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