Physician Employment Protections

At the onset of the 82nd legislative session, more than 20 bills were asking lawmakers to lift Texas' ban against the corporate practice of medicine. Both rural and urban hospital districts wanted the ability to employ physicians. However, by the mid-session TMA accomplished these two major feats:

  • Protect Texas' ban against the corporate practice of medicine, and
  • Create important employment protections for physicians who choose to be employed.

TMA supported bills that included proper and structured physician employment for underserved urban and rural patient populations as long as:   

  1. The patient-physician relationship is protected;
  2. Physicians, through the hospital district's medical executive committee, are solely and exclusively responsible for all clinical aspects of medical practice;
  3. Independent medical judgment and the clinical autonomy of physicians – employed and independent – is guaranteed by medical staff oversight; and
  4. The privilege of employing is for the statutory mission of the district to provide care for the indigent residents of the county.

TMA's chief goal was to ensure that no corporation could dictate how physicians care for their patients. Texas is one of the first states in the nation to take this step.   

Employment WITHOUT protections is the corporate practice of medicine.
Employment WITH protections is part of the practice of medicine, and that’s what we stand for. 

Here are the bills that passed and are now law:   

On May 12, Gov. Rick Perry signed Senate Bill 894 by Sen. Robert Duncan (R-Lubbock) and Rep. Garnet Coleman (D-Houston) into law. SB 894 allows critical access hospitals, sole community hospitals, and hospitals in counties of 50,000 or fewer to employ physicians. Most of these hospitals are run by local governments. The new law contains many features that protect the physician’s clinical autonomy against the corporate practice of medicine. It:

  • Places the responsibility for all clinical matters – bylaws, credentialing, utilization review, and peer review – under the medical staff;
  • Guarantees physicians' independent medical judgment;
  • States that all physicians – employed or independent – are subject to the same rights and responsibilities;
  • Allows employed physicians to participate in the selection of their liability insurance and have the right to consent to settle in a liability action; and
  • Requires the medical staff to designate a chief medical officer (CMO) who must be approved by the hospital board. The CMO has the duty to report to the Texas Medical Board (TMB) that the hospital is hiring physicians under this bill and that the CMO is the contact with TMB. The CMO has a duty to report instances of interference to TMB.  

"We strongly support this bill because it ensures that patients and their physicians — not hospital administrators — will be responsible for making clinical decisions,” said TMA President Susan Rudd Bailey, MD. “Unlike other states that allow employment of physicians — Texas is different. We’re one of the first states to statutorily pass clinical protections for physicians who choose employment." Read TMA’s news release urging Gov. Rick Perry to sign SB 894.

On June 17, 2011 the governor signed the remaining employment bills: SB 1661 by Senator Duncan provides first-time physician protections for the thousands of physicians employed by hospital-run, nonprofit health care corporations, commonly referred to as 501(a) corporations. The legislation that passed provides significant protections, makes the physician board of directors responsible for all clinical matters within these organizations, and gives physicians important liability protections within a 501(a).

HB 1568 by Representative Coleman and SB 1795 by Sen. Mario Gallegos (D-Houston) allows the Harris County Hospital District to employ physicians with protections. The Harris County bill provides for a structure for the supervision of all clinical issues related to the practice of medicine in a medical executive board. It imposes no new structure but rather utilizes the existing medical executive board as a physician-led group in charge of the practice of medicine by all physicians – employed or medical school-affiliated – providing care in district facilities. It is the product of local discussions  facilitated by TMA that included the district; the Harris County Medical Society; and both medical schools, The University of Texas Medical School at Houston and Baylor College of Medicine. It helps the district meet its statutory mission to provide care to the indigent.

HB 2351 by Rep. Ruth Jones McClendon (D-San Antonio) allows the Bexar County Hospital District to employ physicians with protections to meet its statutory mission of providing care to the indigent. TMA, the Bexar County Medical Society, and the hospital district worked together to develop an employment structure that protects a physician's clinical autonomy and the patient-physician relationship. The framework of the employment arrangement constitutes a nonprofit healthcare corporation – a 501(a) – with a physician board of directors to oversee all the clinical issues related to physicians and the care they provide their patients. It's companion legislation is SB 1263 by Sen. Leticia Van de Putte (D-San Antonio).

HB 840 by Rep. Naomi Gonzalez (D-El Paso) and SB 860 by Sen. José Rodriquez (D-El Paso) allows the El Paso County Hospital District to employ physicians and other health care providers with protections. Under this measure, the supervision of all matters related to the practice of medicine – by all physicians, employed or not – is the responsibility of the district's medical executive board. The board would be made up of physicians and would establish the rules related to credentialing of physicians, the peer review process, quality assurance programs, and any other function related to the clinical responsibilities of physicians practicing in district facilities. Most importantly, the bill results from a series of discussions we had with the hospital district aimed at understanding its challenges for the future and our need to protect the patient-physician relationship and independent medical judgment. It, too, helps the district meet its statutory mission to provide care to the indigent.

SB 761 by Sen. Royce West (D-Dallas) allows the Scottish Rite Hospital in Dallas to continue to employ physicians. This charitable fraternal hospital has been providing free care to children for 90 years or more, but because of reductions to its endowment, may begin to bill some costs to its insured patients. Throughout its history, the hospital has been employing physicians because of its charitable mission. The physicians at this facility occupy a unique position at the intersection of academia, research, and charity care. Scottish Rite accepted amendments to ensure that the medical staff remain responsible for all aspects of the practice of medicine and have control of all clinical issues. It's companion legislation is HB 2854 by Rep. Vicki Truitt (R-Keller).

SB 303 by Sen. Robert Nichols (R-Jacksonville) was amended to allow the Tarrant County Hospital District to employ physicians with strict protections. It provides for a structure for the supervision of all clinical issues related to the practice of medicine in a medical executive board. It imposes no new structure but rather utilizes the existing medical executive board as a physician lead group in charge of the practice of medicine by all physicians - employed or medical school affiliated - providing care in district facilities.     


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