TMA Testimony on SB 8: Health Care Collaborative

Testimony: Senate Bill 8 -  Health Care Collaborative

House Public Health Committee   

By: Asa Lockhart, MD
Texas Medical Association
May 11, 2011

Good morning, Madam Chair Kolkhorst and members of the committee. My name is Asa Lockhart, and I am an anesthesiologist from Tyler. I am testifying before you today as chair of the Texas Medical Association’s (TMA’s) Ad Hoc Committee on Accountable Care Organizations and on behalf of nearly 45,000 physicians and medical student members. Senate Bill 8 provides an avenue for the state to implement innovative ways for physicians and health care providers to care for Texas patients in collaborative arrangements. It also will help Texas employers and patients plan for the cost of their health care. But most importantly, it protects a physician’s clinical autonomy and ensures that patients and their physicians are in charge of the patient’s health care.

Today I want to discuss five issues critical to TMA’s continued support for this legislation as it moves through the remaining days of the session. The issues are:

  1. Attorney general (AG) approval and Texas Department of Insurance (TDI) certification and oversight,
  2. Equal and shared governance structure,
  3. Compensation committee structure, 
  4. Covenant not to compete, and
  5. Due process.

 1.  AG Approval and TDI Certification and Oversight

  • What have primarily prevented collaboration among parties in the past are state and federal antitrust laws. A collaborative brings together physicians, health care providers, and hospitals who are competitors in a market to achieve a common goal — to make health care affordable and provide quality patient outcomes. 
  • TMA supports bill language that lays out an AG review and concurrence with the TDI assessment to issue a collaborative license. We also support bill language that ensures that TDI continues its usual oversight and regulatory function for collaboratives. TMA is concerned that without active AG review and concurrence, and TDI oversight, a collaborative MAY engage in activities that LIKELY WOULD violate FEDERAL antitrust law. We believe an amendment to clarify the bill provisions to permit AG review and concurrence with TDI’s judgment to issue a license is necessary.
  • Texas needs this important and active state oversight to provide physicians and other health care practitioners peace of mind that their participation in a collaborative will not run afoul of antitrust laws. Even the federal safe harbors the Federal Trade Commission and Department of Justice discussed with interested stakeholders this past Monday on a national webcast do not provide this same assurance. The safe harbors will function ONLY if the Centers for Medicare & Medicaid Services (CMS) has approved the arrangement. 
  • The AG approval interjects a careful balance and serves both those who are in the collaborative as well as those who choose NOT to participate. Without this important state oversight, monopolies could be created especially in small or midsize markets. This could harm the current health care marketplace.
  • More importantly, AG concurrence provides a state solution for those who choose not to get their accountable care organization or collaborative  approved by the federal government.
  • The federal government is focused on the implementation of accountable care organizations rather than state initiatives. Texas should focus its attention on how to structure and implement collaboratives that meet the needs of each local community for those patients who are not in a federal health care program. Texas’ health care collaboratives must be local — not statewide.  

2.  Equal and Shared Governance — The Medical Model

  • If the future of health care delivery involves consolidation, then TMA believes a “medical model” is the best approach.  The bill in its current form provides a governance structure that will support the ultimate goal of keeping patient care and needs front and center.
    • The governing board has equal and shared governance between physicians and non-physicians with a local community member tie-breaking vote.
    • The governing board may be any size so long as the representation is equal AND shared.   
  • The engine that will make a collaborative work is the professional component of any health care service. That is the heart of the medical model, and the success of any health care collaborative is dependent upon it. 
  • If collaboratives are successful, we should see a decline in hospital in-patient admissions and readmissions.  Getting the right care to patients at the right time requires physician leadership and participation. 
  • On the other hand, a hospital-centric model will drive care toward the most expensive place of service — the hospital. Hospitals have made no secret that they seek to dominate the governing board because they bring financial capital to the collaborative. However, this does a disservice and dismisses the importance of the education, training, and skill that only physicians can bring to a collaborative. 
  • Patients MUST receive the right care at the right time, in the least expensive way —  physician offices and other nonhospital-based health care provider locations. Hospital care is only a limited — albeit expensive — component of the continuum of care that a patient receives.
  • The way to ensure that physicians are integral in patient care decisionmaking is to provide them with an equal voice within the collaborative’s governing structure on all important matters, including operations and payment. The bill language before you, as written, achieves that goal.

3.  Compensation Committee Structure

  • In addition to the Governance Committee, the compensation committee will be integral in the design and operation of the new payment methodologies.
  • TMA supports the utilization of a compensation committee to review and negotiate the payments that will flow through the collaborative to the various physicians and health care providers.
  • The bill before you permits a compensation committee of unlimited size. TMA recommends that participation on the compensation committee be limited to three people, who are:  
  1. The unanimously chosen committee member,
  2. A member chosen by the nonphysicians on the board of the collaborative, and
  3. A member chosen by the physicians on the board.   
  • Nothing in the bill would prevent the collaborative composed of mixed provider types from hiring experts to advise the compensation committee. TMA supports that flexibility and approach should the collaborative decide to obtain that expertise.
  • This committee structure would not be essential for collaboratives composed of physicians only.  

4.  Covenants Not to Compete Are Inappropriate for Collaboratives

  • Hospitals and physician groups who use covenants not to compete in their “ordinary course of business” is understandable for recruitment purposes and should be allowed to continue.  The bill language before you should be amended so that covenants not to compete are entirely disallowed when used by a collaborative itself. The purpose of a collaborative is NOT to recruit but to bring together independent individuals, hospitals, and other health care providers already established in the community in a more efficient delivery model. 
  • A health care collaborative is NOT an extension of the hospital and its recruiting activities. Staff recruitment should not be interjected as a function of a collaborative. 
  • MOST IMPORTANTLY, the use of a covenant not to compete by a collaborative is targeted solely at eliminating physicians and individual practitioners from a community. A HOSPITAL is NEVER at risk of being asked to abandon a community. Yet if a physician leaves or is terminated from a collaborative, he or she must leave the community.

5.  Due Process

  • The opportunity to have a fair and interactive opportunity to address a complaint serves a fundamental purpose to ensure that physicians always have an unencumbered role in patient advocacy.  
  • A wrongful complaint should not be used as a method to silence a physician who delivered or advocated for appropriate, necessary care that perhaps did not adhere completely to collaborative protocols. 
  • Appropriate departure from general protocols may be necessary to treat the specific needs of a specific patient. 
  • The bill language before you on due process should not be changed. It provides the protections necessary for fairness when reviewing a physician’s participation in a collaborative and tracks the requirements of the Health Care Quality Improvement Act (which applies to hospital reviews).  


  • A collaborative’s role should be to improve care, measure that care against certain quality benchmarks, report on the cost of care provided to patients, and coordinate activities.  The bill takes a step in that direction.
  • A long-term perspective on collaboratives is to encourage health and prevention instead of focusing on only disease intervention. Embracing this concept is necessary to achieve success and any anticipated cost savings in the long run. 
  • Whether an organization embraces this concept, which is necessary for success, enables us to distinguish between organizations that wish to bring about better-coordinated delivery of health care vs. those that will leverage the collaborative model for short-term, anticompetitive gains.
  • Thank you again for the opportunity to provide our perspective and input. I am happy to answer any questions you may have.  

Last Updated On

May 20, 2016