185.020 Principles for Employment Contracts


185.020 Principles for Employment Contracts: The need to protect quality patient care and the physician’s exercise of independent medical judgment in providing that care to patients, both in the context of accountable care organizations and hospital physician employment efforts, is paramount. Principles that physicians may want to consider when independently evaluating contract offers should focus on protecting professional judgment

An employment contract should contain provisions, subject to individual negotiations, that address the following principles.

  1. Whistleblower Protection from Retaliation. An employment arrangement with a physician should ensure that the patient’s well-being is placed first. Therefore, provisions to guarantee that physicians are free to make complaints regarding interference in medical decisions by nonphysicians to an appropriate authority without fear of reprisal should be considered for inclusion in employment contracts.
  2. Due Process Protections. Physicians must be provided due process in credentialing and privileging, quality assurance activities, utilization review, and peer review. Due process in terms of TMA activities means, at a minimum, the right to notice, a hearing, and an appeal to a physician board to challenge adverse decisions, including termination from the medical staff. Inclusion of Due Process protections in contracts serve to provide a fair forum for physicians when they advocate for patients (among other things). The physician will continue to work until due process is completed unless the physician poses an imminent threat to patients. If a physician is restricted from clinical work during due process, the physician should be compensated appropriately by the institution if the allegations are not confirmed. Furthermore, due process rights should not be able to be waived by a third-party contract.
  3. Medical Staff Bylaws as Contracts. Medical staff bylaws of any entity that may employ physicians (not owned by licensed Texas physicians) should have the legal effect of a contract enforceable by the physicians subject to its terms.
  4. Referral Limitations. Physicians employed by nonphysician entities must have the freedom to refer patients based on the physician’s clinical judgment and not be directed to refer patients to a favored facility or provider. The contract should reflect that freedom of choice.
  5. Prohibitions on “Clean Sweep” Clauses. A physician’s privileges to practice within a hospital facility or other affiliated institution must not be contingent upon employment by any particular nonphysician entity. Thus, the termination provisions of the contract of employment must not affect an individual physician’s privileges to practice in a facility. Furthermore, hospital bylaws should not make privileges contingent on employment.
  6. Fair Dispute Mechanism for Performance Measurements. When a nonphysician entity rates or evaluates a physician’s performance through measures or standards, a fair dispute mechanism must exist in the contract to challenge:
    1. The physician’s involuntary termination;
    2. The physician’s failure to meet satisfaction of performance standards; 
    3. The physician’s eligibility to receive savings or distributions from the nonphysician entity;
    4. The amount of the distribution received by the physician from nonphysician entity;
    5. The patients assigned to the physician’s care under the nonphysician entity;
    6. The measurements used to determine the quality of care/efficiency of care provided to patients under the nonphysician entity; and
    7. Any assessment of the quality of care provided to patients by the physician.
  7. Freedom of Choice of Liability Coverage. Physicians must have the freedom to choose medical liability coverage from the carrier of their choice, and not be required to purchase such coverage from the hospital’s preferred carrier (CHSO Rep. 1-A-12; amended CHSO Rep. 3-A-18). 

Last Updated On

August 14, 2018