Texas Medicine Investigation Exposes Threats to Texas’ Ban on Corporate Practice of Medicine

June 19, 2018

An Austin physician group, one of the city’s largest hospital systems, and an outside hiring firm are engaged in a tug of war that pits corporate finances against the physicians’ view of what’s best for their patients, a three-month investigation by Texas Medicine magazine found.

“It wasn’t like this previously. Our daily duties were previously focused on taking care of our patients,” Ellis Doan, MD, the physician group’s chief medical officer, told Texas Medicine. “Now, we’re constantly pressured to discharge patients faster and earlier in the day, tracked with discharge time goals created arbitrarily by non-clinical hospital administrators, and pushed to quickly issue admission orders under time goals — oftentimes prior to seeing the patients — to meet a time metric. It has nothing to do with patient care at all.”

The Texas Medicine story, “Corporate Encroachment,” will be published in the July 2018 edition of the magazine. A special prepublication version has been released today online.

The Austin struggle is similar to complaints physicians have shared with the Texas Medical Association (TMA) that demonstrate a growing disregard for Texas’ legal ban on what is known as the “corporate practice of medicine.” That law is intended to keep lay people and organizations from interfering in a physician’s medical judgment, especially for financial reasons.

“Physicians have the highest duty, a fiduciary duty under Texas law, to put each patient’s needs first,” said TMA Vice President and General Counsel Donald P. “Rocky” Wilcox. “We continue to work on this issue, and more needs to be done to ensure that non-physicians are not able to unduly influence how medicine is practiced.”

The arrangement between the three Austin parties — now clouded even more by a lawsuit the physician group filed May 31 — was supposed to work like this: Hospital Internists of Austin (now Hospital Internists of Texas, or HIT) would supply the internists for five of the six hospitals in the St. David’s HealthCare chain, which is majority-owned by HCA Healthcare. With about 85 physicians and 35 nurse practitioners, HIT would work through TeamHealth, one of the nation’s biggest medical staffing companies. TeamHealth, owned by Blackstone Group, would recruit the emergency physicians for the hospital chain.

Instead of leaving patient care to the physicians, HIT doctors told Texas Medicine reporter Sean Price, TeamHealth’s demands to cut costs and raise revenue gradually became more frequent and less reasonable. They say the company encouraged the hospitalists to speed up discharge times to clear out beds for new patients, and it promoted transfers from other hospitals, even when those transfers were not medically necessary. 

“Over the past three years, we’ve been having increasing encroachment from TeamHealth on our decision-making and increasingly we’re being asked to do things that are unsafe or against the patients’ best interest,” said Dieter Martin, MD, HIT past president.

Since 1956, Texas has had some of the strictest corporate practice prohibitions in the country that, among other things, bar non-physicians from employing physicians. Mr. Price’s story reveals a potential pattern in which the state has failed to enforce that law amid a changing business environment.

TMA will push during the 2019 session of the Texas Legislature to give physicians — especially those hired by a nonprofit health corporation — more recourse.

The TMA House of Delegates in May directed TMA to develop legislation that stops nonprofit health corporations from retaliating against employees who file complaints or reports of suspected violations of state or federal law. The house also told TMA to ask lawmakers to give the Texas Medical Board (TMB) authority to accept, process, and dispose of complaints against licensed nonprofit health corporations, which are currently certified by TMB.

TMA is the largest state medical society in the nation, representing more than 51,000 physician and medical student members. It is located in Austin and has 110 component county medical societies around the state. TMA’s key objective since 1853 is to improve the health of all Texans. 


Steve Levine (512) 370-1380; cell: (512) 750-0971; email: steve.levine[at]texmed[dot]org
Marcus Cooper (512) 370-1382; cell: (512) 650-5336; email: marcus.cooper[at]texmed[dot]org  

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Last Updated On

February 14, 2020

Originally Published On

June 19, 2018