Austin Hospitalists Sue TeamHealth Over Corporate Practice of Medicine
By Sean Price


An Austin-based medical practice has filed a lawsuit against the company St. David’s HealthCare uses to help staff physicians at its chain of hospitals, the latest in a tug of war that pits corporate finances against the physician’s view of what’s best for their patients.

Since last fall, relations have gradually grown more heated between the Austin practice, Hospital Internists of Texas (HIT), and Knoxville, Tenn-based, TeamHealth, which is owned by Blackstone Group. Their disagreement finally boiled over when HIT filed a lawsuit against TeamHealth in the U.S. District Court for the Western District of Texas.

The lawsuit filed on May 31 accuses TeamHealth of pressuring physicians to make medical decisions designed to make money for St. David's. This would violate Texas "corporate practice of medicine" laws, which among other things, forbid a business from practicing medicine or employing a physician to provide medical services here, the lawsuit states. The laws are designed to preserve doctors' independent medical judgment.

The lawsuit names St. David's as a conspirator.

HIT's lawsuit says that St. David's "uses TeamHealth to do indirectly what it could not do directly — implement a scheme of corporate governance over physicians to manipulate their medical practice to save St. David's money and remove physicians that St. David's determined cost it too much money." 

Texas Medicine magazine chronicles the dispute between HIT, St. David’s, and TeamHealth in “Corporate Encroachment,” an article that will be published in the July 2018 print edition. A special prepublication version has been released today online.

Since HIT began subcontracting with TeamHealth in 2015, HIT doctors say 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. 

In December, TeamHealth required HIT to remove one physician from St. David's Medical Center because his patients' length of stay were judged to be too long and were "costing St. David's too much money," according to the lawsuit. TeamHealth also threatened to remove two other HIT hospitalists unless they reduced their patients' length of stay, the suit says.

In a statement to Texas Medicine Today, St. David's Vice President of Communication and Community Affairs Denise Bradley, PhD, said, "The basis of the disagreement between TeamHealth and HIT is that TeamHealth and St. David’s HealthCare were holding HIT accountable for improved performance."

Dr. Bradley said St. David's and TeamHealth attempted to "address performance gaps of HIT and to achieve improvement in a number of areas. These areas included clinical quality, patient experience, clinical efficiency and appropriate utilization, as well as adequate presence in our facilities and timely care of our patients. Rather than responding appropriately to the efforts of TeamHealth and St. David’s HealthCare to establish and achieve performance expectations in these areas, HIT instead chose to terminate their contract with TeamHealth."

TeamHealth responded in an emailed statement from Melinda Collins, director of communications. It says in part that "our hospital medicine and our emergency medicine providers will continue to abide by the medical staff bylaws at the hospitals we serve, and our providers will continue to follow the patient assignment processes and protocols that have been in place since our relationship’s inception."

HIT’s former president Dieter Martin, MD, said the group felt compelled to sue TeamHeath. Once HIT's contract with TeamHealth expired in early June, TeamHealth and St. David's instructed emergency department physicians to not use HIT hospitalists, Dr. Martin told Texas Medicine Today on June 19.

"Our plan was to see assigned patients as they come through the emergency room," he said. "[But] the hospital in conjunction with TeamHealth has put an embargo on us in the emergency room. They're essentially trying to run us out of business as quickly as possible." 

In her statement, Dr. Bradley at St. David's said,  "HIT physicians have not been removed from St. David’s HealthCare’s medical staff.” She said HIT doctors are actively working in St. David's hospitals as non-contracted, private hospitalists, but they are no longer on emergency room call schedules because HIT now only cares for private patients who are referred to them by another physician. 

As the Texas Medicine article explains, HIT is not the only physician practice to sue TeamHealth over medical practices at St. David's HealthCare. Another hospitalist practice, Central Texas Hospitalists (CTH), filed suit in 2016. CTH alleged that TeamHealth required “material changes to the CTH physicians’ workplace” by demanding they do work they were not trained for, namely providing services typically handled by emergency department physicians and staff. The suit says TeamHealth was aware that forcing this responsibility on the hospitalists would result in mass resignations, which is exactly what happened. 

While deposing a witness in this earlier lawsuit, which is still working its way through the courts, an executive in the TeamHealth organization referred to “this arcane law we call corporate practice of medicine that nobody needs,” according to an unofficial copy of the transcript on file at the Travis County District Clerk’s office. 

Last Updated On

August 07, 2018

Originally Published On

June 19, 2018

Sean Price


(512) 370-1392

Sean Price is a reporter for Texas Medicine and Texas Medicine Today. He grew up in Fort Worth and graduated from the University of Texas at Austin. He's worked as an award-winning writer and editor for a variety of national magazine, book, and website publishers in New York and Washington. He's also helped produce Texas-based marketing campaigns designed to promote public health. Sean lives in Austin and enjoys hiking, photography, and spending time with his wife and two sons.

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