2007 Legislative Compendium: Corporate Practice of Medicine

Few issues are as sacrosanct to Texas physicians as the prohibition on the corporate practice of medicine. Over the years, the doctrine has been tarnished. Questions have been raised about whether legal methods to employ physicians, such as 501(a) entities, undermined physicians' ability to make independent medical decisions and to be fiduciaries to their patients. Texas' case law has upheld a prohibition against corporations or other lay entities from directly employing physicians.

TMA vigorously opposes any erosion of the corporate practice prohibition. In this session, as in 2005, the association blocked efforts to allow some types of hospitals, such as hospital districts and rural facilities, to employ physicians. About half a dozen bills were filed that would have allowed a hospital district to employ doctors. All of the problematic bills were "local bills" - bills affecting only a certain county or region. TMA worked successfully with most of the bill authors to revise the language to address medicine's concerns. All the corporate practice bills were amended or died.

The ability of hospitals to employ physicians proved appealing to several lawmakers. Local hospitals encouraged legislators to help their communities improve health care availability by allowing them to hire physicians directly. The authors of some of the bills would not accept TMA-supported amendments because they, and the rural hospital administrators within their districts, argued (erroneously) that employing physicians was the only way to successfully attract and retain physicians in underserved areas.

TMA expects this issue to reemerge next session. An interim legislative study on the topic also is likely.

Corporate Practice of Medicine TMA Staff Team:

Legislative: Dan Finch
Legal: Rocky Wilcox, C.J. Francisco, and  Lee Spangler
Policy: Michael Reed and Helen Kent Davis

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