New law lets rural Texas hospitals employ doctors

Hospital officials anticipate that the law will enable them to attract more physicians to underserved areas and protect doctors' autonomy in practice.

By Carolyne Krupa — Posted June 13, 2011

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Texas has lifted a longstanding ban prohibiting rural hospitals from employing physicians, a move officials hope will help attract doctors to medically underserved areas of the state.

The new law allows hospitals to hire physicians if they are critical access hospitals, are the only hospital in their community and are located in counties with a population of 50,000 or less. It also forbids hospital administrators from supervising or controlling physicians' clinical practice.

The law is a compromise reached after more than five years of debate in the state Legislature between hospital groups and physician organizations. It ensures that doctors can practice medicine in the best interest of patients, said Texas Medical Assn. President Bruce Malone, MD, an orthopedic surgeon in Austin.

"We are very pleased with the protections that the doctors have in this bill," he said.

Those protections say medical staff has full responsibility for all clinical matters, and physicians can use their own medical judgment and have the same rights as physicians in independent practice. The law, signed May 12 by Gov. Rick Perry and effective immediately, also allows doctors to have a say in selecting their medical liability insurance and determining how to respond to liability actions.

"We wanted to make sure that patient care is focused on the patient's lifeline, not the corporation's bottom line," TMA Immediate Past President Susan Rudd Bailey, MD, said in a statement.

Although there are exceptions, most Texas hospitals cannot employ physicians. Texas is among a handful of states, including California, with laws prohibiting the corporate practice of medicine. California allows public hospitals to employ physicians, but it doesn't have any exceptions specific to rural hospitals, the California Medical Assn. said.

The Texas statute prohibiting corporate interference in medicine has been in place since the 1800s, said Don McBeath, director of advocacy and communications for the Texas Organization of Rural and Community Hospitals. Rural hospitals sought the ability to hire doctors because of a growing trend of physicians preferring to be employed rather than risk starting an independent practice, especially in rural communities where residents are more likely to be uninsured, or covered by Medicare or Medicaid, he said.

"It will enhance recruitment of physicians in rural areas," McBeath said. "It's not going to solve the problem. There are always going to be challenges, but this was one barrier we could remove without costing the taxpayers a dime."

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External links

Texas Senate Bill 894, signed into law by Gov. Rick Perry on May 12 (link)

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