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Texas’s Exception to Physician Employment at Rural Hospitals Reflects National Trend

by Leah Greene, JD, LLM on June 21st, 2011

Texas allows for hospital employment of physicians at rural hospitals

In May 2011, Texas Governor Rick Perry signed a bill that allows rural hospitals to employ physicians, which took effect immediately. The revised law created an exception to the State’s approximately 200-year-old ban on the corporate practice of medicine. A rural hospital may now employ physicians if it is a critical access hospital, the only hospital in its community, and is located in a county with a population of fewer than 50,000.

Protections for physicians are included in the new law. Specifically, hospital administrators are prohibited from supervising or directing the physician’s treatment decisions. In addition, the physician has a say in which medical liability insurer he or she chooses and in how to respond to liability claims.

More information about the new law is found here.

Downward trend nationally of independent physicians

Texas’s revised law reflects the shifting trend among physicians nationally. An increasing number of physicians prefer hospital employment over an independent practice. A recent report by Accenture found that only 33 percent of physicians will remain independent by 2013, down from 2009, when 43 percent of physicians were independent. The study pointed out that hospital employment offers advantages to physicians such as relief from administrative duties, greater access to leading-edge healthcare technology, better work hours, and stability in an uncertain business environment due to recent payment reforms.

The Accenture report is found here.

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From → Health Law