The ink on Texas Gov. Rick Perry's signature was barely dry before John Marshall Henderson, CEO of Childress Regional Medical Center in Childress, TX, started getting inquiries from physicians about employment.
"I've actually had two or three questions in the last week," related to legislation that was signed May 12, he told HealthLeaders Media in an interview.
The new law will allow rural Texas hospitals to employ physicians, ending a longstanding ban which had prevented hospitals from doing so. Specifically, senate bill 894 will allow critical access hospitals, sole community hospitals, and hospitals in counties of 50,000 or fewer to employ physicians.
Physician recruitment is already a problem in rural communities, so prohibiting employment of physicians was another roadblock for Texas hospitals, especially since nearby states allow physician employment, proponents of the law say.
"Over time it has become increasingly difficult to recruit primary care physicians in particular to more rural, isolated areas of the state, and this is another tool or option or incentive to attract physicians," Henderson said. "There was an argument to be made before this passed that the prohibition against employment actually drove physicians out of Texas because those that would prefer an employment relationship could go to Louisiana or Oklahoma or New Mexico."
Don McBeath, director of advocacy of communications for the Texas Organization of Rural and Community Hospitals, agrees.
"We're very optimistic that this will be huge step toward enhancing access to healthcare in rural Texas by virtue of being able to recruit more physicians into rural areas," he said in an interview. "There's no one solution, but we do think a big barrier was this antiquated Texas law."
One of the concerns with allowing physician employment was whether hospitals would try to influence physicians' medical judgment, but provisions in the legislation aim to prevent that from happening.
"While a hospital can employ a physician, a hospital cannot take any action or develop any policies that might impede physicians' medical decision making," Charles Bailey, SVP and general counsel for the Texas Hospital Association, said in an interview.
For example, the law places the responsibility for all clinical matters, including bylaws, credentialing, utilization review, and peer review, under the medical staff. It also requires the medical staff to designate a chief medical officer who is approved by the hospital board. The chief medical officer must report to the Texas Medical Board that the hospital is hiring physicians under the law, as well as report any instances of interference from the hospital.
Although not all physicians want to become employees, Henderson says the family practice physicians in his community supported the legislation. In fact, he says that at least two of them made the roughly 375-mile trip from Childress to Austin to testify in support of the bill.
"That was a big deal because hospital administrators can say it's a good thing all day long but there's real impact when a physician takes unpaid time to go to Austin and talk about how important the issue is to them," he says.
Although the bill took effect immediately, Henderson says his organization is aiming to be able to offer employment packages to physicians—including retirement, health insurance, and other benefits—by October.
He acknowledges that employing physicians might be more expensive.
"But my perspective is it's worth it when you're talking about an isolated rural community that just needs a physician," he said.
Alexandra Wilson Pecci is an editor for HealthLeaders.
