Ban on Hiring Rural Doctors in Texas is Over

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.