S.B. No. 894

	AN ACT
	relating to employment of physicians by certain hospitals.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Chapter 311, Health and Safety Code, is amended
	by adding Subchapter E to read as follows:
	SUBCHAPTER E.  EMPLOYMENT OF PHYSICIANS BY CERTAIN HOSPITALS
	Sec. 311.061.  APPLICABILITY AND CONSTRUCTION OF
	SUBCHAPTER. (a)  This subchapter applies only to a hospital that
	employs or seeks to employ a physician and that:
	(1)  is designated as a critical access hospital under
	the authority of and in compliance with 42 U.S.C. Section 1395i-4;
	(2)  is a sole community hospital, as that term is
	defined by 42 U.S.C. Section 1395ww(d)(5)(D)(iii); or
	(3)  is located in a county with a population of 50,000
	or less.
	(b)  This subchapter may not be construed as authorizing the
	governing body of a hospital to supervise or control the practice of
	medicine, as prohibited under Subtitle B, Title 3, Occupations
	Code.
	(c)  This subchapter applies to medical services provided by
	a physician at the hospital and other health care facilities owned
	or operated by the hospital.
	Sec. 311.062.  EMPLOYMENT OF PHYSICIANS PERMITTED. A
	hospital may employ a physician and retain all or part of the
	professional income generated by the physician for medical services
	provided at the hospital and other health care facilities owned or
	operated by the hospital if the hospital satisfies the requirements
	of this subchapter.
	Sec. 311.063.  HOSPITAL DUTIES AND POLICIES. (a)  A
	hospital that employs physicians under this subchapter shall:
	(1)  appoint a chief medical officer who has been
	recommended by the medical staff of the hospital and approved by the
	governing board of the hospital; and
	(2)  adopt, maintain, and enforce policies to ensure
	that a physician employed by the hospital exercises the physician's
	independent medical judgment in providing care to patients at the
	hospital and other health care facilities owned or operated by the
	hospital.
	(b)  The policies adopted under this section must include:
	(1)  policies relating to:
	(A)  credentialing and privileges;
	(B)  quality assurance;
	(C)  utilization review;
	(D)  peer review and due process; and
	(E)  medical decision-making; and
	(2)  the implementation of a complaint mechanism to
	process and resolve complaints regarding interference or attempted
	interference with a physician's independent medical judgment.
	(c)  The policies adopted under this section must be approved
	by the medical staff of the hospital.
	(d)  For all matters relating to the practice of medicine,
	each physician employed by a hospital under this subchapter shall
	ultimately report to the chief medical officer of the hospital.  The
	policies adopted under this section must be approved by the medical
	staff of the hospital.  In the event of a conflict between a policy
	adopted by the medical staff and a policy of the hospital, a
	conflict management process shall be jointly developed and
	implemented to resolve any such conflict.
	(e)  The chief medical officer shall notify the Texas Medical
	Board that the hospital is employing physicians under this
	subchapter and that the chief medical officer will be the
	hospital's designated contact with the Texas Medical Board. The
	chief medical officer shall immediately report to the Texas Medical
	Board any action or event that the chief medical officer reasonably
	and in good faith believes constitutes a compromise of the
	independent medical judgment of a physician in caring for a
	patient.
	(f)  The hospital shall give equal consideration regarding
	the issuance of medical staff membership and privileges to
	physicians employed by the hospital and physicians not employed by
	the hospital.
	(g)  A physician employed by a hospital shall retain
	independent medical judgment in providing care to patients at the
	hospital and other health care facilities owned or operated by the
	hospital and may not be disciplined for reasonably advocating for
	patient care.
	(h)  If a hospital provides professional liability coverage
	for a physician employed by a hospital, the physician may
	participate in the selection of the professional liability
	coverage, has the right to an independent defense if the physician
	pays for that independent defense, and shall retain the right to
	consent to the settlement of any action or proceeding brought
	against the physician.
	(i)  If a physician employed by a hospital enters into an
	employment agreement that includes a covenant not to compete, the
	agreement shall be subject to Section 15.50, Business & Commerce
	Code, and any other applicable provisions.
	SECTION 2.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2011.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 894 passed the Senate on
	April 7, 2011, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 894 passed the House on
	May 4, 2011, by the following vote:  Yeas 142, Nays 0, two present
	not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor