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  S.B. No. 761
  relating to the employment of physicians by certain hospitals
  associated with nonprofit fraternal organizations.
         SECTION 1.  Chapter 311, Health and Safety Code, is amended
  by adding Subchapter E to read as follows:
         Sec. 311.061.  APPLICABILITY OF SUBCHAPTER. This subchapter
  applies only to a hospital that employs or seeks to employ a
  physician, that primarily provides medical care to children younger
  than 18 years of age, and that:
               (1)  is owned or operated by a nonprofit fraternal
  organization; or
               (2)  has a governing body the majority of members of
  which belong to a nonprofit fraternal organization.
         Sec. 311.062.  EMPLOYMENT OF PHYSICIANS PERMITTED. (a)  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 if the hospital satisfies the requirements
  of this subchapter.
         (b)  The billing and receipt of third-party reimbursement
  for medical care at a hospital does not affect the authority granted
  to the hospital under this section.
         Sec. 311.063.  DUTIES AND HOSPITAL POLICIES. (a)  A
  hospital that employs physicians under this subchapter shall:
               (1)  appoint a chief medical officer, who may be a
  member of the hospital's medical staff;
               (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
               (3)  designate the chief medical officer as the contact
  for the Texas Medical Board for all matters relating to complaints
  regarding interference or attempted interference with a
  physician's independent medical judgment or any other matter under
  this section.
         (b)  The person appointed as chief medical officer shall
  report the person's appointment to the Texas Medical Board.
         (c)  The policies adopted under this section must include:
               (1)  policies relating to:
                     (A)  credentialing;
                     (B)  quality assurance;
                     (C)  utilization review;
                     (D)  peer review; 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.
         (d)  The policies adopted under this section must be approved
  by the chief medical officer.
         (e)  In the event of a conflict between a policy approved by
  the chief medical officer and any other policy of the hospital, a
  conflict management process shall be jointly developed and
  implemented to resolve the conflict.
         (f)  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.
         (g)  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.
         Sec. 311.064.  CONSTRUCTION OF SUBCHAPTER. 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.
         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. 761 passed the Senate on
  March 24, 2011, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 26, 2011, by the
  following vote: Yeas 31, Nays 0.
  Secretary of the Senate    
         I hereby certify that S.B. No. 761 passed the House, with
  amendment, on May 20, 2011, by the following vote: Yeas 146,
  Nays 0, three present not voting.
  Chief Clerk of the House