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  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