Press Releases

Physician Employment

Now Texas Law!

Texas Governor Rick Perry signed into law [May 12, 2011] the physician employment bill for rural hospitals. The law takes effect immediately.


The new law, brought about by the efforts of TORCH, will allow all Critical Access Hospitals, all Sole Community Hospitals, and all other hospitals in counties of 50,000 and less population to directly employ physicians. The final version of the bill passed into law does contain some requirements that hospitals will need to comply with.




·         A 100 year plus law has prohibited physicians from being an employee in Texas with few limited exceptions. Physicians have always been independent and their medical practices are independent small businesses for the most part.  

·         The law has been a barrier in the recruitment of new physicians to many areas of rural Texas as more and more physicians want the guarantee of a paycheck, as well as insurance and retirement, which comes with being an employee.

·         Many rural physicians no longer want to take the financial risk that goes with running their own medical practice, especially in a rural area where there are usually less patients.

·         Surveys show that 75% of the new physicians coming out of Texas medical schools in the areas of Family and Internal Medicine want the option to be an employed physician.

·         The new law (Senate Bill 894) will give rural hospitals in Texas the authority to make a physician an employee if the physician desires that option.

·         The new law applies to Critical Access Hospitals, Sole Community Hospitals, and all other hospitals in counties of 50,000 or less population – approximately 160 of the 580 hospitals in Texas.

·         The new law contains a number of provisions to protect the physician’s independent medical judgment as well as the doctor-patient relationship even when they are an employee.

·         The effort to change the law was spearheaded by the Texas Organization of Rural & Community Hospitals and was supported by the Texas Hospital Association and the Texas Medical Association.

·         The bill changing the law was sponsored by Senator Robert Duncan of Lubbock and Representative Garnet Coleman of Houston.

·         The new law takes effect immediately but the results will be over time. This one change will not open the door to new physicians pouring into rural Texas, but it will remove a barrier that has caused some doctors to look to urban areas to practice where there is less financial risk.


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      Gov. Rick Perry

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