On May 21, Governor Bill Lee signed House Bill 979 (HB 979) into law. Notably, provisions of this law aim to address physician shortages and improve access to specialized medical care in rural and underserved areas in Tennessee by easing restrictions on the employment of physicians by hospitals.
Prior to the enactment of HB 979, hospitals were generally restricted from employing hospital-based physicians – specifically, radiologists, anesthesiologists, pathologists, and emergency medicine physicians. HB 979 modifies these restrictions for certain hospitals, effective July 1, 2025:
- Hospitals in counties with a population of 105,000 or less (per the 2020 federal census) may employ licensed physicians without restrictions as to specialty.
- Children's hospitals may employ licensed physicians without restrictions as to specialty, provided that any employed radiologists, anesthesiologists, pathologists, or emergency medicine physicians are board-certified or board eligible.
Hospital-based physician employment restrictions still apply to hospitals in counties with a population greater than 105,000 (per the 2020 federal census), meaning those hospitals may only employ licensed physicians other than radiologists, anesthesiologists, pathologists, or emergency medicine physicians.
Physician groups organized as a professional corporation and nonprofit/academic medical centers that employ physicians through a faculty practice plan appear to remain exempt, meaning they can employ any type of physician. Further, research hospitals (i.e., those hospitals with 50% or more inpatients treated pursuant to research protocols during the prior calendar year) remain able to employ radiologists, anesthesiologists, and pathologists under the same terms as other physicians.
Hospitals employing physicians under these provisions are still prohibited from restricting or interfering with medically appropriate diagnostic or treatment decisions and are likewise prohibited from restricting or interfering with referral decisions unless the physician has agreed to the restrictions when their contract was executed, the restriction does not (in the physician's reasonable medical judgment) adversely impact the patient, and the restrictions are disclosed to the patient.
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