Good Old Rocky Top: Keeping its Physicians Independent

September 2015

By Jacob Vugrinac, Director of Business Development, Stark Medical Auditing / Vachette Pathology


63-6-204. Practice of medicine defined.
(f) (1) Notwithstanding the provisions of this section, nothing shall prohibit a hospital licensed under title 68, chapter 11, or title 33, chapter 2, or an affiliate of a hospital, from employing licensed physicians other than radiologists, anesthesiologists, pathologists, or emergency physicians, to provide medical services, subject to the following conditions...

This little-known piece of Tennessee legislation is responsible for independent radiology, anesthesiology and pathology practices remaining autonomous and sovereign during the trying times physicians find themselves in. In layman's terms, the law states that a hospital in the state of Tennessee is not allowed to employ radiologists, anesthesiologists, pathologists or emergency physicians.

For the past few years we have seen a trend of consolidation among healthcare providers, with hospitals buying out physician practices. Selling out seemed like a necessary evil for physicians who were finding it increasingly difficult to survive in the current economic climate. Systems across the country have been buying physician groups to make a long-term investment for a future centered on the Accountable Care Organization (ACO) structure.

But things don't always go as planned (ask my prom date senior year and every Cleveland sports fan who has ever lived) - at least in the short term. Hospitals are losing money on their employed physicians. In the long-term, employing physicians is a sound investment, but hospitals are losing on average $175,000 per year for each employed physician, thanks to the costs associated with physician / employee salaries, benefits, office space and upgrades to IT.

While hospitals continue to lose money as they push onward with their buying-everything-in-sight mentality (reminds me of my strategy playing Monopoly as a child; stick with the orange properties and the railroads), maybe there is something to be learned from the Volunteer State.

By eliminating the possibility of purchasing these practices, Tennessee has ensured that its consumers will not be led / coerced / forced to believe that it helps hospitals coordinate care and control costs when we know their main motivation is negotiating higher prices with insurers and building referrals to grow admissions.

The law also allows the state's private practices to outlast their counterparts in other states; states who did not protect its physicians from the buying power of the health systems.

As the trend toward physician employment continues, many doctors feel they are losing control of their profession. The people running medical practices are now less likely to don lab coats and more likely to be in three-piece suits.

To protect and promote the future health of the medical profession, it is imperative that physicians continue to base their decisions primarily on what is best for the patient, not what is best for the hospital.

My hope is that other states will have the foresight and gumption to enact similar legislation to protect its physician practices and in turn protect its citizens.



Jacob Vugrinac is the Director of Business Development at Vachette Pathology and Stark Medical Auditing. He can be reached for comment at jvugrinac@vachettepathology.com or 517-486-4262.