Tennessee Governor Bill Lee signed House Bill No. 979 into law on May 21, 2025, enacting significant changes to Tennessee’s corporate practice of medicine prohibition. Prior to this law, certain hospital-based physicians—including radiologists, anesthesiologists, pathologists, and emergency physicians—were prohibited from being directly employed by hospitals in Tennessee pursuant to Tenn. Code Ann. § 63-6-204. The direct employment limitation resulted in these types of physicians being employed by third-party groups that contracted with hospitals to provide these services.
Effective July 1, 2025, this restriction will no longer apply to hospitals located in counties with a population of 105,000 or less, according to the 2020 Federal Census. Only 13 of Tennessee’s 95 counties will be unaffected by this change. Hospitals in counties with a population exceeding 105,000 may continue to employ licensed physicians other than radiologists, anesthesiologists, pathologists, or emergency physicians.
There are two main exceptions to the county population requirement. First, the new law allows children’s hospitals to directly employ board-certified or board-eligible radiologists, anesthesiologists, pathologists, and emergency physicians. Second, a research hospital may employ radiologists, anesthesiologists, or pathologists under the same terms and conditions as other physicians.
This law is expected to alter the dynamics between hospitals and these hospital-based specialists. Hospitals that choose to directly employ these physicians must ensure that the physicians retain sufficient control over their medical judgment and referral decisions.