Many independent physicians would like to join with other physicians to negotiate contract terms with insurers. Whether a physician can engage in collective bargaining depends, in large part, on the physician's status. Interns and resident physicians are entitled to join unions and participate in collective bargaining. Likewise, physicians who are salaried employees of a hospital or a managed care organization can unionize and engage in collective bargaining as long as they are not managers or supervisors. In general, most private physicians or physician groups are not allowed to unionize or collectively bargain. It is estimated that only one percent of physicians in America are union members.

The National Labor Relations Act only permits employees to engage in collective bargaining. Because the majority of physicians in the United States are independent contractors, not employees, the majority of physicians are prohibited from engaging in collective bargaining. The Federal Trade Commission (FTC) and the Department of Justice (DOJ), two federal government entities that aim to preserve the American free-market health care system by bringing enforcement actions against those who violate the antitrust laws, have determined that physician collective bargaining leads to higher prices and does not necessarily result in higher-quality care. Consequently, the FTC and DOJ have advised states not to pass legislation permitting independent physicians to bargain collectively. Likewise, Congress has failed to enact legislation allowing independent physicians to unionize.

Those in favor of allowing independent physicians to participate in collective bargaining claim that it will level the negotiation playing field between physicians and health insurers. With the domination of the health care market by relatively few managed care organizations, proponents of physician collective bargaining claim that allowing unionization is essential to the survival of independent physicians. Those opposed to independent physician collective bargaining claim that unionization would constitute a betrayal of the Hippocratic Oath and that resulting cost increases would hurt patients.

In a few states, however, physicians are permitted to engage in collective bargaining with insurers regarding contract terms. For example, Texas law allows competing physicians within a health plan's service area to jointly negotiate practices and procedures and other terms and conditions of their contracts with health benefits plans. Washington and New Jersey have passed similar laws. The New Jersey law requires a finding by the state's Attorney General that an insurer has "substantial market power" as a prerequisite to allowing joint negotiation of fee schedules.

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