“[N]early half of primary care physicians in group practices and more than a third of physicians employed at hospitals or free-standing clinics [are] bound by a noncompete agreement. The prevalence of noncompete agreements has increased as more doctors are now employed by hospitals or large health systems, which have been steadily buying up group medical practices . . . .”
I was not aware of this remarkable statistic until I read https://www.nbcnews.com/politics/economics/hospitals-are-fighting-keep-former-doctors-seeing-patients-rcna134341 (3/3/2024), a deeply reported story that is well worth your time. Following are enough excerpts to give you the gist of it.
David Lankford, an Indiana pediatrician who specializes in treating critically ill children, says he decided to leave his job at Lutheran Hospital in Fort Wayne after it laid off a group of pediatricians, causing the number of patients he was seeing to increase more than fourfold.
But when Lankford took a job last year at nearby Parkview Health, his new employer was threatened with a lawsuit by his former employer, who alleged he had violated a noncompete clause in his contract, according to court records. Now, he’s months into a legal battle over whether he can continue taking care of patients in Fort Wayne.
“There is a shortage of physicians who do the subspecialty work that I do in Fort Wayne,” said Lankford in a written response to questions. “I believe many critically ill children and their families would have to travel significant distances at significant hardship to get access to care.”
Lankford is among a handful of doctors who are fighting back in court against the increasing prevalence of noncompete agreements . . . .
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. . . . For patients, the practice can result in an abrupt disruption of care with no explanation of where their doctor has gone or why, said [Omar Atiq, president of the American College of Physicians]. Doctors often have nonsolicitation clauses tied into the noncompete agreements, preventing them from letting patients know where they are relocating to.
The American Hospital Association, which represents the country’s for-profit hospitals, has opposed the [total ban on non-competes] proposed by the Biden administration. Chad Golder, general counsel for the AHA, said . . . that the restrictions are needed, in part, to protect the financial investment hospitals make in recruiting, relocating, marketing and training their doctors.
“We think they are important for protecting investments that hospitals make to recruit doctors and senior executives,” said Golder. “Imagine you’re a rural hospital out in the country and you spend a lot of money to bring on a new physician, to get them integrated into the community, to train them, and they leave after a short period of time after you’ve made all this investment to get them out there.”
But critics, including two of the largest physician groups – the American Medical Association and the American College of Physicians – say the agreements can contribute to physician shortages, sever doctor-patient relationships, and deter doctors from speaking out for fear of being fired and unable to work elsewhere in the community.
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In Savannah, Georgia, HCA Healthcare-owned Memorial Health University Medical Center threatened one of its former OB-GYNs with a lawsuit last year when the doctor went to work at a nearby clinic focused on treating low-income women, according to a letter the physician shared with NBC News. Several months prior, the physician had their contract terminated without cause by Memorial, but the noncompete remained in place.
Under the doctor’s noncompete agreement, they were unable to work as an OB-GYN within a 25-mile radius of Memorial for one year following the end of their contract.
The doctor has since left their job at the clinic, where they were treating mostly uninsured women, and is planning a move out of the area. The doctor asked that their name not be published for fear it could harm their future job prospects.
Memorial said in a statement that noncompete agreements help protect the significant costs the hospital makes in recruiting a physician, paying for moving costs, and other expenses that come with setting up a physician’s practice, like hiring staff and leasing space. The hospital said its noncompete agreements don’t prevent physicians from setting up a private practice.
In Georgia, noncompete agreements have been contributing to a shortage of OB- GYNs across the state, where some women have to wait months to get routine care, said Kate Boyenga, executive director of the Georgia Obstetrics and Gynecology Society. She said her organization has begun looking into whether there is any state legislative action that could limit the scope of noncompete agreements for OB-GYNs to help address the shortages.
Interestingly, Massachusetts, which allows non-compete agreements (albeit with significant restrictions), bans them for doctors, nurses, psychologists and social workers. (Also broadcast industry workers (?) and lawyers.) Four states have completely banned non-compete agreements. Colorado allows them only for “highly compensated workers” – as of 2023, anyone making more than $112,500. https://www.forbes.com/sites/zacharyfolk/2023/12/06/which-states-have-banned-non-compete-clauses-heres-what-to-know-as-new-york-could-be-next/?sh=7c95babe95c0. The New York legislature passed a bill banning all non-competes; the governor vetoed it, but expressed support for “banning non-compete agreements for anyone making below the median wage in New York.” https://ogletree.com/insights-resources/blog-posts/new-york-governor-vetoes-noncompete-ban-bill/.
For the FTC’s proposed rule banning non-competes, see https://www.federalregister.gov/documents/2023/01/19/2023-00414/non-compete-clause-rule. For the current status of the proposed rule and what is expected when the FTC issues the final rule (namely, litigation), see https://www.natlawreview.com/article/update-status-non-competes-and-what-expect-2024.
