Jacqui O’Kane, M.D., got a job at a hospital in Southern Georgia in 2020. He is a primary care doctor in a small underserved town. She soon amassed nearly 3,000 patients.
But she said the hospital put pressure on her to take in more new patients, so she had to work nights and weekends, ideal for a mother of two young daughters. No. She considered starting her own practice in town. That way, you’ll have more control over her schedule.
The problem was that her three-year contract contained a non-compete clause that prohibited her from practicing within 50 miles of the hospital for two years after termination.
That means she and her husband will sell their house, move hundreds of miles, and enroll their children in new schools.
“It sucks,” she said. “I know my patients very well, but I feel like I am being forced to abandon them. “
In January, the Federal Trade Commission proposed ending O’Kane’s predicament by banning non-compete clauses in employment contracts. “Freedom to change jobs is at the heart of economic freedom and a competitive and prosperous economy,” said FTC Chairman Rina Khan.
The proposed rule would prohibit employment contract clauses that prevent employees or contractors from working for competing employers or starting competing businesses when they are transferred. Such contracts usually prohibit working within a particular area after the job is done.
The FTC estimates that 30 million workers are bound by non-compete clauses. It said ending these provisions would boost economic competition, lower prices and increase workers’ total earnings by up to $296 billion annually.
Eliminating non-compete obligations will improve access to patient care by allowing physicians to practice wherever services are needed. They say they will be free to speak up about situations that are dangerous for patients because they won’t have to worry about being laid off and unable to continue working in the community.
But the FTC’s proposal faces opposition from employers in all industries, including hospitals and private equity-backed medical groups that employ thousands of doctors, nurses and other medical professionals. .
Money is a problem for them too. They say removing the non-compete obligation would push up hospital costs because hospitals have to pay doctors more to keep them. It states that non-compete clauses are necessary to protect training investments and prevent employees from taking clients or patients with them when they retire.
Business and hospital groups are likely to sue to block the rule, claiming Congress has not approved the committee that regulates the non-compete clause. We have bipartisan support for a bill to limit and authorize FTC action, but the bill is not making progress. Similar legislation has stalled over the past few years.
Health industry groups want to block any change, arguing that the FTC does not have the legal authority to regulate nonprofit or tax-exempt hospitals, which make up nearly 60% of US community hospitals. Under the proposed rule, the FTC would not be subject to the rule because entities that do not operate for profit are exempt from the Federal Trade Commission Act, the law that gives the FTC powers. I acknowledge that it is possible.
Chip Kahn, CEO of the American Hospital Federation, which represents for-profit hospital systems, said, “This rule will create an unlevel playing field as it competes with non-profit and public hospitals.
But other experts aren’t convinced the FTC lacks authority over nonprofits. Although the FTC law exempts nonprofits, the commission has acted repeatedly under the Sherman Act and the Clayton Act. These are federal antitrust laws used to stop anticompetitive behavior by the nonprofit hospital system.
“I fully support the application of non-compete obligations to all hospitals,” said Dr. Jonathan Jones, president of the American Academy of Emergency Medicine, whose members are bound by non-compete obligations. I’m here.
California, North Dakota, and Oklahoma already prohibit enforcement of non-compete clauses against all employees, and six other states prohibit enforcement of non-compete clauses against physicians. Even in states without bans, judges have waived non-compete obligations when they found them too broad or unreasonable.
But challenging a non-compete clause can cost tens of thousands of dollars in legal fees, and other employers may not want to risk hiring people in the middle of a legal battle, doctors say. said Luke Campbell, a Seattle attorney representing .
FTC rules also prohibit the use of non-disclosure agreements or training repayment agreements in employment contracts when they act as a de facto non-compete.
Hospitals often require nurses to sign training reimbursement agreement clauses called TRAPs. This locks a nurse into the job by requiring her to pay $20,000 in what is essentially the equivalent of job orientation if the nurse quits within her two years. says the nursing group. The labor union, National Nurses United, wants the FTC to explicitly ban her TRAP.
As of last year, nearly three-quarters of all doctors in the United States were employed by the hospital system or other companies, many of whom work under non-compete obligations. A 2018 survey found that nearly half of primary care physicians in California, Illinois, Georgia, Pennsylvania, and Texas are bound by non-compete obligations.
Private equity-owned staffing firms such as TeamHealth, Envision Healthcare, and Sound Physicians provide emergency physicians and other medical professionals to work in hospitals and generally use non-compete clauses. None of these three companies agreed to discuss an employment contract. As a for-profit employer, non-compete clauses in contracts would clearly be prohibited even if the employee worked for a non-profit hospital.
Hospitals, insurance companies, and doctor-owned medical groups also use non-compete obligations when hiring doctors and other medical professionals.
Hospital-based physicians (paramedics, anesthesiologists, hospitalists, radiologists, pathologists) are refuting industry claims that they carry patients and sensitive information with them.
Dr. Robert McNamara, Director of Emergency Medicine, Temple University, said:
Instead, he said, non-compete obligations are how physician staffing firms lock in contracts with hospitals. “Private equity groups told hospitals, ‘You may not like what we’re doing, but if you get rid of us, we’ll have to replace all of your doctors.’ I can say
Dr. Vanessa Urbina, a general practitioner in central Florida, is also concerned about the impact on her patients. She left her company-owned medical practice in Altamonte Springs last year for what she described as an abusive environment. Trapped by a non-competitive agreement she signed prohibiting her from practicing within 15 miles of her clinic, she moved her primary school to the country side of Mount Dora, 19 miles away. Care of opened her clinic.
She had to stay in the area because of a child custody agreement. Her non-compete fight cost her $25,000 in attorney fees and lost income. She now has to drive a long way to pick up her daughter from school, but is happy with her new practice. However, she is upset at not being able to care for her former patients.
“They forced me to abandon the patient,” she said. “Now they have to wait three months for her to book. Noncompetition should be illegal.”