Noncompete clauses in employment contracts have been a longstanding thorn in the side of physicians nationwide. Lately, however, several states have pushed to ban the practice.
A 2023 survey from the National Opinion Research Center at the University of Chicago found that 60% of physicians were required to sign a noncompete when starting their current roles — despite nearly nine out of 10 clinicians supporting a ban of the practice.
Several states moved to restrict or entirely ban the practice last year, including California, New York and Oklahoma. Despite this, 30% and 43% of physicians in California and Oklahoma, respectively, indicated they are still bound by one in a March poll by Doximity, an online networking service for medical professionals .
In April, the Federal Trade Commission voted 3-2 to ban noncompetes for most U.S. workers, a move that has left physicians divided.
"When a physician signs a noncompete, it is the patients who suffer. Noncompete clauses create artificial shortages in the medical profession," Thomas Pliura, MD, a physician and attorney in Le Roy, Ill., told Becker's. "Opponents of a ban on noncompetes always argue physicians have a choice whether to sign a noncompete or not. In reality, this is the appearance of choice, but with no real choice at all. Many of these health systems have become so large they monopolize markets with employed providers, bound by noncompete clauses. The healthcare profession needs free market competition to drive down prices and improve quality."
The FTC estimates that banning noncompetes will lead to $74 billion to $194 billion in reduced spending on physician services over the next 10 years.
About 87% of physicians said they support the FTC ban in the Doximity poll, but there were dissenters in the medical community.
"I am on the side against banning noncompetes, especially how the current one is written. My argument as a small business owner is that noncompetes serve companies by protecting our confidential internal information and encourages us to invest in our workforce, knowing our employees won’t just pack up and leave," Eric Anderson, MD, an interventional pain management physician in Lewisville, Texas, told Becker's.
In response to the FTC ban, the U.S. Chamber of Commerce moved to sue the commission, arguing the FTC is overstepping its authority. Three other business groups — the Business Roundtable, the Texas Association of Business and the Longview Chamber of Commerce — joined the suit.
This year, a multitude of states have spearheaded their own initiatives to end the practice in several industries, including healthcare — with varying degrees of success.
In January, New York Gov. Kathy Hochul vetoed a proposal to ban noncompetes.
In April, Maryland passed a law prohibiting noncompetes for healthcare professionals. However, the Florida state legislature declined to pass two laws banning noncompetes for physicians and doctors of osteopathic medicine in March.
In July, Louisiana legislators passed a bill limiting the length and geographical scope of noncompetes for specialty and primary care physicians, while Pennsylvania passed legislation banning the clauses for physicians, certified registered nurse practitioners and physician assistants, according to an Aug. 13 post by law firm Knox, McLaughlin ,Gornall & Sennett. Washington state also amended its 2019 ban of noncompetes, adding additional protections for workers.