Docs: Ban noncompete clauses to improve working conditions, patient care

Barring noncompete clauses is a prescription for better working conditions for doctors and higher quality health care for patients, said three physicians who spoke about the topic with federal regulators.

But at least one national leader said the contracts are crucial for tax-paying hospitals to compete with those who are tax-exempt.

On Feb. 16, the Federal Trade Commission (FTC) held a three-hour online public forum as the regulatory board contemplates a new national ban on noncompete agreements that limit what workers can do when they leave employers.

“Companies impose noncompetes on workers across industries and job levels, from hairstylists and warehouse workers to doctors and business executives,” an FTC summary said. “Evidence indicates that noncompetes hurt workers and harm competition by blocking workers from pursuing better opportunities and by preventing employers from hiring the best available talent.”

A problem in medicine

In health care, it’s worse than that, said Sameer Baig, MD, a Florida-based hematologist/oncologist who was one of seven speakers on a panel offering perspectives to the FTC members.

Noncompetes are one of the greatest problems in medicine, Baig said. The national physician shortage largely is a manufactured crisis that grew out of noncompetes, now ubiquitous in health care, but serving only the interests of corporations while harming Americans, he said.

“Noncompete agreements allow health care corporations to create oligopolies by carving out territories, not much different than drug cartels,” Baig said. “The motive is purely to ensure egregious profiteering by stifling competition and controlling access to health care.”

For the first time in U.S. history, most American doctors are employed. Gone is the safety net of independent physicians, and the effects of noncompetes have never been greater, Baig said.

Corporate owners create toxic and exploitative conditions for doctors and interfere with medical decisions. Physicians get burned out and leave, but noncompetes block them from serving their own communities, creating medical deserts with few or no doctors in some parts of the country. Doctors who want to speak out against fraudulent or dangerous corporate practices remain silent – or face economic warfare due to noncompetes, Baig said.

Physicians facing penalties

Jennifer Massengale, MD, a breast radiologist, described having to move her family out of state twice to escape noncompete covenants with geographic restrictions about where she could work if she changed employment. Noncompetes do not affect physicians who have no trade secrets to pass on, she said.

Like radiologists, emergency physicians, anesthesiologists, and pathologists don’t have patient lists or trade secrets, said Jonathan S. Jones, MD, FAAEM, an emergency physician in Mississippi and president of the American Academy of Emergency Medicine.

But they do have noncompete agreements that corporate owners use to intimidate physicians not to speak up about potentially dangerous practices to patients, Jones said. He and Massengale supported a potential federal ban on noncompetes.

Nursing support

The physicians found allies from a nurse union.

Brynne O’Neal of National Nurses United said that organization supports a ban on noncompetes, along with training repayment agreement provisions, or TRAPs. Those function as de facto noncompete clauses in some circumstances because nurses must work for employers for a period of time or face a financial penalty by repaying costs of employer-required training, O’Neal said.

Unfair competition

An FTC ban on noncompetes would hurt competition in health care by creating different rules for different providers, said Katie Tenoever, JD, senior vice president and general counsel for the Federation of American Hospitals.

The proposed ban would apply to about 20% of hospitals across the country – taxpaying hospitals, Tenoever said. It would not apply to the 80% of hospitals that are nonprofits when there is increasing competition for a shrinking pool of skilled professionals.

If noncompetes are allowed for the nonprofits, she predicted they will engage more aggressively in noncompetes at all levels of service.

On the commission

In his comments concluding the session, FTC Commissioner Alvaro Bedoya mentioned Baig and Massengale specifically for illustrating a lesson about noncompetes. Some may think noncompetes are just a problem for blue collar workers or entry-level workers at a fast food restaurant. That is a misconception, Bedoya said.

The physicians are sophisticated professionals, and likely high-wage earners, but they did not negotiate the noncompete agreements, Bedoya said.

“This was something that was imposed on them, and this is something that impacted their ability to provide health care and impacts that ability to this day, and that impacts their families,” Bedoya said. “And so I think we need to ask ourselves in the current environment, just two years, three years after COVID, if this kind of impact on competition in the health care market is something that our country needs and something that is good.”

Additional comments

Bedoya, FTC Chair Lina M. Khan, and Commissioner Rebecca Kelly Slaughter all spoke, but took no formal action in the public forum. They and their staff did refer to comments from the public coming in about the issue.

As of Feb. 16, the FTC website listed at least 5,340 comments on a potential ban on noncompetes. The comment period will continue through March 20, though a number of speakers in the public session asked for more time to submit comments.