Non-compete agreements have long been a contentious issue in the US healthcare sector, shaping the professional landscape for physicians, nurses, and other clinicians. Traditionally, these legal contracts restrict healthcare workers from joining competing organizations or starting similar practices within a specified geographic area and time frame after leaving their current employer. While proponents argue that non-competes protect investments in training and patient relationships, critics contend that they suppress wages, limit job mobility, and ultimately harm patient care. Recent regulatory and legal developments have brought renewed attention to the widespread use and impact of non-compete agreements in healthcare.
Historically, non-compete clauses have been widespread in both large health systems and smaller private practices. Estimates suggest that between 37% and 45% of physicians in the United States have been bound by such agreements. The prevalence is even higher among certain specialties and in consolidated healthcare markets. For hospitals and large health systems, non-competes have served as a tool to maintain market share, prevent the loss of high-value clinicians, and protect proprietary information. Smaller practices, on the other hand, often justify non-competes as a means of safeguarding investments in recruiting and training physicians.
However, mounting evidence indicates that non-compete agreements have significant negative consequences for both healthcare providers and patients. Studies have shown that these contracts contribute to workforce immobility, wage suppression, and increased burnout among clinicians. The inability to switch employers freely can be particularly damaging in rural areas, where limited job options allow employers to offer lower wages and less favorable working conditions. Moreover, non-competes can exacerbate physician shortages by making it more difficult for clinicians to relocate within their communities or respond to changing healthcare needs.
From a patient perspective, non-compete agreements may restrict access to care by limiting the availability of experienced providers in certain regions. When physicians are forced to leave their communities or are unable to join competing practices, continuity of care suffers, and patients may face longer wait times or travel greater distances for services. The American College of Surgeons and other professional groups have argued that non-competes undermine the physician–patient relationship and hinder hospitals from recruiting the best-suited clinicians for their communities.
The regulatory landscape has shifted dramatically in recent years. On April 23, 2024, the Federal Trade Commission (FTC) voted to ban the vast majority of non-compete agreements for US workers, including most healthcare professionals. The FTC estimates that this rule, if implemented, could reduce healthcare costs by $74 billion to $194 billion over the next decade while increasing worker earnings. The new rule does not apply to senior executives earning over $151,164 annually or to most nonprofit employers, though the FTC reserves the right to challenge nonprofit entities that operate similarly to for-profit organizations.
The FTC’s decision has sparked intense debate within the healthcare industry. Many physicians and advocacy groups have welcomed the ban, viewing it as a long-overdue step toward greater career mobility, improved wages, and better patient outcomes. Conversely, hospitals and health systems, particularly those in rural areas, have expressed concern that the elimination of non-competes could worsen provider shortages and disrupt continuity of care. As the industry continues to evolve, the balance between protecting business interests and promoting clinician autonomy will remain a central issue.
References
- Gilman DJ. A Competition Perspective on Physician Non-compete Agreements. Inquiry. 2024 Jan-Dec;61:469580241237621. doi: 10.1177/00469580241237621. PMID: 38462909; PMCID: PMC10929039.
- Marshall JJ, Ashwath ML, Jefferies JL, Naidu SS, Nayak G, Reitman AB, Smalley S, Soto GE, Sumrell JM, Marine JE. Restrictive Covenants and Noncompete Clauses for Physicians. JACC Adv. 2023 Aug 7;2(7):100547. doi: 10.1016/j.jacadv.2023.100547. PMID: 38939481; PMCID: PMC11198593.
- Huntoon K, Stacy J, Cioffi S, Swartz K, Mazzola C, Profitt C, Adogwa O. The Enforceability of Noncompete Clauses in the Medical Profession: A Review by the Workforce Committee and the Medicolegal Committee of the Council of State Neurosurgical Societies. Neurosurgery. 2020 Nov 16;87(6):1085-1090. doi: 10.1093/neuros/nyaa426. PMID: 33094340.
- Brown KJ, Brodhead MT. Reported Effects of Noncompete Clauses on Practitioners in Applied Behavior Analysis. Behav Anal Pract. 2022 May 31;16(1):251-264. doi: 10.1007/s40617-022-00718-4. PMID: 37006427; PMCID: PMC10050295.
- American College of Surgeons. Ban on Noncompete Agreements Has Implications for Healthcare Workers. April 30, 2024. Accessed online. https://www.facs.org/for-medical-professionals/news-publications/news-and-articles/acs-brief/april-30-2024-issue/ban-on-noncompete-agreements-has-implications-for-healthcare-workers/
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