America’s healthcare sector could see major upheaval as Joe Biden seems set to ban so-called noncompete employer agreements, which prevent doctors and nurses from leaving to go work for a competitor.
Noncompete Clauses to Kill Off Competition
Biden’s plans to put an end to noncompete clauses in employment contracts may “cause a major shake-up” in the US healthcare industry, an NBC News report has warned.
It is noted that one in five workers in the United States are bound by a non-compete agreement; the practice has become very widespread in recent decades and in the healthcare sector more than anywhere else.
Private equity companies and big health systems have been buying up entities, such as hospital staffing agencies and group doctor practices. In doing so, they demand their new employee sign “broad noncompete agreements.”
This development has been exposed by interviews with numerous doctors and nurses, as well as medical groups.
Senior policy adviser Jonah Mainzer from the American Nurses Association described the noncompete clauses as “standard practice.” He emphasized this was particularly true of younger nurses and medics.
The report noted that, for both doctors and nurses, a noncompete employment agreement would typically stipulate “a geographic radius” in which they would be banned from exercising their profession for one to two years after leaving or getting fired.
Oftentimes, however, the prohibited region would be really broad. Defenders of the noncompete agreements claim they are justified as they protect the investments made by medical practices and hospitals.
Opponents point out, however, that such contracts stifle competition, keep down wages, and leave rural areas without enough doctors.
Jonathan Jones, who heads the American Academy of Emergency Medicine, said the only reason noncompete agreements even exist was to remove competition.
The Biden administration aims to issue a rule that would ban employers from putting provisions in an employment agreement barring workers from moving to a competitor or starting their own enterprise.
The move may greatly impact the healthcare industry. https://t.co/BSRLJ9texg
— NBC News (@NBCNews) February 13, 2023
Biden’s push to ban noncompete agreements could have big implications for health care https://t.co/T1973eIK8G pic.twitter.com/NLQlDWs4mu
— The Last Word (@TheLastWord) February 14, 2023
President Joe Biden’s push to ban noncompete agreements that limit a worker’s ability to leave their job for a competitor could cause a major shake-up in the health care industry, where the agreements have become pervasive among doctors and nurses. https://t.co/aQ6v1YOJ8b
— NBC10 Philadelphia (@NBCPhiladelphia) February 14, 2023
Biden’s FTC May Overdo It
In 2022, a Medscape survey of 558 doctors discovered over 90% were bound by noncompete contracts.
Another survey found that this applied to 37% of doctors at free-standing healthcare centers and hospitals, along with almost 50% of all primary care doctors in group practices.
To top it all off, Jones warned, the noncompete agreements could be particularly restrictive beyond employment. They could ban medics from sounding the alarm about unfair pay, working conditions, or unsafe practices.
The restrictions would oftentimes apply even if a medic may be fired. Thus, an axed doctor may be banned from working for another entity in a 100-mile radius, forcing him or her to move their entire family to a whole different part of the country.
Back in 2021, Biden instructed the Federal Trade Commission to prohibit or restrict noncompete agreements. Last month, the FTC proposed widely banning the agreements in all industries.
It is accepting public feedback on its proposal until March 20, after which it would make a final decision. The potential FTC move, though, is largely expected to be resisted by large companies in a number of economic sectors, including healthcare.
The American Medical Association, the largest association of physicians, called for a balanced approach, rather than a blanket ban that Biden’s FTC seeks to propose.
This article appeared in Mainstpress and has been published here with permission.
