FTC moves to ban non-competes: What it could mean for physicians

In January, the Federal Trade Commission proposed a rule that would keep employees free from non-compete contracts. The rule would apply to full-time employees and independent contractors, both paid and unpaid. 

The non-compete rule, which the FTC is accepting public comments on until March 10, would impact nearly every job position in the U.S., including physicians and medical staff. 

Health systems often impose non-compete contracts on physicians to prohibit them from leaving to start a new practice, or following fellow physicians who leave to start their own practice, according to a Jan. 12 report from Medscape.

A 2018 survey found that about 37 percent of employed physicians were bound by non-compete contracts. 

Some states, including California, Oklahoma and North Dakota have already banned certain non-compete contracts. 

Physicians are split on their support of non-compete contracts. 

"A federal ban on non-compete agreements will ensure that physicians nationwide can finally change jobs without fear of being sued," Erik Smith, MD, a clinical professor of anesthesiology in California, told Medscape. 

On the other hand, practice owner and cardiologist Rishin Shah, MD, is opposed to the proposed FTC rule. 

"As a small practice owner, I am personally against this. The noncompete helps me take a risk and hire a physician. It typically takes 2-3 years for me to break even. I think this will further consolidate employment with large hospital systems unfortunately," Dr. Shah told Medscape. 

The American Medical Association has publicly discouraged physicians from signing contracts with unreasonably strict non-compete contracts, as has the American Hospital Association. 

However in 2020, the AMA urged the FTC not to make a federal rule regulating any non-competes for physicians. 

The FTC claims that banning non-competes nationwide will increase annual wages by $300 billion as it will allow 30 million Americans to pursue different job opportunities. 

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