Noncompete agreements have become a highly contentious component of physician contracting discussions as many argue that they stifle competition between healthcare organizations and have a disproportionate negative impact on physicians in rural communities.
While a national ban on noncompetes at the federal level remains highly unlikely under the current Federal Trade Commission, a state-by-state discussion is developing as new court cases and advocacy efforts shape noncompete laws across the country.
The arguments
Noncompete agreements, on a surface level, are designed to protect an entity’s investment in new hires — but their enforceability and scope varies drastically from state-to-state or organization-to-organization.
Carl Deitwiler, MD, a gastroenterologist and founder of Clearwater Gastroenterology in Lewiston, Idaho, said that regardless of “whether the recruiting entity is a single physician or small group, or a large group or a hospital, the cost to recruit and onboard a physician is large. Sometimes the recruiting entity may have hired new nurses or other help to assist the new physician.”
“The recruiting entity should be able to have some reassurance of some return on investment of recruiting a new physician,” he said. “Therefore the covenant not to compete is only fair. However, the covenant not to compete should be time limited — for example, no longer than four years.”
Many states have provisions in their noncompete laws including limits to the geographic scope and time limit on the covenant. But for many physicians, these restrictions do not go far enough.
R. Michael Meneghini, MD, spent several years driving three hours a day to work outside the geographic limits of a noncompete agreement. He told Becker’s that he believes the practice should be illegal.
“It interferes with the doctor-patient relationship,” he said. Unlike traditional corporate industries, he argues, medicine depends heavily on continuity, trust and long-standing physician relationships that cannot easily be transferred to another provider simply because an employment agreement requires it.
“Patients should be able to continue seeing the physician they trust,” he said.
The array of state laws
Currently, four states ban the use of noncompete agreements entirely, according to a March 24 report by the Economic Innovation Group’s State Noncompete Law Tracker, including California, Oklahoma, North Dakota and Minnesota.
Becker’s has reported on several other state-level updates to noncompete laws. Tennessee Governor Bill Lee signed House Bill 1034 into law May 7 which will create new policies surrounding compensation thresholds and length of agreement for noncompete clauses.
Legislators in Ohio are considering two bills that would create new restrictions for noncompetes as rural healthcare systems in the state continue to face an uphill battle against staffing shortages.
However, other developments may complicate noncompete cases for ASC roles specifically. Texas appeals court recently upheld a non-compete injunction against four CRNAs, barring them from practicing within a 20-mile radius of their former workplaces for three years Testimony showed the CRNAs’ new employer, Longview, Texas-based EmergencHealth, had agreed to cover legal costs and damages tied to the non-compete violations. The court ruled that such arrangements do not invalidate enforceable restrictions. The case will proceed to trial June 8, 2026.
The case reflects an ongoing conflict across healthcare as noncompete agreements become increasingly criticized as a barrier to physicians and other clinicians already facing significant labor shortages.
“Noncompetes and the way that they’re used serve as a blanket restrictive covenant for physicians when they sign a contract is really problematic,” Marcelo Hochman, MD, an independent physician and former president of the Independent Doctors of South Carolina, told Becker’s. “It abridges the patient’s rights to follow their doctor if their doctor is going to leave the hospital system and now they have to move X miles away. That patient may not have that option, [especially] senior patients, or maybe even just geographically … 30 minutes, 45 minutes away may just not be feasible, or you may just not want to do that.”
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