Trump administration asks states to scrutinize non-compete clauses for physicians

The Trump administration released a proposal on recommendations and changes to the healthcare system touching on an array of topics, including non-compete clauses.

 

The administration recommended states scrutinize non-compete clauses and restrictive covenants to avoid unenforceable non-compete clauses and reduced competition. While the report outlined arguments for and against non-compete clauses, the language tended to favor the argument against the clauses.

"Experts suggest that these clauses reduce bargaining power for employees because they reduce worker mobility. Various reports on non-compete clauses have also suggested that they are overly burdensome and restrictive on providers. Further scrutiny of these and of these restrictive covenants is warranted, particularly where they impede patient access to care and limit the supply of providers. By suppressing competition these clauses may inflate healthcare prices, elevating patient and federal spending on healthcare goods and services," said the report.

The report, a combined effort between HHS, the U.S. Treasury Department and the Department of Labor, upheld California's public policy of not enforcing non-compete clauses as a catalyst for innovation and growth. The report also cited an article in the Journal of Human Resources suggesting 45 percent of physicians in group practices are bound by non-compete agreements.

The report officially recommended: "States should scrutinize restrictive covenants such as non-compete clauses, particularly their impact on patient access to care and on the supply of providers."

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