AMA pushes to end noncompete clauses in physician contracts

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The American Medical Association's House of Delegates voted last week to oppose noncompete contracts for physicians in clinical practice who are employed by for-profit or nonprofit hospitals, hospital systems or staffing company employers.

The issue has been debated within the AMA's membership, the group said. Physicians who are employers and owners of physician practices may favor the use of reasonable noncompetes, while employed physicians may believe that noncompetes need to be banned outright.

The AMA's stance is that allowing physicians to work for multiple hospitals can enhance the availability of specialist coverage within a given community, thereby improving access to care and reducing health disparities.

WHAT'S THE IMPACT?

The use of noncompete agreements has been extensive in the healthcare system, affecting up to 45% of primary care physicians, according to data cited by the AMA. Trends show more physicians are working directly for a hospital or for a practice that is at least partially owned by a hospital or health system than physicians in a private practice.

Recently graduating trainees entering the workforce may be especially vulnerable to the negative effects of noncompete contracts, which can limit their opportunities for career advancement and restrict their ability to provide care in underserved areas, the AMA said.

Although the Accreditation Council for Graduate Medical Education (ACGME) prohibits restrictive covenants as a contingency for residents or fellows participating within any GME training program, there are non-ACGME fellowship programs that require trainees to sign restrictive covenants as a condition for employment.

Covenants not-to-compete are already prohibited outright in several states, including California, North Dakota and Oklahoma. Additional states such as New Hampshire, Delaware, Massachusetts and Rhode Island ban noncompete covenants specifically for physicians.

THE LARGER TREND

The Federal Trade Commission recently proposed a ban on noncompete agreements, though it would not cover nonprofit hospitals. According to the AMA, nonprofits comprise 57% of all hospitals, many of which are large employers.

The House of Delegates also called for a study of current physician employment contract terms and trends, with recommendations to address balancing legitimate business interests of physician employers while also protecting physician employment mobility and advancement, competition and patient access to care. One AMA priority is removing barriers physicians face in providing patient care.

ON THE RECORD

"Allowing physicians to work for multiple hospitals can enhance the availability of specialist coverage in a community, improving patient access to care and reducing healthcare disparities," said AMA Board of Trustees member Dr. Ilse Levin. "We must keep in mind that owners of private practices often invest heavily when hiring and training physicians, and those owners may believe that they need to use reasonable noncompete agreements to compete with large hospital systems or other dominant institutional employers. Preserving and fostering independent physicians and other physician-led organizations is crucial to a healthy nation."

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Email the writer: Jeff.Lagasse@himssmedia.com