“Noncompetes are conventionally intended to prevent trade secrets from being used against a company, but in the case of physician work, physicians are trained with evidence-based skill sets that are relatively uniform within their specialties,” said radiologist Dr. Nisha H. Mehta, who founded the Facebook group “Physician Side Gigs” with nearly 100,000 doctors. “Accordingly, in most cases, it’s hard for a large hospital system to justify a claim that losing one physician will pose significant risks to the viability of their business model, as the problem could be solved by hiring another physician within the same specialty.”
Despite near-universal support for the FTC proposed rule, the majority (62%) of the 4,853 physicians who responded to the poll say they currently work under a noncompete.
The poll results point to the broad reach of physician noncompete clauses throughout the country, even in states that ban such clauses. Roughly 43% of physicians in Oklahoma and 30% in California report having a noncompete clause, based on the poll results, despite laws banning the practice for employees in those states. Employers are also prohibited from adding noncompetes to physician contracts in at least seven other states. Yet many physicians in those states say they still have noncompetes, including 58% in West Virginia, 50% in Arkansas, 38% in Massachusetts, and 23% in Alabama.
The FTC’s proposed rule appears to especially appeal to younger physicians: 94% of physicians under 30 support the rule, as do 92% in their 30s, 90% in their 40s, 85% in their 50s, 84% in their 60s, and 73% in their 70s.
A similar pattern is evident among physicians in different medical specialties. The vast majority in each specialty support the FTC proposed rule, ranging from a low of 73% in ophthalmology to as high as 95% in endocrinology and neonatology/perinatology.
The percentage of physicians who currently have a noncompete clause ranges more widely. The specialties with the highest percentage of physicians with noncompetes are neonatology/perinatology (82%), radiation oncology (79%), oncology (74%), and vascular surgery (70%). There are only three specialties in which fewer than half of responding physicians currently have noncompetes: psychiatry (44%), endocrinology (42%), and emergency medicine (37%).
While many physicians support banning noncompetes, there are arguments for keeping them. For smaller medical practices, for example, it can be risky to hire a new physician without a noncompete clause, due to the time and costs needed to build the practice’s reputation and establish a patient base. A noncompete clause allows for smaller medical practices to protect themselves from the possibility of losing patients and revenue if their newly hired physician were to leave.
Still, Dr. Mehta pointed out that noncompetes can put undue pressure on individual physicians when at the negotiating table: “They may have to stay at jobs that are not a good fit for them or endure unfavorable contract terms that allow their employers to ask for more work without a commensurate increase in compensation.”
By restricting physicians’ negotiating power, hospital systems are allowed to keep labor costs down but do so at the risk of exacerbating physician burnout and shortages, Dr. Mehta noted.
“If a physician is unhappy at their position but is unable to move, they may just elect to cut back clinically or leave medicine altogether — a trend we’re seeing amongst physicians at an alarming rate,” she said. “On a larger level, when so many physicians are struggling with career longevity and burnout, which is exacerbated by limited ability to control their career, having more mobility allows physicians to find the right jobs for the right stages of their lives.”
According to Dr. Mehta, there are benefits for young physicians and trainees if noncompetes are banned. Employers would have more incentive to retain good talent and treat physicians well, which would in turn translate to better learning experiences for trainees. More senior physicians may then be less burnt out and less likely to leave medicine if they are treated better. They would also likely be happier, which could have the ripple effect of making them better mentors and role models for younger physicians.
“One big issue is that unlike some industries, where noncompetes may prevent you from working for a particular employer or a niche sector, for physicians, most noncompetes are based on geography and involve skills that can not be readily applied to a different sector,” Dr. Mehta said. “Particularly as consolidation in large hospital systems increases and physicians are increasingly working at multiple sites, noncompete radiuses can become quite large. This means that walking away from a job often requires a move to another city, or even state.”
One potential gap in the FTC proposed rule, however, is that it wouldn’t apply to nonprofit health systems, and a majority of hospital systems in the U.S. are classified this way.
“In an environment where large nonprofit hospital systems currently have so much of a competitive advantage over independent practices that are struggling to stay afloat, keeping noncompetes for nonprofits but not for other employers would provide an unfair advantage against private practices and for-profit health systems,” said Dr. Mehta. “Given that the operating model of nonprofit health systems may not be significantly different from for-profit health systems, this rule seems arbitrary and much to the advantage of several of our country’s largest and most profitable hospital systems that happen to have not-for-profit status in name.”
Dr. Mehta shared that in today’s environment, where supply and demand curves are shifting in favor of physicians, many are advocating for colleagues to simply refuse to sign noncompete contracts.
“[Physicians] should certainly also comment on the FTC’s proposal, as well as speak out publicly and tell their stories of how noncompetes have affected them and their patients to the media in order to increase awareness of the effect of noncompetes on access to care and quality medical care,” she said. “I think that anything that empowers physicians to have leverage at the negotiating table is overall a good thing for physicians. On the whole, getting rid of noncompetes will force employers to fight harder to retain good talent.”
The FTC’s proposed rule is not final, and commenting is open until April 19, 2023. Submit your comments directly to the FTC site or use Doximity’s enhanced ChatGPT tool—docsGPT.com—to generate and submit a letter to the FTC. You can also support Dr. Mehta's petition to end noncompete clauses here.
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