How a ban on non-competes could shake up the healthcare landscape

The Federal Trade Commission’s (FTC) vote to ban non-compete agreements is expected to have an outsized impact on the health care industry, disempowering doctors and increasing anxiety among private practices that fear it could worsen staffing problems.

The FTC voted 3-2 last month to ban all current and future agreements that prevent workers from going to competitors or starting a competing business after leaving their jobs. The rule is set to take effect on September 4, although the US Chamber of Commerce has already sued to stop it.

Shortly before the rule was published, FTC Chair Lina Khan told reporters that of the 26,000 comments her agency received on the proposed rule, “a fairly significant portion came from health care professionals in particular.”

“Even for workers who, as you know, make a decent living, their view was that at the time of signing these contracts, they didn’t really have bargaining power,” she said.

In its announcement, the FTC said the elimination of non-compete clauses is expected to reduce health care costs by $194 billion over the next 10 years.

Lisa Stand, director of policy and regulatory advocacy at the American Nurses Association, said her group was pleased with the rule and surprised by “how strong it is.”

“This will certainly make job mobility easier,” Stand said. “We are nurses and we think that ultimately this is also good for patients, as there is more robust competition for clinical talent and expanded access to more provider and provider environment options.”

But some private practices worry that not enough thought has been given to how a change like this will affect the care they provide to patients.

Jack Feltz is an obstetrician and gynecologist and also president and CEO of Lifeline Medical Associates, a practice with about 200 doctors providing care to patients in New Jersey and Delaware.

Employees at Feltz’s practice, including himself, are required to sign non-compete agreements. He acknowledges that non-competes can be costly for workers, but argues that private practices will be less able to compete with larger hospital systems without them.

“It really unbalances the ability of these organizations, especially private practices that are already under siege and being decimated by hospital employment, to be able to maintain and compete with hospitals that have no restrictions on non-competes,” Feltz said.

He warned that large health systems will soon be more apt to prey not just on doctors but also on the patients of their private practices.

According to the American Medical Association, 37-45 percent of doctors are under non-compete agreements. While common, Feltz noted that non-compete agreements are not always enforced. He said his own practice allowed former employees to terminate their agreements due to external issues.

Lynn Rapsilber is co-founder and CEO of the National Nurse Practitioner Entrepreneur Network, a nonprofit organization that helps nursing professionals start their own businesses. According to Rapsilber, everyone from large health systems to small practices are “competing for that patient” who she believes will be the main beneficiary of this rule.

From a business perspective, Rapsilber agrees that there is value in contractual agreements that former employees not accept patients or mailing lists from a practice. The main “problematic” issue she sees in the application of non-compete agreements is the geographic stipulations they impose on healthcare professionals, limiting where they can practice after leaving their job.

“For the consumer, this is great news because there will be more choice in their health care provider if there are more opportunities for people to open their own practices and be able to serve the community,” she said. “This will increase competition, which in the long run will reduce prices and increase quality.”

Labor experts argue that getting rid of noncompetes will also relieve doctors of an additional challenge amid an increasingly monopolized industry.

According to John August, director of health care and partner programs at Cornell University’s Scheinman Institute, noncompetes have become “a big problem” in health care as doctors’ practices are being taken over by big companies. health systems.

“Many doctors are thinking about leaving their practices that they spent many years building and only to see them taken over by larger and larger corporations and feeling very, very dissatisfied with their employment situation and wanting to leave and finding these professional non-compete clauses,” August said.

The new rule would allow many of these doctors to leave after their practice is absorbed — with some caveats depending on the type of entity.

Some larger hospital systems may gain an advantage by being excluded from this rule. The FTC has limited jurisdiction over nonprofit organizations, and about half of all community hospitals in the U.S. are nonprofit organizations, according to the American Hospital Association.

As Fierce Healthcare recently reportedFTC Commissioner Rebecca Slaughter acknowledged that there would be health care workers that the rule would “struggle to reach” because of their employment in nonprofit hospitals.

This story originally appeared on thehill.com read the full story