January 26, 2023
Proposed FTC Ban on Noncompete Agreements is Potential Boon to America's Urologists
Noncompete agreements, also known as restrictive covenants, are contracts between employers and employees that prohibit the latter from working for a competitor for a certain period of time after leaving the company. While these agreements are meant to protect a company's trade secrets and customer relationships, they can also have negative impacts on physicians and the healthcare industry as a whole.
One major issue with noncompete agreements for urologists is that urologists have very few potential employers, often only one, depending on the size of the city. By preventing urologists from working for competitors, noncompetes can essentially take away a urologist’s ability to work for an extended period of time. Aside from the obvious financial impacts, this doctor faces the choice of moving, going a year or longer without operating, or doing locums work to keep their surgical logs up to date.
Another negative impact of noncompete agreements on physicians is that they severely limit competition in the healthcare market. By preventing physicians from working for competitors, noncompetes can reduce the number of providers available to patients, which can lead to higher prices and less choice. This is particularly concerning in areas where there is already a shortage of doctors, as noncompetes can exacerbate the problem by making it even harder for patients to access care.
Noncompetes are often used by private equity firms to reduce competition and raise prices. When private equity firms buy physician practices or medical groups, they often require the physicians to sign noncompete agreements as a condition of the sale. This can make it difficult for other providers to compete with the newly acquired practice, allowing the private equity firm to raise prices and increase profits.
To address these issues, the Federal Trade Commission (FTC) has proposed a rule that would ban noncompete agreements for physicians. This rule would make it illegal for employers to require physicians to sign noncompete agreements as a condition of employment, making it easier for doctors to move between jobs and for patients to access care. The FTC's proposed rule would also help to increase competition in the healthcare market, which would lead to lower prices and better care for patients without reducing physician pay.
In conclusion, noncompete agreements have substantial negative impacts on physicians and the healthcare industry as a whole. They limit physicians' mobility and career opportunities, restrict competition in the healthcare market, and can be used by private equity firms to reduce competition and raise prices. The proposed FTC rule that bans noncompetes for physicians would help to address these issues and improve the lives of everyone. By making it easier for physicians to move between jobs and for patients to access care, the proposed rule would help to increase competition in the healthcare market, which would lead to lower prices and better care for patients.