The Federal Trade Commission (FTC) proposed a rule to ban noncompete clauses from employment contracts. The healthcare industry has relied heavily on non-compete agreements, and should the proposed rule be finalized, it would have a significant impact on for-profit hospitals and healthcare providers.
According to Attorney Rebecca Falk, if enacted, the rule would necessitate that hospitals and healthcare providers use other, “non-competitive” methods to protect its trade secrets and workforce. One likely outcome of a broad ban could be that hospitals feel pressured to increase providers’ wages and benefits, in hopes that the providers won’t seek other employment opportunities.
Additionally, non-compete clauses are used to keep patients at a practice when a physician leaves. If this FTC proposed rule is finalized, patients will have an easier time following providers who leave their practice, which would significantly affect a practice/hospital’s revenue when a provider with a large patient following leaves.
Further, the rule would require healthcare employers to analyze their contracts for non-compete clauses and notify all affected employees that the non-compete clause is ineffective.
To access the proposed FTC ruling, click the link below. Wolfe Pincavage is staying on top of this development and will continue to provide timely updates.
