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Healthcare industry impact of FTC proposed ban of non-competes

January 23, 2023

By: Rebecca Falk

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.

FTC Link