Physician noncompetes stir controversy amid shifts in employment trends

Tue Jun 23 20:04:01 PDT 2015

June 2, 2015

Physician noncompetes stir controversy amid shifts in employment trends 

<http://www.fiercepracticemanagement.com/story/physician-noncompetes-stir-co
ntroversy-amid-shifts-employment-trends/2015-06-02> Fierce Practice
Management

By Debra Beaulieu-Volk

A small segment of physicians who enter hospital employment contracts are
beginning to change their minds and return to private practice. In some
parts of the country, however, broad noncompete agreements can severely
limit physicians' practice mobility later in their careers.

>From the health system perspective, the clauses--which bar doctors from
leaving for a competing hospital or clinic and taking their patients with
them--are in place to ensure they get a return on investment when they hire
a doctor, explained a post from the Puget Sound Business Journal.

In states where noncompetes or restrictive covenants are legal, they're
generally enforceable as long as the terms are reasonable. What constitutes
"reasonable," however, is a matter of debate throughout various industries.
Legislation has thus evolved in some states, especially in light of current
and expected doctor shortages.

New Mexico, for example, just passed a law that limits restrictive covenants
for employee physicians, but not non-solicitation agreements, JD Supra
Business Advisor reported. Under the New Mexico law, effective July 1,
physicians who have been employed by an organization for fewer than three
years are allowed to separate from that entity and compete, but the
organization can require the employee to repay incentives like loans,
relocation expenses and signing bonuses. After three years of employment, a
physician can leave with no strings attached.

But in Washington state, contracts with UW Medicine ban doctors from
practicing medicine within a 30-mile radius of the UW facility where they
practiced, according to an article in the Puget Sound Business Journal.
Doctors can in some cases negotiate their way out of the noncompetes, but
it's at no small expense.

One doctor wrote, in public testimony supporting a failed bill that would
have eased restrictions, that she faced a fine of $427,150 if she were to
leave, according to the newspaper, while another wrote that the restriction
left her unable to perform psychiatric services that few others provide in
the state.

Jeff Wells
Deputy Editor, CAL/AAEM News Service

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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