Likely Non-Compete Clauses Will Go Away

[southerndoc]

Biden declares war on anti-competitive practices with sweeping order

President Biden will sign a sweeping executive order on Friday, aimed at promoting competition in the economy through 72 initiatives cracking down on anti-competitive practices in multiple industri…

thehill.com

Looks like the White House is on the offensive for non-compete clauses. Will be interesting to see how the larger groups react.

Lots of other stuff in the executive order: importing drugs from Canada, investigating hospital mergers, etc.

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[GeneralVeers]

Biden declares war on anti-competitive practices with sweeping order

President Biden will sign a sweeping executive order on Friday, aimed at promoting competition in the economy through 72 initiatives cracking down on anti-competitive practices in multiple industri…

thehill.com

Looks like the White House is on the offensive for non-compete clauses. Will be interesting to see how the larger groups react.

Lots of other stuff in the executive order: importing drugs from Canada, investigating hospital mergers, etc.

In general I agree with doing away with these practices. Let's just hope that "cracking down on uncompetitive practices" doesn't mean more government control of key industries. Student Loan industry I'm looking at you.....

 

[Neopolymath]

This would be so awesome. It's clear that non-competes make no sense for the average EM or anesthesia or rad doc as they don't own the patients. The only reason people don't quit these PE jobs is due to the ball and chain of family preventing them from moving cities and this would eliminate that. PE job sucks (duh) you can move to the place next door.

 

[hundreddaysoff]

Y'know, I've worked for TH, Envision, USACS, and multiple hospitals directly. I never encountered a single "non-compete" clause per se.

What TH, Envision, and USACS all did write me was a "non-interference" clause. This means I can still work at other local hospitals or even the same hospital if my capitalist oppressors CMG gets kicked out. What I can't do, in theory, is cause the CMG to get kicked out, eg because I want to start my own group.

USACS' non-interference clause also prohibits me from taking a job in management with our client hospital. These two restrictions together for me are just as annoying as a "non-compete", for 3 reasons:

(1) there are only 2 local hospitals and the one I don't work at sucks even more;

(2) USACS' "golden" handcuffs "#ownit" mechanic will cause me to lose $45k--150k or else be forced to move to another USACS company town, depending on whose fuzzy logic you use, if USACS does lose or even voluntarily give up the contract;

and most importantly

(2) I and a bunch of other people happen to think USACS is subverting all our good local values, kinda like a stereotypical Mongol horde, and we kinda do want to kick them out.

So, any word on whether this federal extravaganza will cover non-interference clauses in addition to non-competes? Would seem to fit with the spirit of what Biden was saying about competition per the CNN article.

 

[emergentmd]

Non competes are overblown and done more to scare docs to think twice. We were bought out by one of the CMGs, had a noncompete in, and a bunch of docs broke it. EM is a small community even in a big city and so it wasn't some secret. CMGs just ignore it unless you are flagrantly doing something to hurt their business.

 

[VA Hopeful Dr]

Non competes are overblown and done more to scare docs to think twice. We were bought out by one of the CMGs, had a noncompete in, and a bunch of docs broke it. EM is a small community even in a big city and so it wasn't some secret. CMGs just ignore it unless you are flagrantly doing something to hurt their business.

No they're not

 

[bravotwozero]

Non competes are overblown and done more to scare docs to think twice. We were bought out by one of the CMGs, had a noncompete in, and a bunch of docs broke it. EM is a small community even in a big city and so it wasn't some secret. CMGs just ignore it unless you are flagrantly doing something to hurt their business.

Allow me to add some nuance here. Obviously this is the EM forum, so we're all thinking about non competes in the EM world, where its impact is debatable.

This is not so for other specialties, where non competes can be quite severe and highly problematic, with all kinds of crazy clauses.

 

[southerndoc]

Allow me to add some nuance here. Obviously this is the EM forum, so we're all thinking about non competes in the EM world, where its impact is debatable.

This is not so for other specialties, where non competes can be quite severe and highly problematic, with all kinds of crazy clauses.

Exactly. A cardiologist friend of mine left his employment at a large healthcare organization and had to set up private practice 90 miles away for 3 years before he could return back home. The healthcare organization didn't want his patients to follow him to his practice and instead wanted them to stay loyal to their organization.

He said 5% of his patients drove the 90 miles to see him. He built the practice there, and then 3 years later, opened a practice near his old practice. He claims that 85% of his previous patients went back to him when he opened a practice locally again. He hired another cardiologist to staff his new practice 90 miles away and now has two practices that are thriving. The healthcare organization is less than amused.

 

[bravotwozero]

Exactly. A cardiologist friend of mine left his employment at a large healthcare organization and had to set up private practice 90 miles away for 3 years before he could return back home. The healthcare organization didn't want his patients to follow him to his practice and instead wanted them to stay loyal to their organization.

He said 5% of his patients drove the 90 miles to see him. He built the practice there, and then 3 years later, opened a practice near his old practice. He claims that 85% of his previous patients went back to him when he opened a practice locally again. He hired another cardiologist to staff his new practice 90 miles away and now has two practices that are thriving. The healthcare organization is less than amused.

Always happy to see an exploitative policy come back to bite the greedy corporation that tried to use it.

 

[NicMouse64]

Exactly. A cardiologist friend of mine left his employment at a large healthcare organization and had to set up private practice 90 miles away for 3 years before he could return back home. The healthcare organization didn't want his patients to follow him to his practice and instead wanted them to stay loyal to their organization.

He said 5% of his patients drove the 90 miles to see him. He built the practice there, and then 3 years later, opened a practice near his old practice. He claims that 85% of his previous patients went back to him when he opened a practice locally again. He hired another cardiologist to staff his new practice 90 miles away and now has two practices that are thriving. The healthcare organization is less than amused.

Maybe they should treat doctors and patients better so that both doctors and patients don't want to leave a practice. Thus, a reason I will never become a successful administrator.

 

[EctopicFetus]

Y'know, I've worked for TH, Envision, USACS, and multiple hospitals directly. I never encountered a single "non-compete" clause per se.

What TH, Envision, and USACS all did write me was a "non-interference" clause. This means I can still work at other local hospitals or even the same hospital if my capitalist oppressors CMG gets kicked out. What I can't do, in theory, is cause the CMG to get kicked out, eg because I want to start my own group.

USACS' non-interference clause also prohibits me from taking a job in management with our client hospital. These two restrictions together for me are just as annoying as a "non-compete", for 3 reasons:

(1) there are only 2 local hospitals and the one I don't work at sucks even more;

(2) USACS' "golden" handcuffs "#ownit" mechanic will cause me to lose $45k--150k or else be forced to move to another USACS company town, depending on whose fuzzy logic you use, if USACS does lose or even voluntarily give up the contract;

and most importantly

(2) I and a bunch of other people happen to think USACS is subverting all our good local values, kinda like a stereotypical Mongol horde, and we kinda do want to kick them out.

So, any word on whether this federal extravaganza will cover non-interference clauses in addition to non-competes? Would seem to fit with the spirit of what Biden was saying about competition per the CNN article.

Some states dont allow them. I cant imagine the NI clauses Go away though. If you are really looking to boot them I would reach out to the AAEM physician group. I heard they are looking for way to help those in your exact situation. Bob McNamara runs the show on there i think.

 

[emergentmd]

I can't speak for other specialists as they "Own" their patients so non compete has some validity. I don't see how you can enforce a noncompete on an ER line doc that owns nothing and working at another ER would cause any intellectual/material harm.

The bigger threat is the CMG harassing you and causing loss of time/money which could be significant.

 

[Birdstrike]

I remember being told, "We won't lose our ED contract because our non-competes protect us. If someone tries to take our contract then we'll all just refuse to sign with the new group. Our non-compete prevents anyone from going to the new group, they won't be able cover the ED shifts and the hospital will be brought to their knees."

Yeah, right. Didn't work. We still lost the contract.

 

[Apollyon]

I remember being told, "We won't lose our ED contract because our non-competes protect us. If someone tries to take our contract then we'll all just refuse to sign with the new group. Our non-compete prevents anyone from going to the new group, they won't be able cover the ED shifts and the hospital will be brought to their knees."

Yeah, right. Didn't work. We still lost the contract.

I would think that we worked at the same place, in the same state, from that.

 

[VA Hopeful Dr]

I would think that we worked at the same place, in the same state, from that.

Non-competes in that state get enforced by judges routinely.

 

[maxxor]

Exactly. A cardiologist friend of mine left his employment at a large healthcare organization and had to set up private practice 90 miles away for 3 years before he could return back home. The healthcare organization didn't want his patients to follow him to his practice and instead wanted them to stay loyal to their organization.

He said 5% of his patients drove the 90 miles to see him. He built the practice there, and then 3 years later, opened a practice near his old practice. He claims that 85% of his previous patients went back to him when he opened a practice locally again. He hired another cardiologist to staff his new practice 90 miles away and now has two practices that are thriving. The healthcare organization is less than amused.

Noncompetes in Radiology are ridiculous and a PE buyout recently made me leave my practice because they wanted to put a 5 mile radius for all sites I read for. I read for 2 hospitals, 10 outpatient imaging centers, and 20 or so doctors offices across a 50 mile stretch of the most populous portion of the state.

I would have to 1) leave the state for 2 years or 2) do telerads for 2 years, with all the risks of being unable to return to in-person practice after that.

 

[collegestud2013]

Non-competes in that state get enforced by judges routinely.

Anyone with legal expertise actually think that non-competes will now become unenforceable across the country after Biden's new executive order (at least within physician employment contracts)? In the past it was largely state-dependent and determining whether the non-compete significantly hinders your ability to make a living?

 

[GeneralVeers]

Anyone with legal expertise actually think that non-competes will now become unenforceable across the country after Biden's new executive order (at least within physician employment contracts)? In the past it was largely state-dependent and determining whether the non-compete significantly hinders your ability to make a living?

Doubt it as it's a state's rights issues. If the Federal Legislature made a law, then it would supercede the states laws. Executive orders while symbolic often can't stand up to serious legal challenges.

 

[collegestud2013]

This would be so awesome. It's clear that non-competes make no sense for the average EM or anesthesia or rad doc as they don't own the patients. The only reason people don't quit these PE jobs is due to the ball and chain of family preventing them from moving cities and this would eliminate that. PE job sucks (duh) you can move to the place next door.

Exactly. A cardiologist friend of mine left his employment at a large healthcare organization and had to set up private practice 90 miles away for 3 years before he could return back home. The healthcare organization didn't want his patients to follow him to his practice and instead wanted them to stay loyal to their organization.

He said 5% of his patients drove the 90 miles to see him. He built the practice there, and then 3 years later, opened a practice near his old practice. He claims that 85% of his previous patients went back to him when he opened a practice locally again. He hired another cardiologist to staff his new practice 90 miles away and now has two practices that are thriving. The healthcare organization is less than amused.

The cardiologist presumably used the healthcare organization's resources (eg referrals, advertising costs) to establish his patient panel while employed there. And in most outpatient specialties seeing more follow-ups of established patients will result in a much higher RVU productivity per hour than seeing new patients. Without a non-compete clause someone would be able to dump most of the upfront recruiting expenses on the organization while benefiting from the more profitable years. In contrast, if you establish your practice from scratch you bear the burden of the resources needed to recruit new patients.

 

[NicMouse64]

The cardiologist presumably used the healthcare organization's resources (eg referrals, advertising costs) to establish his patient panel while employed there. And in most outpatient specialties seeing more follow-ups of established patients will result in a much higher RVU productivity per hour than seeing new patients. Without a non-compete clause someone would be able to dump most of the upfront recruiting expenses on the organization while benefiting from the more profitable years. In contrast, if you establish your practice from scratch you bear the burden of the resources needed to recruit new patients.

again, maybe they should do a better job of wanting to keep physicians and patients so that those things don't happen. You know free market and stuff....

 

[cyanide12345678]

Allow me to add some nuance here. Obviously this is the EM forum, so we're all thinking about non competes in the EM world, where its impact is debatable.

This is not so for other specialties, where non competes can be quite severe and highly problematic, with all kinds of crazy clauses.

Agreed, when negotiating contracts for my FM wife, initially we were talking to Indiana University, they wouldn't even change the mileage on the non compete by 5 miles! They literally let her sign elsewhere over changing the non compete. The other company we eventually signed with, after vigorous negotiation, we brought down the non compete from 2 years to 6 months and from 25 miles to 10 miles. But still weren't able to fully eliminate it despite trying.

As family medicine, she will own those patients, so it makes sense why the non compete exists. I mean....what's stopping her from building a practice otherwise using someone else's resources, getting the patient base, and then opening her own shop a couple blocks away otherwise and taking away all her own patients.

Does the executive order essentially make all non compete clauses in existing contracts non enforceable? That would be sweet.

 

[VA Hopeful Dr]

As family medicine, she will own those patients, so it makes sense why the non compete exists. I mean....what's stopping her from building a practice otherwise using someone else's resources, getting the patient base, and then opening her own shop a couple blocks away otherwise and taking away all her own patients.

Because opening and running a FM practice is a pain in the rear and takes a surprising amount of work to be profitable.

 

[Apollyon]

Because opening and running a FM practice is a pain in the rear and takes a surprising amount of work to be profitable.

If you get a panel of 2000 or 5000 patients, ready to go, the pain in the *ss of getting credentialed by insurances is, comparatively, mild.

 

[doctalaughs]

If you get a panel of 2000 or 5000 patients, ready to go, the pain in the *ss of getting credentialed by insurances is, comparatively, mild.

There would be no reason for that FM doc (or any other doc) to leave if the big healthcare organization paid the same as a successful private partner doc and gave them full control of staff. They could take a similar overhead to private practice and make plenty of money off economies of scale (building space, EMR, equipment, advertising etc).

Instead they hire a bunch of bloated administrator roles and take that out of the physician salaries.

 

[VA Hopeful Dr]

If you get a panel of 2000 or 5000 patients, ready to go, the pain in the *ss of getting credentialed by insurances is, comparatively, mild.

Yes because that's the only difficult part.

 

[VA Hopeful Dr]

There would be no reason for that FM doc (or any other doc) to leave if the big healthcare organization paid the same as a successful private partner doc and gave them full control of staff. They could take a similar overhead to private practice and make plenty of money off economies of scale (building space, EMR, equipment, advertising etc).

Instead they hire a bunch of bloated administrator roles and take that out of the physician salaries.

Doesn't even have to be the exact same since many of us are happy giving up some money to not have to worry about the business aspects of the practice, but should be somewhat close.

 

[bronx43]

Agreed, when negotiating contracts for my FM wife, initially we were talking to Indiana University, they wouldn't even change the mileage on the non compete by 5 miles! They literally let her sign elsewhere over changing the non compete. The other company we eventually signed with, after vigorous negotiation, we brought down the non compete from 2 years to 6 months and from 25 miles to 10 miles. But still weren't able to fully eliminate it despite trying.

As family medicine, she will own those patients, so it makes sense why the non compete exists. I mean....what's stopping her from building a practice otherwise using someone else's resources, getting the patient base, and then opening her own shop a couple blocks away otherwise and taking away all her own patients.

Does the executive order essentially make all non compete clauses in existing contracts non enforceable? That would be sweet.

Nothing should stop a doc from leaving a practice and taking all the patients. That threat should always be present in order to the keep the employer in check. If the employer doesn't like it, then they will change their business practices and stop offering big up-front guaranteed salaries. That's what I expect as the noncompete get phased out.
This is a huge boon for physicians, IMO. Hospitals will stop guaranteeing multi-year salaries, which will then drive docs to private physician owned groups.

 

[bronx43]

The cardiologist presumably used the healthcare organization's resources (eg referrals, advertising costs) to establish his patient panel while employed there. And in most outpatient specialties seeing more follow-ups of established patients will result in a much higher RVU productivity per hour than seeing new patients. Without a non-compete clause someone would be able to dump most of the upfront recruiting expenses on the organization while benefiting from the more profitable years. In contrast, if you establish your practice from scratch you bear the burden of the resources needed to recruit new patients.

Hospitals can easily change their recruiting approach and stop guaranteeing salaries and big sign-on bonuses. That's how private physician groups do it. When I was in private practice, my guarantee was modest and only one year. Some other groups don't guarantee at all - you eat what you kill from day one, while helping to pay overhead.

These noncompetes are inherently anticompetitive. Getting rid of them simply evens out the playing field.

 

[Apollyon]

Yes because that's the only difficult part.

Your sarcasm doesn't rebut my point. Having to get an office, staff, equipment, insurance, and any other miscellany I forget would be dwarfed compared to getting literal thousands of pts as new pts. At no point did I say it was "easy". But, having the panel ready to go would remove a huge uncertainty. The flat rate expenses you can count on. The pt base, if new, you can't, and any projections have little or no validity. Until butts are in the seats, you don't know.

 

[VA Hopeful Dr]

Your sarcasm doesn't rebut my point. Having to get an office, staff, equipment, insurance, and any other miscellany I forget would be dwarfed compared to getting literal thousands of pts as new pts. At no point did I say it was "easy". But, having the panel ready to go would remove a huge uncertainty. The flat rate expenses you can count on. The pt base, if new, you can't, and any projections have little or no validity. Until butts are in the seats, you don't know.

All of that stuff you listed is potentially more difficult then you seem to think. Each one of those things is a unique pain in the ass. Let's not forget the actual running of the practice.

When I opened my solo practice, getting patients was the easiest part.

 

[anonperson]

The cardiologist presumably used the healthcare organization's resources (eg referrals, advertising costs) to establish his patient panel while employed there. And in most outpatient specialties seeing more follow-ups of established patients will result in a much higher RVU productivity per hour than seeing new patients. Without a non-compete clause someone would be able to dump most of the upfront recruiting expenses on the organization while benefiting from the more profitable years. In contrast, if you establish your practice from scratch you bear the burden of the resources needed to recruit new patients.

That scenario is extremely rare.

I'm in CA where non compete clauses are not legal.

The situation you have described where a physician uses a healthcare organization to build a name for themselves/ patient volume and then jumps ship to open their own practice is non existent.

This is what happens in reality:
New grad joins a health system with a guaranteed 1 to 2 year salary

Sees patients and gets board certified

If it's a reasonable system, then a fair compensation structure is agreed upon and everyone is happy

If it's a crappy system, the physician leaves for another health system. The vast majority of physicians today have no interest in going in private practice.