AMA votes to oppose noncompete agreements in certain physician contracts

Key takeaways:

• Up to 45% of PCPs are affected by noncompete agreements.
• New physicians entering the workforce may be particularly vulnerable to noncompete agreements, which may limit their career opportunities.

During its House of Delegates meeting, the AMA voted to oppose noncompete agreements for physicians employed by hospitals or staffing company employers.

Noncompete agreements are common in health care. They affect up to 45% of primary care physicians, according to an AMA press release.

Recent trends indicate that more physicians are practicing at a hospital or a practice “that is at least partially owned by a hospital or health care system rather than in a private practice,” the release said.

“Allowing physicians to work for multiple hospitals can enhance the availability of specialist coverage in a community, improving patient access to care and reducing health care disparities,” Ilse Levin, DO, MPH&TM, DM, a member of the AMA Board of Trustees, said in the release.

Noncompete agreements may particularly have a negative effect on new physicians entering the workforce by limiting their career opportunities and their ability to practice in underserved areas, the AMA said.

Still, Levin said it is important to “keep in mind that owners of private practices often invest heavily when hiring and training physicians, and those owners may believe that they need to use reasonable noncompete agreements to compete with large hospital systems or other dominant institutional employers.”

“Preserving and fostering independent physicians and other physician-led organizations is crucial to a healthy nation,” he said.

The Accreditation Council for Graduate Medical Education (ACGME) bans restrictive agreements as a contingency for residents or fellows in GME training programs; however, the AMA said there are other fellowship programs that require trainees to sign restrictive agreements for employment.

Some states have already banned noncompete agreements, including California, North Dakota and Oklahoma, according to the AMA. Other states, including Delaware, Massachusetts, New Hampshire and Rhode Island, have banned noncompete agreements for physicians, specifically.

In addition, the Federal Trade Commission has recently proposed a ban on noncompete agreements, but it would not cover nonprofit hospitals, which the AMA said comprise 57% of all hospitals.