Noncompete Ban Transforms Healthcare Landscape

Labor Experts Laud New Rule

The recent vote by the Federal Trade Commission (FTC) to ban noncompete agreements is set to shake up the healthcare sector. Noncompete agreements are contracts that prevent employees from working for a competitor or starting a competing business after they leave a job. This has been a common practice in healthcare, but the FTC has ruled that it is unfair to workers and anti-competitive. Labor experts argue that the ban on noncompetes will relieve physicians of an additional challenge amid an increasingly monopolized industry. "A lot of physicians are thinking of leaving their practices that they've spent many years building and then only to see them taken over by larger and larger corporations and feeling very, very dissatisfied in their employment situation and wanting to leave and finding these noncompete clauses," said John August, director of health care and partner programs at Cornell University's Scheinman Institute. The new rule would allow many of these physicians to leave after their practice is absorbed — with some caveats depending on what type of entity it is.

Private Practices Express Concerns

While some private practices worry that the ban on noncompete agreements will make it more difficult for them to compete with larger hospital systems, others believe that it will ultimately benefit patients. "For the consumer, this is great news because there's going to be more opportunities for choice in their health care provider if there's more opportunity for people to open up their own practices and to be able to serve the community," said Lynn Rapsilber, co-founder and CEO of the National Nurse Practitioner Entrepreneur Network. "That's going to enhance competition, which will actually in the long run lower prices and increase quality."

Healthcare Costs Expected to Decrease

The FTC estimates that eliminating noncompete clauses will lower healthcare costs by $194 billion over the next 10 years. This is because it will increase competition among healthcare providers, which will lead to lower prices for patients. In addition to the financial benefits, the ban on noncompete agreements is also expected to improve the quality of healthcare. This is because it will allow patients to choose from a wider range of providers, which will lead to better outcomes.