Non-Compete Agreements on The Rise In Healthcare
Recruiters need to be aware that medical employers are increasingly using protective covenants, such as non-compete agreements, to protect their practices.
Non-compete agreements are often signed in conjunction with physician employment contracts, or when a physician joins a practice as an owner. Medical practices and hospitals invest significant resources in building their patient base and reputation and want to avoid the risk of losing patients when a physician starts his own practice or goes to a competing facility. These agreements are structured to protect medical practices by prohibiting physicians from leaving and setting up competing practices nearby using information, training, or patient contacts developed by them.
While protecting the employer, non-competes can present substantial disadvantages to employees. To comply with the agreement, a physician may need to move outside the restricted area. New doctors who do not have an established reputation may have little bargaining power to negotiate an employment agreement without stringent restrictions.
There is no national standard governing the enforcement of non-compete agreements. Rather, enforcement is regulated by state law and, therefore, differs from state to state. Although general principles of contract law apply, additional issues arise when considering physician non-compete agreements. Several states have statutes that prohibit non-compete agreements; many states apply special rules in light of the unique position the medical profession holds in the public interest.
It is important that the physician employer, as well as a prospective employee, consult with legal counsel before entering into an agreement.
Medical recruiters need to remain well-informed about the increasing use of non-compete agreements by practices and facilities. When creating your marketing campaign to recruit healthcare professionals and putting together competitive employment packages, consideration needs to be given to protective covenants that employers are increasingly including as part of their employment contracts.