Multispecialty physician groups oppose FTC proposal to ban noncompete clauses

Multispecialty physician groups on Monday announced their opposition to a Federal Trade Commission proposal that would ban the use of noncompete clauses, arguing that the move could disrupt patient care.

AMGA (formerly the American Medical Group Association) contended that such contracts help support providers’ ability to offer team-based care. Making employees sign noncompete agreements allows groups to build “strong, sustainable” care teams, the association said March 20.

“Patients benefit the most from a model that is built around care coordination and a carefully designed team-based environment,” AMGA President and CEO Jerry Penso, MD, MBA, said in a statement. “Patient access to their team of providers is important for care continuity, especially for those patients with chronic diseases. The FTC should prioritize the stability of doctor-patient relationships and not move forward with a plan that could disrupt patients’ care.”

The FTC first announced the proposal in January, arguing that noncompete clauses are an often “exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.” Doing away with them, the commission said, could increase wages by almost $300 billion while expanding career opportunities for 30 million Americans. The FTC was accepting comments on the proposal through Monday, but recently extended the deadline until April 19.

“The freedom to change jobs is core to economic liberty and to a competitive, thriving economy,” FTC Chair Lina M. Khan said in January. “Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand.

AMGA—which represents more than 440 integrated delivery systems and multispecialty groups, employing 175,000-plus physicians across radiology and other specialties—further fleshed out its concerns in a March 20 letter to Khan. It notes that the U.S. is currently experiencing an “unprecedented healthcare workforce crisis.” Taking the noncompete tool away from medical groups could serve to further destabilize the healthcare labor market, undermine competition and increase costs.

The association believes that local jurisdictions are the best arbiters of these agreements and urged the Federal Trade Commission to leave oversight in their hands.

“To avoid creating instability in the healthcare industry, AMGA recommends that the FTC withdraw its proposal to ban noncompete agreements and reconsider the healthcare industry's unique challenges,” Penso wrote. “States already regulate the enforcement of noncompete agreements and are uniquely positioned to consider local healthcare market needs. Enforcing a national remedy to an issue already effectively handled by states would harm [multispecialty medical groups] and [integrated delivery systems] and the patients they serve.”

The FTC estimated that 18% of U.S. workers are covered by noncompete clauses. Along with upping workers’ earnings, the commission believes its proposal could save consumers upward of $148 billion on health costs each year. Banning these agreements also could close racial and gender wage gaps by upward of 9.1%.

The proposed rule would apply to independent contractors and anyone working for an employer, paid or unpaid. It additionally would require employers to rescind any existing noncompete clauses and actively inform workers they are no longer in effect. However, the rule would not apply to other employment restrictions such as nondisclosure agreements.

Back in late February, the American Hospital Association also announced its opposition to the proposal in its current form.