FTC rule on non-competes!

[hotsaws]

Fact Sheet on FTC’s Proposed Final Noncompete Rule

The following outline provides a high-level overview of the FTC’s proposed final rule:

www.ftc.gov

Just wanted to put this out there. Curious if anyone has any interpretation other than mine?

To me it appears that non-competes will essentially be a thing of the past.

For those who own practices and employ physicians or midlevels, sorry bout your luck.

For those of us that are employed or associate level physicians looking to partner up, this seems like a huge win. I would argue that non-competes are the major leverage that owners hold over us. We should be able to neogtiate way more favorably because we can literally open up next door or play employers against each other for favorable contracts.

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[tylerb1800]

It will be interesting to see if or how this will apply to not-for-profit/non-profit entities.

 

[hotsaws]

“Although the FTC technically does not have jurisdiction over nonprofits, the Final Rule indicates that if a tax-exempt company is organized in a way that seeks to drive profit to its members, the agency can treat that company as for-profit, making it subject to the ban.”

I think most of the big hospital systems that are “nonprofit” but have executives earning 7 figures would fall into this. Then again, big hospital systems seem to have lobbied their way into ruining the medical system and screwing docs so I wouldn’t be surprised if they somehow just manipulate this to even further squeeze out physician owned practices.

 

[tylerb1800]

I have seen the highlights the from the extensive document that the FTC put out. They believe that this rule is applicable to not-for-profit hospitals. Hopefully the courts will agree with this. I feel like it will be a long road before this is applicable to most physicians.

 

[MD46]

Not sure if it makes sense but most people I have spoken to at my hospital which is a non for profit, their contract says they are hired by “ Hospital name” specialists LLC not directly by “Hospital name” medical center. However the MAs and RNs are employed directly by the hospital.

Hence these non for profit hospitals make for profit side companies and hire physicians from that.

Would imaging even if you work for a non for profit hospital it could still mean non compete may not apply to you based on this interpretation.

Maybe some one more familiar with the laws around this could chip in?

Ty

 

[MD46]

I have seen the highlights the from the extensive document that the FTC put out. They believe that this rule is applicable to not-for-profit hospitals. Hopefully the courts will agree with this. I feel like it will be a long road before this is applicable to most physicians.

What do you think now as compared to before when it was clear that per contract non competes apply vs now being in gray area, might be less enforceable?

 

[tylerb1800]

Physicians that are hired by "x group LLC or whatever" that contracts with the hospital are definitely covered by these FTC rules. From a not-for-profit standpoint, the courts will make the determination about how applicable it is. Fingers crossed that it does end up applying to physicians at not-for-profit hospitals.

The medicine subreddit as a good discussion ongoing about this rule. WCI forum also has a thread about this

 

[collegestud2013]

Fact Sheet on FTC’s Proposed Final Noncompete Rule

The following outline provides a high-level overview of the FTC’s proposed final rule:

www.ftc.gov

Just wanted to put this out there. Curious if anyone has any interpretation other than mine?

To me it appears that non-competes will essentially be a thing of the past.

For those who own practices and employ physicians or midlevels, sorry bout your luck.

For those of us that are employed or associate level physicians looking to partner up, this seems like a huge win. I would argue that non-competes are the major leverage that owners hold over us. We should be able to neogtiate way more favorably because we can literally open up next door or play employers against each other for favorable contracts.

What do you think now as compared to before when it was clear that per contract non competes apply vs now being in gray area, might be less enforceable?

In the past, enforceability was largely a state-specific issue based on state-specific laws. Some states like California are already well-known to not enforce nearly all non-competes so it would not change so much for those states, while other states will enforce them for certain groups of workers. Now its a federal issue. However given all the expected lawsuits trying to challenge it no one knows how it's going to play out, so I would not just go signing any ridiculous non-compete with the assumption that it can't be enforced.

If this holds up, there have been predictions by experts that physician pay would, on average, increase double-digit percentages for those currently employed and have have enforceable non-competes.

 

[hotsaws]

I think pay will go up on average, by how much, who knows. While the actual enforceability in each state varies, the threat of it is so lopsided that it's still effective. A large practice or especially a corporation can throw money at attorneys to try to enforce a non-compete and meanwhile continue with business as usual. Not sure what the cost would be but it's a lot easier for a large entity to flex on this kind of thing. For a single physician, the attorney fees, potential lost income, and threat of ultimately losing the case are generally prohibitive. You'd have to feel really sure about yourself to leave your group and join a group within your non-compete area or start your own practice. I also imagine other groups in the area aren't too keen on hiring a doc who may end up in litigation. If non-competes go away, it's a free market for physician talent. If you are productive and generally well liked by patients and staff, your group/employer would be foolish not to try and retain you ...and other groups in town should want to recruit you, especially if you now have a proven track record and some name recognition in the area. At least that's how it should be.

I also think this gives junior docs more leverage against a private equity buyout and probably makes buying equity less appealing unless the price is really fair. Buying equity in a physician owned practice was the main hedge against a future PE buy out, because at least you'd get paid on your shares if the company sold or have some say in the matter. The existing non-competes would likely give PE power over the docs who don't hold equity because my understanding is that most contracts will remain in place at the time of buyout and transfer to the new employer. But if you're a good, productive doc and PE steps in, whether you have equity or not, if there's no enforceable non-compete, they would have to make you a good offer to stay. I could be wrong. Not sure what the precedence has been with PE takeovers and non-competes.