Goodbye Non-Competes! Freeing the healthcare workforce improves outcomes

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This week, the Federal Trade Commission announced a complete ban on non-compete clauses. This ruling will be challenged and likely delayed, but it is a massive step towards increasing worker rights. In healthcare, a ban on non-competes may have an outsized impact.

• According to the American Medical Association , 37% to 45% of physician contracts include noncompete clauses.
• The FTC estimates healthcare cost savings of up to $194 billion in the next decade. The FTC provides evidence that noncompete agreements raise healthcare prices through consolidation and reduced competition.

Banning non-compete clauses in the healthcare sector can have several positive effects. Imagine rural communities where a restrictive non-compete may prevent access to care. If an orthopedic surgeon leaves their employer in a small town, they might have to move to ensure their livlihood. This harms healthcare professionals, but also impacts healthcare cost and access. Here are a few reasons why such bans can be beneficial:

1. Increasing Healthcare Provider Mobility: Non-compete clauses restrict healthcare providers from joining competing practices or starting new ones within a certain geographic area and for a specified period after leaving an employer. By banning these clauses, healthcare professionals can move more freely between job opportunities. This increased mobility can help address the shortages of healthcare providers, as professionals are not legally bound to stay away from certain markets or regions.
2. Enhancing Competition and Innovation: Non-compete clauses can stifle competition and innovation within the healthcare industry. When healthcare providers are able to move freely among practices, it encourages a competitive market where practices must improve their services and innovation to attract and retain the best healthcare professionals. This can lead to higher quality care and more advanced healthcare solutions being available to patients.
3. Improving Patient Access to Care: Non-compete clauses can severely limit the number of healthcare providers in a given area, especially in rural or underserved regions. When providers are free to practice without these restrictions, it can lead to more clinics and practices opening up, thus increasing the availability of healthcare services. This is particularly important in specialized fields where there are acute shortages of providers.
4. Reducing Healthcare Costs: Enhanced competition can also lead to reduced healthcare costs. When there are more providers in the market, the competition can drive down prices and costs associated with healthcare services. This not only makes healthcare more accessible in terms of availability but also more affordable for patients.
5. Empowering Healthcare Workers: Banning non-compete clauses empowers healthcare workers by giving them more control over their careers. This can lead to higher job satisfaction, reduced burnout, and a more dynamic job market where professionals can seek the best opportunities for their skills and specialties without legal hindrances.

“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned. The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.” -FTC Chair Lina M. Khan

Overall, banning non-compete clauses in healthcare can address critical issues related to healthcare provider shortages and uncompetitive practices, ultimately leading to better patient care and access. Such policies encourage a more open and competitive healthcare industry, vital for responding effectively to the evolving needs of the population.

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