JACC: Advances Viewpoint Considers Use of Restrictive Covenants and Noncompetes For Physicians

The fairness and utility of restrictive covenants and noncompete clauses in the physician community has been widely debated in recent years, and a Viewpoint article published in JACC: Advances on Aug. 7 summarizes the findings from an ACC Board of Governors (BOG) workgroup on the topic.

J. Jeffrey Marshall, MD, FACC, et al., review the legal implications and status of restrictive covenants in physician contracts, evaluate both advantages and disadvantages associated with these policies, and present results from a survey of BOG and MedAxiom physician leaders, which found that 95% of BOG and 66% of MedAxiom physician leaders agreed that “ACC Chapters should support legislation that would limit or ban restrictive covenants.”

The workgroup also explore recent market-based and governmental policy changes, noting that “as health systems consolidate into larger organizations, noncompete clauses have become increasingly restrictive and disadvantageous for physicians and their patients.”

They cite the American Medical Association’s Code of Medical Ethics – which considers noncompete agreements problematic due to their tendency to restrict competition, disrupt continuity of care and potentially deprive patients of access to medical care – and the Federal Trade Commission’s (FTC) proposed rule, which if finalized would prohibit employers, except for nonprofits, from imposing noncompete clauses on workers (including physicians) and require employers to rescind current noncompete agreements. The ACC submitted comments regarding the FTC proposal in April 2023.

The authors identify several reasons why noncompete clauses may be harmful to cardiovascular professionals and their patients, such as imposing geographic limitations that may prevent physicians from fulfilling community benefit, the non-negotiable nature of noncompetes in contracts, the creation of a “captive workforce culture,” and potential interference with the clinician-patient relationship. They also note instances where the need for noncompetes may be reasonable, such as protecting a clinical practice and allowing for expansion, protecting business interests, and helping to foster training and mentorship within a workplace.

“Many cardiologists believe that large health systems, which now employ most cardiologists in the U.S., have outgrown the economic need for protection by noncompetes,” write the authors. “Some physicians still believe that properly constructed noncompete agreements may serve legitimate business purposes under some circumstances. Others may argue that noncompetes have become too restrictive and should be legally adjusted by statute or new judicial precedent to balance the power gradient with large health systems or practices.”

For more information, check out the latest Heart-to-Heart presidential chat discussing restrictive covenants, the full BOG White Paper on restrictive covenant challenges, a state-by-state legal analysis and additional MedAxiom resources.

Clinical Topics: Cardiovascular Care Team

Keywords: ACC Advocacy, United States, Cardiologists, Mentors, United States Federal Trade Commission, Physicians, Workplace, Workforce, Policy

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