Short answer: usually no. Longer answer: only if it’s enforceable where you live, you’re getting something meaningful for the restriction, and the terms are so narrow they won’t kneecap patient care, your options—or your career.
A few realities:
- The ground is shifting. Non-compete agreements are disfavored. Some states, such as California, mandate they are unenforceable. States keep changing their rules on physician non-competes. Some curb them. Some ban them. The only thing consistent is inconsistency. Before you sign anything new, have someone who understands your state’s statutes and legal interpretation read your current contract, amendments, and any separation agreement. Don’t “re-affirm” a weak covenant by accident.
- Hospitals want predictability, not your exile. They say “non-compete,” but what they actually need is continuity of coverage, protection of confidential information, and stability with staffing. Those goals can often be met without banning you from practicing: a reasonable non-solicitation of employees (not patients), a solid confidentiality clause, and a short transition plan for call and complex cases. Even if you did sign an agreement with a non-compete, it may be possible to negotiate waiver or softening on the way out the door. Remember, the law changes. A solid agreement signed 10 years ago may not be enforceable today if the law changed.
- If you must sign, neuter it. Keep the duration short (measured in months, not years). Tie geography to your primary practice site, not the whole system. Limit scope to specific service lines they truly invested in—never “any practice of medicine.” One good argument you’ll have in defending against overreach is if the institution only covers 5 specialties, and the agreement bans you from the “practice of medicine” entirely in the region. That makes no sense. If the institution has abandoned covering various specialties, including your specialty, how could you be competing with them if you set up a shingle across the street? Carve out established patients, emergencies, and anything needed to avoid patient abandonment.
- Make them pay for the privilege. If they want to limit your options, there should be real consideration: severance, tail, loan forgiveness, a clean mutual release, help with patient notifications and record transitions. If they won’t pay, that tells you how much they actually value the restriction.
- Protect patient access up front. Build into your exit paperwork the right to notify patients where you went and how to access records. That’s good medicine and smart risk management. Some states, like Texas, mandate formal notification when you leave. Texas law still requires that physicians not be denied access to a list of patients who they had seen or had treated within one year of termination and that they be given access to the medical records of their patients upon authorization of those patients. Meaning your soon-to-be former employer can’t make it impossible to notify your patients about where you’ll be landing.
- Timing matters. Don’t be rushed into a signature two weeks before you leave. Effective dates and new laws can change your leverage. Waiting a beat may mean the difference between a career detour and a clean departure.
- Choose your hill. If you can, fight non-competes; concede on reasonable confidentiality and a modest employee non-solicit. That trade preserves what patients care about—access—and what you care about—practicing your profession. If a hospital is open access, they may be OK with you bringing your patients to the facility. Remember, a healthcare system has multiple ways to make money.
Bottom line: if you’re leaving to start your own practice, my default is don’t sign a new non-compete. If you already have one, don’t casually re-agree to it on the way out. Get state-specific advice, negotiate hard for narrow terms, and make sure patients aren’t collateral damage.
What do you think?
Jeff,
I think that your advice on non-competes is pragmatic and insightful. But, I would add that is it very cost effective to have a competent thoughtful healthcare lawyer to review all documents before a physician signs. Physician contracts are not a “Do it yourself” job. These contracts are getting more involved and detailed and, frankly, an expert must evaluate. There are issues a doctor can live with, some can be modified, and some are absolutely unacceptable and a physician must pass on the offer.
Richard B Willner
The Center for Peer Review Justice
http://www.PeerReviewJustice.org
shamPeerReview (at) proton.me
504-621-1670 Hotline
1) From a very thorough review of prior legal case law, judges will not permit excessive lengths to a non compete agreements if litigated. Duration of no more than 2 years is typical but it can be as short as 1 year. The other major factor in non competes is the distance factor. In rural areas, this could be 25 miles, the distance to the next town. In Manhattan it might be as much as 5 miles and as little as 2 miles. In order for non compete agreements to be held valid, they must be reasonable in terms of time, and distance.
2) While California has mandated that non competes are invalid, across all fields, there has not been a test case (as far as I am aware) since that law passed, that tested whether firms, or practices, have a right to their intellectual property, and to their client or patient base. It is unclear if this would survive legal challenge since the departing party can take from the party being departed from, without compensation.
3) I would dispute whether hospitals are just interested in predictability, or exile. From what I have seen over the decades, they want physicians they do not agree with exiled. This is especially true under sham peer review circumstances.
4) There is absolutely nothing that compels a physician to sign a non compete agreement when they are going out the door. Those agreements are usually part of the original contract that the physician signed in order to gain employment.
5) The idea of getting a hospital to pay for the privilege of your departure, seems unlikely to be done, since in most circumstances I have seen the hospital is eager to dispatch the physician and is willing to go to court to do so.
When negotiating a contract initially, one should insisted on occurrence malpractice insurance policies, or claims made coverage with a tail. Negotiating this at the tail end is not likely to be successful.
6) Protecting patient access is one issue. One may desire to keep former patients. But taking them away from a former employer, is potentially grounds for litigation. It is likely better to break free cleanly. The patients will find a way to come to you over time.
Notification of your departure is one thing.
But who is going to care for the patients in the interim. They must have adequate time to find another physician, lest the departing physician be charged with patient abandonment.
There is another major issue. Who wants to maintain patient records? That burden should properly fall upon the employer. Moving records, maintaining paper records, or scanning those records to keep them electronically, and eventually destroying them, are all expensive. Is there a clean way to extract multiple patient records for the departing physician to take them with him/her? I’ve not seen one. It is more likely records would be printed out and then the departing physician would have to have them scanned in. Better to leave records behind and start over, for the most part.
7) Non competes are typically part of any initial employment agreement. Signing them at the end of employment is a challenge, and is best avoided. Is the employer realizing then the deficiency of the original contract? Also a non compete that prohibits competition at a distance from multiple hospital clinics is likely unenforceable. The non compete should be determined by the distance from the main facility.
Another issue is a “veiled” threat of peer review against you if the separation agreement is in some way argued or contested by the separating physician.
As the single physician dealing with a much larger institution with deep pockets, that is a possibility that may be brought up in private discussions that you will not be permitted to record. This is obviously extortion and is illegal. But the “threat” may be couched in so-called friendly terms. Coming from a person you used to trust, with “Godfather” good intentions.
All this agrees with the necessity of a health care attorney on your side, which means a compensated attorney whom you yourself pay.
If you wish to utilize a recording during negotiations, you must clearly understand the recording laws in your state.
In any grossly unequal negotiation, trying to handle this without your own experienced legal counsel is foolhardy.
Every dollar you pay your attorney is absolutely the best money you can spend.
Michael M. Rosenblatt, DPM
Dr Retired,
The whole idea is for the physician to have a clean separation from the employer and not have to litigate. It is very expensive and it takes years. Lots of uncertainty. Not a good idea.
If issues have to be negotiated at the end of the term, then it is time to have a really savvy proven healthcare lawyer on the doctor’s side. Calm intelligent reasonable diplomacy does work.
Remember that the CEO and Chief must give good references for the doctor when he or she moves on. It is always best to keep is classy.
Richard B Willner
A better idea is to get a good contract initially.
Great insights on non-compete clauses! It’s crucial for physicians fnf to fully understand these agreements.