Hospitals have the duty to ensure that their physicians are professionally content, both physically and mentally to provide the highest quality of care. But they also have a responsibility to prevent physicians from leaving work for competing institutions. The paradox between the use of restrictive covenants in physicians’ contracts and hospitals’ concerns about physician wellness arises from a tension between two important objectives.
Restrictive covenants, which are clauses in contracts that limit a physician’s ability to practice in a certain area or for a certain period after leaving a hospital, are an effective way for hospitals to protect their interests. However, such covenants can also limit a physician’s professional autonomy and ability to seek out new opportunities. There are 27 community health and hospital systems in Maryland, with 18 of them in Baltimore alone.
From the physician’s perspective, restrictive covenants can be a source of stress and anxiety. Physicians can feel trapped in their current position and unable to explore new opportunities, higher wages, or pursue career goals. This may lead to burnout and decreased job satisfaction. Several academic organizations joined together to call for systemic change and highlight the return on investment for well-being initiatives and the profound downstream effects of physician burnout on patient safety and quality of care.
Due to the litigious nature of the American legal system, there is very little room for vulnerability, which puts physicians involved in a lawsuit at a higher risk for stress, personal consequences, and burnout. Additionally, the increased number of lawsuits against doctors is contributing to a growing trend of physicians leaving the medical profession completely. Institutions also place physician-patient relationships in jeopardy when threatening physicians with legal actions.
Fewer than 50 percent of physicians in the United States are currently working in private practice. The rise of corporations with reduced resources and autonomy overshadows the traditional independent practice of physicians. Over the past twenty years, hospital employment, private equity, and corporate acquisitions have progressively undermined independent medical practice.
More recently, the COVID-19 pandemic has significantly impacted physicians worldwide. The pandemic has placed an immense burden on health care systems, leading to increased demands on physicians to provide care to COVID-19 patients while still managing other patients’ needs. Physicians have been forced to adapt to new ways of working, such as telemedicine, to reduce exposure risks while continuing to provide care. Additionally, the pandemic has taken a toll on physicians’ mental health, with many experiencing burnout and stress due to the high workload and the emotional toll of treating patients with a highly infectious disease. The pandemic has also exposed systemic inequalities in health care, with physicians in low-income communities facing greater challenges due to limited resources and inadequate infrastructure. Overall, the COVID-19 pandemic has profoundly impacted physicians, highlighting the need for greater support and resources to ensure they can continue to provide high-quality care in challenging circumstances.
On January 5th, 2023, the Federal Trade Commission suggested banning restrictive covenants. The suggested regulation would prohibit hospitals and corporate employers from enforcing existing noncompete agreements or creating new ones for employed physicians.
Although the ban on noncompete agreements will not uniformly shift power dynamics across the medical profession, it remains unclear how it will affect hospital-based specialists like emergency medicine, hospitalist, and intensive care physicians, or diagnostic specialists such as pathologists and radiologists, where patient relationships are attenuated, time-limited, or non-existent. Nevertheless, the FTC’s proposed ban would be a game-changer for primary care physicians and subspecialists like cardiologists and orthopedists, where continuing or repeat patient relationships are prevalent. If noncompete agreements were to be banned, it would significantly change the balance of economic and professional power, favoring practicing physicians and increasing their bargaining power with prospective employers regarding work conditions and professional expectations.
Hospital systems and private equity firms are expected to strongly resist the proposed rule, given that the FTC’s action would reduce their control and asset values. Physician-owners who have sold their practices are likely prohibited from competing with the new owners, but non-equity-owning associates would not be subject to the ban. Corporate interests will undoubtedly lobby for additional exceptions to the ban or attempt to overturn it entirely and find a balance between protecting their interests and supporting their physicians’ well-being.
Medical societies at federal, state, and local levels and influential specialty societies must engage in aggressive pro-physician advocacy now that the comment period on the proposed noncompete ban will soon be open. The voices of individual physicians and members of Congress who support pro-competitive policies will also influence the FTC regulation. Noncompete agreements were historically justified to protect an employer’s intellectual property, but this justitifcation has limited applicability to the relationship between physicians and their employers.
A more dynamic professional marketplace benefits both patients and their physicians. Employers must focus on providing value beyond just salaries, including supportive working conditions, peer collaboration, professional development, career mobility, and creating value for patients to retain physicians for the long term.
It is imperative that we take immediate action to eliminate restrictive covenants in physicians’ contracts. The well-being of the medical community is contingent upon a comprehensive overhaul of the medical system. The mere gesture of “checking the well-being box” is insufficient: Substantial change is necessary. Restrictive covenants that curtail physicians’ autonomy and exacerbate burnout must be removed immediately. Leading experts in physician well-being have long recognized this issue – we cannot rely on group yoga sessions or mandatory resilience training alone. We must commit to the arduous task of transforming our culture, starting with eliminating these restrictive covenants.
Raya E. Kheirbek is a geriatrics and palliative medicine physician.
