Freedom to roam: Breaking down the boundaries of non-competes

Change is a constant in the medical field, and one significant shift that’s been shaking up the world of health care employment is the reform of non-compete contracts. Understanding the implications of these changes is crucial to every doctor. I believe it’s important for you to grasp what the new non-compete contract reforms mean and how they might affect your career.

During the first 15 years of my career as a traditionally employed physician, my employment contract did not contain any non-compete language. This proved to be quite beneficial when, over ten years ago, I established my micro-corporation and entered into an employment lite agreement with the same employer, continuing to work in the same role and location. As a result, my current professional services agreement also does not include a non-compete clause.

In retrospect, I am grateful that my professional life has not been limited by non-compete contractual clauses. Essentially, I have had the freedom to explore professional opportunities without restrictions; in other words, I was free to roam.

The evolving changes in non-compete contracts offer many of you newfound freedom to explore without boundaries as well.

The evolution of non-compete contracts in health care

Non-compete contracts have long been a part of the health care industry. They were initially designed to protect the interests of employers, such as hospitals and medical practices, by restricting doctors from practicing within a certain radius or for a specified period after leaving their current job. However, these contracts have often been a point of contention, perceived by many as limiting the professional freedom of physicians.

Recent legal changes affecting non-compete contracts

In recent years, there have been significant legal changes that aim to strike a balance between protecting employers’ interests and preserving the professional autonomy of doctors. These changes have been influenced by court decisions, legislation, and the changing dynamics of the health care industry.

For example, on the federal level, in January 2023, the Federal Trade Commission proposed a rule that would ban most non-competes in the U.S. For doctors, the fine points of this ruling dealt with corporate employers and independent contractors, not employees—note the distinction. The rule was not immediately binding, and the FTC gave the general public 60 days to comment. Thirteen months later, the FTC still has not issued any final rule or signaled when it will do so. Bloomberg Law reports, per an undisclosed source, that the FTC will not vote on its final rule until April 2024.

New state laws also have changed the landscape. There are now five states that outright ban virtually all non-competes, i.e., California, Colorado, Minnesota, North Dakota, and Oklahoma. These laws have just very narrow exceptions, such as for certain sales of businesses. In my state of Indiana, Indiana’s legislature has passed an amendment, Senate Enrolled Act No. 7, which would invalidate primary care non-compete agreements that begin on or after July 1, 2023.

The times are changing, but we have not fully turned the corner in this yet—for the time being, it depends on the state in which you are licensed. But the downstream impact on physician contracts includes the following:

Increased scrutiny. Courts and legislatures are becoming more critical of overly restrictive non-compete agreements, especially when they impede access to care.

Consideration of public interest. Some jurisdictions are shifting their focus to the public interest, emphasizing the importance of patients’ access to health care providers.

Shortened duration. Reforms have led to limitations on the length of non-compete contracts, making them more reasonable and less onerous for doctors.

The implications for doctors

So, what do these changes mean for you? Here are some key takeaways:

Increased professional mobility. You will find it easier to explore new opportunities and practice settings without the fear of facing crippling non-compete restrictions.

Expanded patient access. The reforms are ultimately designed to improve patient access to care by reducing restrictions on your ability to practice in certain areas.

Empowerment of physicians. These changes empower you to make career decisions that align more with your personal and professional goals.

Strategies for navigating the new landscape

As a doctor, it’s important to understand how these reforms can benefit you. Here are some strategies for navigating the new non-compete contract landscape:

Stay informed. Keep up-to-date with the latest legal changes and precedents in your jurisdiction.

Consult legal experts. If you’re bound by a non-compete agreement or are considering one, consult with legal experts who specialize in health care employment contracts.

Consider your career goals. With increased professional mobility, you have more options. Consider your career goals and how these changes can help you achieve them.

Choose independence. Create a professional micro-corporation that enables you to engage in contractual agreements through business-to-business contracts instead of individual-to-business contracts. This approach will give you more leverage to avoid or eliminate non-compete clauses, while also establishing a layer of separation from employers’ suffocating control.

Call to action

The new non-compete contract reforms are a positive step toward balancing the interests of doctors and employers, ultimately benefiting patients and health care providers alike. You now have more freedom to explore career opportunities and expand your horizons in the ever-evolving world of health care. Embrace these changes as opportunities to shape your career according to your vision and passion.

If you have questions or concerns about non-compete contracts and how they affect your career, consider seeking advice from legal experts who specialize in health care employment. Stay informed, and remember that the evolving landscape can work in your favor as a physician.

The changes in non-compete contracts are reshaping the health care employment landscape, offering you more flexibility and professional autonomy. Embrace these changes as opportunities for personal and career growth.

Your best course of action is to establish a professional micro-corporation that enables you to engage in non-employee professional service agreements for job opportunities nationwide. Drawing from my personal experience, you can bypass traditional employment and opt for an employment lite agreement through your professional micro-corporation. This approach will not only protect you from non-competes but also enhance your professional mobility.

Now is the time to empower yourself in the marketplace and take advantage of the evolving contractual changes.

Tod Stillson is a family physician, entrepreneur, and Amazon best-selling author of Doctor Incorporated: Stop the Insanity of Traditional Employment and Preserve Your Professional Autonomy. He can be reached at SimpliMD.  Follow him on FacebookInstagram, and X @DrInc9, or join his Facebook community for doctors, Every Doctor Is A Business.

Dr. Stillson is the founder of SimpliMD, an exclusive physician community that supports doctors on their journey to micro-business competency through community, courses, content, coaching, and consultation. At SimpliMD, he inspires and informs doctors about the benefits of micro-incorporation through his content and regular blog posts titled The Truth.

Schedule a business consultation meeting with Dr. Stillson to discuss how micro-incorporation can help you.

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