John Minchillo/AP Photo
Nurse Elizabeth Schafer is seen before Beth Israel Mount Sinai Hospital for her second day volunteering to combat the COVID-19 pandemic in New York on April 1, 2020.
Since the Federal Trade Commission opened the public comment period for its proposed ban on non-compete agreements in early January, the agency has received an outpouring of responses from medical workers, particularly physicians. An overwhelming majority of those public comments have supported the ban. They detail how these restrictive contracts impose a burden on medical staffers and impaired hospitals' response during the heights of the pandemic. Noncompetes both contributed to the early retirement or burnout of doctors and then dissuaded many out of work physicians from re-entering health services to help at hospitals in need during the pandemic.
Across the economy, companies force workers to sign employment agreements that block them from leaving their jobs for competitor firms. First used for executive-level positions, these clauses spread down the economic ladder and have become especially ubiquitous in healthcare. A 2018 study looked at noncompetes in medical centers across five states and estimated that almost half of physicians were bound by these contracts.
The FTC will hold a public forum on Thursday for employees bound by non-compete agreements and other affected parties to discuss the proposed ban. The forum will feature at least one physician on the panel to speak to the direct impact of these employment restrictions on the medical workers.
Numerous studies cited in the FTC’s proposed rule have shown that noncompetes undercut a competitive labor market and suppress wages by restricting employees from finding better paying jobs. In healthcare, they also hurt patients. When doctors leave a job, the terms of contract won't allow them to start their own business or go to a competitor typically within 15 miles of their former employer. That puts these physicians out of reach for their former patients who can't see their primary care physician anymore.
As the healthcare industry has consolidated, noncompetes have become much more common for physicians. Based on the Department of Justice's index for measuring market concentration, a University of California Berkeley study found that 90 percent of metropolitan areas were highly concentrated for hospitals in 2016 and roughly two thirds also had highly concentrated markets for primary care physicians.
Health giants have aggressively pushed noncompetes onto physicians, which in turn reinforce their market positions. By locking physicians into contracts, hospital chains and health networks make it all but impossible for doctors to start their own practices.
The growing use of subcontractors by large hospitals put a number of physicians in a Kafkaesque employment bind. In a public comment, a surgeon explains that he was trapped by a noncompete imposed by a contractor that ran the emergency room at a major hospital in Washington state. Because his employer lost the contract, the surgeon wouldn’t be able to work at his current workplace or any ones nearby. He would be forced to move his family.
The healthcare industry was hampered even before the pandemic. But the rising COVID-19 case numbers laid bare how a medical workforce tied up by restrictive contracts and a system geared towards profit would prove to be inadequate to the challenge. When hospitals across the country saw surges of COVID patients from spring of 2020 through to 2021, many did not have enough staffing to manage the patient loads. In some cases, that was due to long term cuts to labor costs. Nurses and doctors on hand were working overtime for weeks on end to care for more patients then they could serve. At the worst point of the emergency, some hospitals told people infected with COVID to remain at home because there weren’t any ICU beds left or staff on call.
“What’s being done to older doctors in industrialized medicine is sickening,” said Segal.
Because COVID outbreaks would first cluster in certain neighborhoods before spreading, it would often be the case that hospitals across town weren’t yet over-burdened and had physicians that could have been redeployed. However, many of these physicians were bound up by noncompetes which forbade them from going where they were needed most.
“We’d put calls out for extra help and many responses we'd get told us they couldn’t because of current or prior agreements with their employer,” said Dr. Earl Stewart, a physician at one of Atlanta’s largest nonprofit health networks, Wellstar.
Burnout and early retirements played a role in the physician and nurse shortages that greatly worsened the pandemic response. In public comments to the FTC, health workers document how, for over a decade, chronic understaffing left them crushed under mountainous loads of patients and working brutal hours. Without the ability to find other jobs and negotiate with their current employer, many gave up and left medicine entirely—a shocking waste of resources given how much time and money it takes to train a nurse or doctor.
“The non-compete clause deprives us of any bargaining power with employers and is wielded by employers to reduce wages. This is a large part of the increasing powerlessness and burnout that physicians are experiencing nationwide,” wrote one physician.
When the pandemic hit, even physicians who’d recently left their jobs couldn’t answer calls for extra help at health centers with attenuated staff because of noncompetes. Several employers went out of their way to enforce noncompetes against health workers who tried to do just that. A group of nurses in Wyoming received a court order from their former employer to stop caring for COVID patients because they’d violated non-compete clauses. A number of public comments submitted to the FTC attested to similar hindrances during the worst months of the public health emergency.
Early retirements before the pandemic also chipped away at an already depleted health workforce. Herman Segal worked as a physician, specializing in cardiology for over fifty years in the DC, Maryland metro area. When his private practice was bought in the 2000s by a large academic health institution, his new employer forced him to sign a non-compete agreement. The number of patients the hospital assigned to him took a toll over the years and he felt it was time to begin slowing down. When he asked the institution whether he could start working part time, not an unusual request for a doctor in his 70s, the administrators refused.
“What’s being done to older doctors in industrialized medicine is sickening,” said Segal.
Bound by a noncompete, Segal couldn’t just go back into private practice to cut down his hours. After several more years working full-time, he decided to retire after a long career. Other physicians have been pushed into retirement even earlier in their careers because they’d been over-worked. Had Herman decided to return to help at another health center that needed assistance during the pandemic, he could have been threatened with legal action by the hospital network because of the terms of his contract.
Even physicians actively employed in the field were restricted by their noncompetes from taking on additional shifts at hospitals running over capacity with COVID cases. In Reno, Nevada, Dr. Robert Matz worked as a hospitalist at the nonprofit health network Renown Health. Renown’s hospitals hold a near-monopoly on the city, according to a 2012 FTC case. The agency actually intervened to nullify noncompetes for the cardiologist at Renown’s health sites because it found the noncompetes allowed the nonprofit to gain totalizing control over 90 percent of the heart-care market in the city. That ruling didn’t apply to physicians like Dr. Matz, though. As a hospitalist, Matz works an unusual schedule of seven days straight on call for over 80 hours a day before then getting a week off. During the summer and fall of 2020, Matz tried to pick up extra shifts during his off days to help at the other major hospital in Reno, St. Francis, which was swamped at the time with patients.
But shortly after, Matz received a call from his supervisor. He was pulled into a conference room with around 6 hospital administrators seated around a long horse-shoe shaped table. They told Matz that under no uncertain terms would he be allowed to take shifts at a rival hospital even on off hours, pointing to the terms of the noncompete agreement which apply during and after employment.
“The way one of them put it to me was if you’re working for Nike you can’t go to Adidas,” said Matz.
Several of Matz’s friends who work in the health sector had similar experiences with their employers. Though the FTC’s ban primarily applies to post-termination contract restrictions, easing noncompete agreements could lead to fewer restrictions across the board, as Matz explained in his public comment to the FTC. Many employers in other industries don’t stop workers from taking contract jobs on the side.
A contract means nothing without the power of government coercion behind it. The FTC has substantial authority to outlaw anti-competitive contracts that are harmful to both physicians and public alike.
