AMA Opposes Non-Compete Agreements for Hospital-Employed Physicians

The American Medical Association’s (AMA) House of Delegates has voted to oppose non-compete agreements for physicians employed by hospitals or staffing companies.

Non-compete agreements prohibit employees from working for a competitive employer or starting a competing business during their current employment or for a specific duration after their job has ended.

There has been some debate on non-compete agreements among AMA’s members. Physician practice owners may favor using reasonable non-competes, while employed physicians may support banning the agreements.

The House of Delegates opposed non-compete contracts for certain physicians, including those employed by for-profit or nonprofit hospitals, hospital systems, or staffing company employers.

“Allowing physicians to work for multiple hospitals can enhance the availability of specialist coverage in a community, improving patient access to care and reducing health care disparities,” Ilse Levin, DO, MPH&TM, DM, AMA Board of Trustees member, said in the press release.

According to AMA, non-compete agreements have impacted up to 45 percent of primary care physicians, especially as more physicians are working directly for hospitals or practices that are partially owned by a hospital over private practices.

Additionally, non-compete agreements can limit career opportunities and advancements for recently graduated trainees entering the workforce. These contracts can also limit trainees’ ability to provide care in underserved areas, AMA said.

While the Accreditation Council for Graduate Medical Education (ACGME) prohibits restrictive contracts as a contingency for residents or fellows in GME training programs, some non-ACGME fellowship programs require trainees to sign non-compete agreements.

Some states, including California, North Dakota, and Oklahoma, have already banned non-compete contracts. Other states have banned the agreements specifically for physicians, including New Hampshire, Delaware, Massachusetts, and Rhode Island.

In January 2023, the Federal Trade Commission proposed a ban on non-compete agreements, estimating that it would increase wages by almost $300 billion per year and expand career opportunities for 30 million people. However, the ban would not cover nonprofit hospitals, which account for 57 percent of all hospitals.

“We must keep in mind that owners of private practices often invest heavily when hiring and training physicians, and those owners may believe that they need to use reasonable non-compete agreements to compete with large hospital systems or other dominant institutional employers,” Levin said. “Preserving and fostering independent physicians and other physician-led organizations is crucial to a healthy nation.”

AMA’s House of Delegates requested a study of current physician employment contract terms and trends. The study should include recommendations to address balancing the business interests of physician employers while also protecting physician employment advancement, competition, and patient access to care.

Unlike AMA, the American Medical Group Association (AMGA) supported non-compete agreements. In March 2023, the organization urged FTC to withdraw its proposed ban, asserting that it would hurt care coordination, raise healthcare costs, and harm the healthcare workforce.

AMGA stated that prohibiting non-compete agreements in the healthcare space would negatively affect local healthcare labor markets as the industry continues to experience workforce shortages. The organization said states should retain their authority to regulate non-compete provisions in employment agreements as they are most familiar with local market conditions.