October 4, 2021

Noncompete alternatives to enhance your offer

If you’ve ever signed a contract with a noncompete agreement, you may have gotten to the section and stressed about the terms or rolled your eyes a bit when reading. What reaction do your prospective hires have when reviewing an offer from your organization?

The American Academy of Family Physicians shared a 2018 survey that stated 45% of primary care physicians were bound by strict noncompete agreements. You want your hires to provide the best care possible to your patients, and they may worry about feeling stuck or getting burned out later in their career if they see a restrictive clause in their contract.

On July 9, President Joe Biden signed an executive order encouraging the Federal Trade Commission to limit or ban noncompete agreements. According to Becker’s Hospital Review, this would have the following effects on health care:

Physicians would have an easier time leaving hospitals, but this would cause health care systems to work harder to attract and retain employees.
Wages will increase due to competition between employers.
Physicians and health care workers will benefit as courts in recent years have ruled in favor of hospital systems during noncompete disputes.
Employee poaching could increase between medical practices.

According to LegalZoom, noncompete agreements do not always hold up in legal disputes because they are too broad. You can continue to include noncompete clauses in your offers, narrowing the terms to be more enforceable in court, or you can utilize alternatives to still accomplish your goals of attracting to talent and protecting your organization. A couple options include:

Nondisclosure or confidentiality agreements

When a hire signs a nondisclosure agreement, they will not be able to share confidential information learned while at your organization with a future employer or patients.

Nonsolicitation agreements

Nonsolicitation agreements can minimize the effect of losing a physician as the former employee cannot contact their patients when they leave to follow them to a new practice. This can also prohibit the employee from discussing business with your organization’s patients.

Regardless of the agreements and terms included in your contracts or offers, it’s best to focus on nurturing and creating an environment where physicians want to practice instead of making and enforcing conditions that make it more difficult to leave.

You can enhance your offer and work to attract and retain hires by including:

Comprehensive benefits package

A basic benefits package can include health, dental, vision and malpractice insurance coverage. In addition to basic benefits, your offer can incorporate professional membership dues; reimbursement for continuing medical education; vacation, sick, maternity and family leave; retirement savings plans; and disability insurance. Adding fixed moving allowances or reimbursement for a percentage - or all - of a hire’s relocation expenses on top of the other benefits contained in your offer will likely place your organization ahead of your competitors when candidates compare opportunities.

Many physicians are now looking for flexible work schedules and better work-life balance, which is a great benefit to provide to set your organization apart from others.

Work outside practice

Some physicians will do research, teach, consult or perform other income-earning activities outside of their daily practice. If your organization allows for this, the contract should state the nature of work allowed and whether any income from it is private or part of the practice income. If a candidate feels strongly about volunteering, teaching or conducting research outside their normal practice, this could determine whether they’ll want to sign with your organization.