Should you include noncompete agreements in physician contracts?

The ability to recruit and secure top talent can be a game-changer for healthcare organizations. In their quest to retain their valuable recruits, many organizations turn to noncompete agreements as a means of protecting their investments. But should you include noncompete agreements in physician contracts? Let’s consider the pros and cons of noncompete agreements and some of the alternatives you can consider.

The pros of noncompete agreements

1. Noncompete agreements can help healthcare organizations protect their investments in recruiting and training physicians. They discourage newly hired physicians from leaving for competing practices or hospitals shortly after being hired.
2. Noncompetes can help maintain patient relationships and continuity of care by restricting physicians from practicing in the same geographic area for a specified period of time after leaving.
3. These agreements usually include clauses that protect sensitive patient data and medical information from being used by a departing physician in a competitive setting.

The cons of noncompete agreements

1. Some physicians may be reluctant to consider job offers that come with restrictive noncompete agreements, potentially limiting the candidate pool for recruiters.
2. Noncompetes can limit a physician’s career mobility, making it challenging for them to explore new opportunities, especially those looking to relocate or change specialties.
3. The enforceability of noncompete agreements varies from one state to another, and some courts may deem them overly restrictive.

Alternatives to noncompete agreements

1. Tailored Restrictive Covenants

Rather than blanket noncompete agreements, consider creating tailored restrictive covenants that are more reasonable in scope. This approach can address specific concerns without unnecessarily restricting physicians.

2. Non-solicitation agreements

As opposed to preventing physicians from working in a certain area, a non-solicitation agreement can be used to prohibit them from actively soliciting patients or staff from their former employer.

3. Garden leave clauses

A "garden leave" clause allows physicians to leave their current position but requires them to serve a notice period during which they are paid but cannot practice medicine or compete with their current employer.

4. Buyout provisions
   Including a buyout provision in contracts allows physicians to pay a predetermined sum to be released from their noncompete obligations. This gives them more freedom to explore new career opportunities.
5. Mentorship programs

Physicians may feel less inclined to leave your organizations if they feel valued and supported.  Invest in mentorship and onboarding programs that foster strong physician-employer relationships.

Focus on incentives

Attract physicians and reduce the need for restrictive agreements by offering competitive compensation packages, signing bonuses, loan repayment assistance or other incentives that make your organization an appealing choice.

6. Collaboration agreements

Encourage physicians to collaborate on research or projects that could strengthen their ties to your facility and reduce the chance of them seeking employment elsewhere.

Considerations for physician recruiters

When you’re pondering whether to include noncompete agreements in physician contracts, consider the following:

1. Local regulations

Be familiar with the specific regulations governing noncompete agreements in your state or region and ensure that any agreements you draft comply with local laws.

2. Negotiation flexibility

Physicians may be more willing to accept restrictive covenants if they are tailored to their specific circumstances and goals, so it helps to be open to some negotiation.

3. Transparency

Clearly communicate the terms of any restrictive covenants to candidates during the recruitment process. Being transparent from the beginning can help build trust and avoid surprises down the road.

4. Long-term goals

Give serious consideration to the long-term effects of including noncompete agreements. Will they hinder your organization’s ability to attract top talent? Will they help?

5. Legal counsel

Consult with legal experts experienced in healthcare employment contracts to ensure any agreements you use are legally enforceable.

Deciding whether to include noncompete agreements in contracts is multifaceted. While they can help protect healthcare organizations, they may also negatively impact the recruitment process. Whether you opt to use noncompetes or an alternative option, it’s important to strike a balance between protecting the organization’s investments and fostering positive physician-employer relationships. In the end, a thoughtful, flexible approach to physician contracts will likely be the most successful.