Hospitals in pursuit of excellence

Non-Compete Agreements Among Healthcare Providers: 6 Trends

Physicians' steady interest in hospital employment — a trend that has accelerated in recent years and is not expected to reverse — has implications for their employment contracts, particularly restrictive covenants, or non-compete clauses.

Emerging nuances in hospital-physician relationships, the proliferation of accountable care organizations and other factors of today's rapidly consolidating healthcare industry are influencing how providers choose to approach non-compete clauses and attune them to their broader organizational strategies. Here are six trends and key issues influencing restrictive covenants in a time of rapid healthcare consolidation.

1. When employing physicians, hospitals are tolerating potentially less restrictive covenants.
2. Accountable care organizations will give rise to unorthodox terms of employment that resemble legal covenants, but aren't.
3. More hospitals are finding themselves on the receiving ends of tortious interference claims.
4. Systems are raising the bar for liquidated damages clauses.
5. Sophisticated physician practices are ramping up their scrutiny and use of non-compete agreements.
6. Oversight from the Federal Trade Commission is not out of the question.