What is a non-compete in a physician contract? Of all the things in a contract, besides compensation, this is probably the area that I discuss the most with the physicians I’m reviewing their contracts. It can have enormous ramifications on a professional’s career depending upon several factors that we’ll get into. Let’s do some basics as far as non-competes go. In most physician contracts, there’ll be restrictive covenants. Restrictive covenants are basically things that the physician can’t do when the employment contract ends. Standard restrictive covenants would be a non-disparagement clause. You can’t kind of badmouth the employer in some way.
In non-solicitation clause, you would be prohibited from actively soliciting patients, employees, other physicians, independent contractors, business vendors from the employer. And then there would also be a non-compete. The non-compete essentially prohibits the physician from working within a specialty for a period in a certain geographic area. Let’s get into the details of that. First, in every contract, in the non-compete, there will be a section that details what the physician can’t do, meaning, let’s just say, it’s an internal medicine physician who’s working as a hospitalist. The non-compete would state that the physician can’t work as a hospitalist for the period of time within the specific area. One thing to consider here is if you are in a specialty where you can do different things, let’s just take the internal medicine physician as an example, they could do primary care, they could do urgent care, they could do ED, they can be a hospitalist.
If in the non-compete, it says, you can’t practice medicine within that area, well, that can pose some problems if the physician needs to be in that area. So, you want to make certain that it specifically states in your specialty for the employer. If you’re a hospitalist, it just needs to say, the physician can’t work as a hospitalist within that area, within that time, not the practice of medicine. For many physicians who can do multiple things, an easy way around the non-compete, although maybe not a perfect scenario, but they could for a year do something else. And then after that year, come back and then work within their desired specialty. That’s the first thing. What does it entail? Is it the complete practice of medicine or is it just in your specialty? Should be just in your specialty. Other blogs of interest include:
Next, how long is the noncompete? Well, most non-competes are in a year. Many employers will stretch it out to two years. Anything above two years, I don’t think would be enforceable anywhere. If you are a physician, you do not want a non-compete longer than one year. It’s just an equitable amount of time. I think, no, this is state specific, right? I’m kind of giving you a broad outline of this. I can’t go through all the states in this video, but most courts have held that one year is the limit that they would consider a reasonable non-compete length. If you have a non-compete, you want to limit it to at least one year, nothing beyond that. And then the geographic restriction. This is probably the most important one.
Once again, generally, anywhere between 5 to 15 miles would be considered a reasonable non-compete. Now, in some states, they’ll push it for whatever reason. The Midwest states seem to really put more than that. So, 20 miles is not uncommon. You also must think about where you are located. 20 miles in a rural location that completely knocks you out of a city is certainly a lot different than 20 miles in a big metropolitan area which can knock out many potential opportunities. Maybe you’re a cardiologist in a small town in a smaller state, and it says 20 miles from your office. Well, there may not be another office that you could even get into within those 20 miles so that doesn’t really matter. Let’s say you’re in Phoenix where I am and 20 miles here could knock out hundreds, thousands of jobs potentially.
So, you would like to limit it to a small geographic restriction as possible. I’ve seen so many variations. It could be by county. In the south, they seem to use counties more than just mileage and normally it’s as the crow flies. If it says you can’t practice within your specialty for one year within 10 miles of the office, it’s not kind of a Google map road of 10 miles. It is as the crow flies. So, stick a pin in it, 10 miles all the way around that. That’s how it’s calculated. For many people, a non-compete might be the most important thing in a contract and for others, it might not matter at all. For physicians who are in a city that they don’t really have any ties to, they’re just there for the job.
They don’t care if they’re there after the fact, then we would spend more capital in getting different things changed in the agreement. Maybe the compensation or providing tail insurance or something like that. But if you are a physician who is either moving to an area to be near a family, or maybe you have a family yourself, and you just don’t want to pull your kids out of school and move them across the country. Well, then the non-compete could be the absolute most important thing. If you’re with a private physician practice, I find there’s much more leeway in negotiating the non-compete. Many of the larger hospitals, healthcare networks may just say, take it or leave it. We’re not going to negotiate. I also find that some of those big hospitals change their non-competes frequently. We have a huge healthcare network where I live, and I think every year it vacillates between different mileage and whether you can join a private practice and that’s exempted just kind of goes back and forth.
You certainly do have leverage in getting that changed in some instances, but honestly, I wish I had a better answer for you but in some instances, it’s going to be a take it or leave it offer. So, you need to think about, alright, what’s the most important to me? And then you always have to get to the point where once again, if you have to stay in a community, you won’t have any options to practice there under the terms of the non-compete, then you just have to figure out a way to move on. Some jobs are simply not worth it. And if you accept a job, you’re accepting the non-compete, they are enforceable, and nearly there’s only a few states where it’s not enforceable. When you sign that agreement, you need to understand that that non-compete is likely going to be enforced if necessary, and whatever terms you agree to are the terms that are going to hold.
Last thing, if you are negotiating a non-compete, maybe you can offer some concessions in other areas. For instance, with the non-solicit, it may say you cannot attempt to solicit patients, employees, whatever. Well, you could say for instance, I agree not to hire, not just solicit, I will not hire any employees, any other physicians, and independent contractors. That way, you’re less of a threat. If you’re in kind of like a primary care type specialty, you’re going to open a new office. The biggest concern of any employer is they bring a physician in, they leave, then take all patients, all the employees, and that old employer is kind of stuck. Maybe giving somewhere else might be worth the employer agreeing to amend the non-compete in some way. So, those are the basics of a physician’s non-compete.
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