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Non-compete agreements have no place in healthcare.

A non-compete agreement prohibits a terminated employee from competing with an employer or other entity by imposing a ban covering scope of practice, time, and geographical area. At one time these agreements were considered to be presumptively invalid because it was recognized that they had the potential to deny affected employees a livelihood, deprive society of needed services, and facilitate monopolization.

As the law evolved, the balance has shifted in favor of the employer and the non-compete agreement has become a commonplace feature of employment contracts. This has resulted in a system that features arbitrary enforcement and subjective interpretation. It also opens the door to abuses of power and deceptive business practices. The latter can cause a non-compete agreement to be activated, thereby giving complete control to the offending party and leaving the employee essentially defenseless.

Through the technique of protracted litigation the law may be used as a weapon of attrition rather than as an honest means to determine right or wrong. The real goal becomes a settlement followed by a gag order which, of course, fails to establish any reasonable standard(s) of practice. Even the veiled threat of a lawsuit is enough to cause individuals to act in a manner that is counter to their best interests.

In the practice of medicine and nursing, such agreements restrict competition, disrupt continuity of care, and remove needed medical services from the public. Furthermore, it seems unreasonable that someone should be obligated to an employment situation where just choosing to work elsewhere could result in their possible economic ruin and physical relocation.

The first rule of business is to stay in business. The first rule of medicine is to do no harm. No more so than in the non-compete agreement is the clash of business and medical ethics more apparent. By signing such an agreement, both the employer and the employee have relegated the patient to second place. In essence, the employer is saying that care will be provided but only on their terms or possibly not at all. The employee is expressing a willingness to abandon the patient in the event that the working relationship with the employer sours. The best interests of the patient and society are forgotten. Furthermore, there are already methods available to prevent business loss and compensate businesses for those employees who fail to honor their contracts that do not involve unnecessary non-compete agreements.

Non-Compete Agreements Are Discouraged

The AMA's Council of Ethical and Judicial Affairs officially discourages non-compete agreements. The American Bar Association's code of professional conduct does the same. At least 28 states have enacted legislation curtailing this business practice to some extent, and 3 states (Colorado, Delaware, and Massachusetts) specifically prohibit non-compete agreements involving physicians.

The non-compete agreement is really all about fear; fear of the loss of a business and fear of the loss of a job. It is a tactic to enforce loyalty rather than to earn it. When you can get away with it, why be elegant by restraining power? In the practice of nephrology, especially as related to ownership interests in dialysis units, it is a tactic that has the propensity to color judgment. To gain access to the benefits of ownership, all one has to do is steer patients the right way. In exchange, one gives up the high ground of independent thought and action by signing the non-compete agreement. The lure of easy money has a very strong appeal indeed. Out of this comes a conflict of interest. Who comes first, the business or the patient? I suspect few who have been subjected to this practice can honestly say that at some point they were not put in an uncomfortable position.

Agreements Cause Considerable Harm

I have personally seen considerable harm caused by such agreements. This has ranged all the way from disruption in the provision of medical care to unethical behavior on the part of medical personnel resulting in the death of patients. After all, what's more important, one's business/job or the patient? If the patient is harmed and the business (or one's job) is protected, that's just business, isn't it? Everyone gets sick sooner or later. If you were a patient, is this the way you would like to be treated? As one who may have signed a non-compete provision, are you happy to have signed away your precious freedom simply for a job and money? Do you realize that you will be (and effectively are being) treated as a spare part in the event the non-compete agreement becomes activated? Would you even like to be subjected to the possibility of any of these things happening? I think most would not. Until this practice is abolished universally in healthcare, we are all at risk.

Gary Rabetoy, MD, FACP Retired nephrologist who has worked in all areas of American Medicine--both Government (Military, Veterans Administration) and Civilian (University, Private Practice, Industry)
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Title Annotation:Controversies in Nephrology Nursing: Non-Compete Clauses: Are They an Appropriate Business Strategy?
Author:Rabetoy, Gary
Publication:Nephrology Nursing Journal
Date:Sep 1, 2005
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