Indiana Senate approves doctor noncompete ban

The Indiana Senate on Tuesday overwhelmingly passed a ban on physician noncompete agreements, a top Senate GOP priority and one of several bills meant to lower the cost of health care.  The bill goes to the House for consideration.

The noncompete agreements bar physicians who leave their jobs from working in similar positions within a certain time frame, and often a geographical range. That means doctors who want or need to take other jobs either can’t practice medicine for the agreed-upon time period, or must move elsewhere—even out of state.

“Eliminating non-compete clauses will help increase competition among health care providers, which will lead to lower prices and more options for Hoosiers,” author Sen. Justin Busch, R-Fort Wayne, said on the floor.

Eliminating the practice nationally, Busch said, could save health care consumers about $148 billion annually. That’s according to the Federal Trade Commission, which is considering a nationwide ban.

Minority Leader Greg Taylor, D-Indianapolis, said he supported the bill because the noncompete agreements can also require physicians to refer patients to colleagues within the same medical system.

“People should be referred to the best doctor, not just based on a business decision,” Taylor said.

But some feared the bill would threaten hospitals with narrow margins.

“This has been a very, very difficult bill to find the center spot on because you do see both sides,” said Sen. Jean Breaux, D-Indianapolis. “The flip side is that the hospitals do invest an awful lot in the physicians that they bring to their organizations.”

Banning noncompetes, she said, would let doctors leave their employers at will and “negate all of the investments made on the front end by the hospital.”

In committee, some hospitals said noncompetes kept their talent in place, but Sen. Liz Brown, R-Fort Wayne, argued that noncompetes also kept doctors from leaving other health systems and joining ones desperately in need of help.

The conservative-leaning Indiana Chamber of Commerce also came out against the bill, arguing that the government should have no role in private contractual matters.

“We have a fundamental philosophical position—long standing—that we oppose government interfering in employers’ rights to enter into contracts,” President and CEO Kevin Brinegar said Tuesday.

He warned the bill could introduce a slippery slope.

“If we’re going to do it here for doctors, then what occupations or what other types of contracts might come next, that the state might want to interfere in?” he asked.

The Senate passed the bill 45-5, with Breaux and three other Democrats voting against. Sen. Jean Leising, R-Oldenburg, also voted against, citing similar concerns for rural hospitals.

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5 thoughts on “Indiana Senate approves doctor noncompete ban

  1. Pay them their worth and provide a healthy, productive work environment where they have QUALIFIED AND DEDICATED support staff (In the quantities they need to do their job safely for their patients) and they will have no desire to leave. Many physicians, and employees in general, will stay at a job for the same and sometimes even slightly less pay, if the other work conditions are excellent. Non competes have always been solely for the benefit of the hospital, period! Any “investment” in a physician from recruiting etc. is quickly recouped, so this argument is a joke. Be a great employer and you will retain great employees…it’s just that simple.

  2. It is remarkable that every hospital administrator or lobbyist keeps parroting the phrase about “investing in the doctors”. What business out there doesn’t spend time, money, and energy to recruit the best people possible? This is going to be a big wake up call for hospitals to join the real market economy.

  3. Any non-compete agreement in a free market system devalues the employee and stifles competition. Unless the company has made a significant and expensive investment in training, maybe you can require a payback for leaving a job after a set period, but not a non-compete.

    For any job it is anti-free market and stifles competition.

  4. Let’s be honest, these agreements have nothing to do with keeping the Doctors and everything to do with keeping their patients (and really just the patients’ money.) I completely agree with those above that hospitals need to be held to the market standards that other industries are, and create a work environment where doctors want to stay.