The past decade has seen a dramatic increase in the number of physicians who have become employed by health care systems. As a result, physicians are generally required to sign non-compete agreements. Non-compete provisions from such institutions tend to be much broader in scope than in the past, when physicians joined private practices, presenting several important considerations physicians should understand before accepting a new position.
Geographic Reach
As hospitals expand their presence beyond their primary campuses with urgent care facilities, ambulatory surgery centers, diagnostic centers and other services, non-compete agreements have expanded in geographic reach. It is not uncommon to see a non-compete that restricts a physician’s future employment to include all the geographic areas surrounding the employer’s extended facilities. In South Florida, for example, that could stretch from the Keys through the Treasure Coast, making it necessary for a physician to move out of South Florida in order to continue to practice medicine.
To avoid this situation, a physician should request the non-compete be limited to the area where he or she will be spending their greatest amount of time. From an enforceability perspective, a court might not find it reasonable, if a primary care physician practices solely in Miami Beach, for that physician to have a restrictive covenant extending into Palm Beach County, simply because the healthcare system has an imaging facility there. On the other hand, if the physician is a highly skilled specialist and one of only a few in the region, a court might find it reasonable for the non-compete to cover an expanded area, as patients likely would be willing to travel a greater distance for treatment.
Length of Agreement
Under Florida statutes, a non-compete of less than six months is presumed to be reasonable, whereas a non-compete of greater than two years is presumed to be unreasonable, leaving the vast majority of agreements in the gray area.
One way to mitigate a long non-compete is to request a "honeymoon" period. This allows a newly employed physician time to get a feel for the employer without committing to a lengthy non-compete if things don’t work out. A honeymoon period between three and six months gives the physician a fair amount of time to determine if the new job is the right fit and yet is short enough to avoid negatively impacting the employer if the physician leaves.
Enforceability
I have seen too many cases in which a physician signed a non-compete, thinking it would not hold up in court, only to learn the opposite years down the line. It is important to presume that any non-compete agreement will be enforceable, and ideally, have an attorney review it before signing it. In other words, plan for your exit when you arrive.
Negotiating Power
As part of the consolidation trend in health care, many hospitals and large practices have developed approved templates for non-compete agreements and are unwilling to negotiate with prospective employees. With fewer employers in today’s medical marketplace, physicians, especially young graduates, typically do not have the leverage they once had. That being said, sought-after specialists who are being courted by many prospective employers might find that those employers are willing to grant concessions.
Ideally, the conditions of a non-compete agreement protect an employer’s legitimate business interest while not being unduly restrictive on the physician. Being well informed and aiming to be reasonable during the negotiation process are keys to achieving a mutually agreeable outcome.
