A federal court on Aug. 20 struck down the Federal Trade Commission's sweeping noncompete ban, claiming that it was "unreasonably overbroad" and that the FTC lacks authority to implement nationwide rules defining unfair methods of competition.
The rule, which was initially set to take effect Sept. 4, would have invalidated tens of millions of existing noncompete agreements and banned hospitals and other employers from entering into or attempting to enforce any new noncompetes.
The FTC told Becker's it is considering a potential appeal of the federal court's ruling, which has received mixed reactions from hospital and physician groups.
Chip Kahn, president and CEO of the Federation of American Hospitals, stands by the federal court's decision to prevent the noncompete rule from taking effect.
"We have been clear from the start that this rule would threaten patient access to care by making it more difficult for hospitals to recruit and retain physicians and invest in training and technology," Mr. Khan said in a statement shared with Becker's. "In addition, this rule would create an unlevel playing field for tax-paying hospitals, an outcome completely at odds with FTC's mission to promote competition. Especially at a time of workforce shortages and other challenges, this was the right decision."
Some physician groups take the opposite view, arguing that noncompete agreements create an unlevel playing field for providers and hurt their ability to provide long-term, high quality care for their patients.
The American Academy of Family Physicians, which has more than 130,000 members, said it is disappointed by the decision to block the rule nationwide.
"Noncompetes harm family physicians and their patients by jeopardizing long-term patient-physician relationships and creating an uneven playing field for physicians," AAFP President Steven Furr, MD, said in a statement, "The AAFP will continue to support the FTC's mission to eliminate noncompetes in healthcare that prioritize the interests of organizations over those of patients and their physicians."
Noncompete agreements can be more nuanced for other providers, such as anesthesiologists, who often employ other anesthesiologists.
Most of the American Society of Anesthesiologists' members supported bans on noncompete agreements, but small and mid-sized groups said they would be disadvantaged by a general ban on noncompetes, a spokesperson for the ASA told Becker's. Those same anesthesia groups also expressed that the noncompete structure should be addressed in a more targeted way to rid such clauses of unreasonable and sometimes egregious practices.
The American Hospital Association, which filed an amicus brief in July urging the federal court to vacate the noncompete rule, said the FTC decision was an overreach of the agency's power and argued that it did not attempt to understand the disruptive effect the ban would have on hospital, health systems and their patients.
"We are pleased that Judge Brown vindicated what the AHA predicted when this unlawful regulation was first released — the 'only saving grace is that this rule will likely be short-lived, with courts almost certain to stop it before it can do damage to hospitals' ability to care for their patients and communities,'" Mr. Golder said in a statement.
Becker's has also reached out to the American Medical Association, America's Essential Hospitals and the American Academy of Orthopaedic Surgeons for comment.