The FTC voted April 23 to ban noncompete agreements in employment, a move that has yielded mixed reaction from spine surgeons.
It would be nationwide, but four states — California, Minnesota, North Dakota and Oklahoma — have already enacted noncompete bans.
Brian Gantwerker, MD, of The Craniospinal Center of Los Angeles, discussed what a noncompete ban looks like in his state for physicians.
Note: This conversation was lightly edited for clarity.
Question: Do you think California's landscape for physicians and especially spine and orthopedic surgeons is a good model of how things could look like then for other states, once this fully takes effect nationwide?
Dr. Brian Gantwerker: California is kind of a patchwork of good things and bad things. For the good things the noncompete clause being unenforceable — not just for the for profit businesses but not for profit as well — is something the state of California has done very well and effectively. The other thing is it does a decent job of offering consumer protections.
But California does not safeguard its patients' access very well. There are also laws that came down that essentially undid more than 40 years of tort reform that the state of California had under the threat of a legal battle with a very large syndicated private practice malpractice firm that makes a job of suing doctors from state to state. That has raised the cost of care here in California significantly. And malpractice premiums will go up and physicians will leave, and that will drive up the cost of care as more physicians join large groups or get bought out or do co-management agreements with private equity and venture capital.
They've also not done really well in terms of state income tax. Fortunately there was a recent city initiative in Sacramento that tried to specifically target physician practices to raise taxes. That measure was defeated. But a state like California that's the fourth largest economy in the world should really focus more on access and allowing people to open up their independent small businesses and running practices in peace, rather than trying to get a piece of everyone's action and driving up the cost of healthcare.
Other states are not as large of an economic juggernaut like California. But if you ask me, tort reform will keep the cost down. Having noncompetes unenforceable not just for not just for profit, but not for profit is obviously something that can work.
I think the bad things that happen in California are independent of noncompetes. We've had that ban on noncompetes since well before I started practice, and those those have actually done very well for the state and certainly it allows small practices like mine to flourish.
While the Federal Trade Commission can't enforce this on not for profits, I think it should be written into law that hospital systems and charity-based organizations should not be allowed to engage in unfair employment practices. Another thing that's going to be coming is more physicians will be joining collective bargaining units. Whether that's a guild or a union or a co-op remains to be seen. But ultimately, it's these unfair employment practices that have led physicians to do this. Really, it's the large healthcare systems and private equity that have done this to themselves, and I really harbor very little pity for them.