Looking Out For Your Career

Understanding physician non-compete clauses

| Apr 5, 2021 | Noncompete Agreements

Texas physicians often have a wide selection of employers. However, it is critical to thoroughly read and understand the employment contracts when offered a position. Non-compete clauses may become deal-breakers if the restrictions significantly limit your job prospects when the contract comes to a close.

An enforceable noncompetition must protect a legitimate business interest of the employer. According to the American Medical Association, physicians should not enter into covenants that unreasonably restrict their right to practice medicine for a specific time or geographic area upon contract termination.

Elements of an enforceable non-compete clause

The Texas courts recognize a free market can suffer when covenants contain broad restrictions regarding employee mobility. As a result, employers must limit the scope of constraints. State laws allow physician non-competes as long as they meet the following criteria:

  • Do not deny physician access to patients they saw or treated within a year of the contract termination
  • Allow access to the patient records with patient authorization
  • Provide a non-compete buyout option at a reasonable price
  • Allow continuing treatment and care to specific patients during acute illness

Restrictions that limit patient access to physicians, disrupt the continuity of care and increase healthcare costs are often not enforceable.

Questions to ask yourself before signing a non-compete

Is this is your first job as a physician after graduating? If it is, you may not have a strong negotiating position. Do your plans include living and working in the area covered by the contract after it ends? If so, consider specifying geographic areas or types of practice that the non-compete excludes. This can make finding work or starting your own practice easier.

If the employer is a small private practice, you may have more flexibility than if the potential employer is a larger hospital system as contractual agreements with hospitals may have rigid requirements. Understanding which factors are and are not enforceable can prevent you from limiting your career options unnecessarily.