I prepared this potential op-ed prior to the death of HB 2931 in the Washington legislature. Non-compete clauses (also known as restrictive covenants) in physician contracts have had a devastating effect on the primary care workforce in Vancouver, Washington and other border regions of the state.

I understand the need to protect employers from the costs of recruiting a physician who then turns around and threatens to compete from across the street (really… who does that?) On the other hand, large groups in the state have thrown their weight around and hospital systems have thrown temper tantrums. I would prefer to eliminate restrictive covenants for family physicians, but there is good evidence from numerous sectors fo the economy that putting sharp limits on the enforceability of restrictive covenants is good for the economy. The best example is Silicon Valley,  where companies treat their employees very well, manage them extraordinarily well and continue to work with the intellectual capital they attract long after it leaves to spin off new entities and foster even more innovation.

Other physicians need the support, but so do baristas, hairdressers, nail spa workers and tattoo artists, who are unfairly unlimited by the legacy companies. I have to believe it makes these companies lazy and less considerate than they would be otherwise.

There were several bills, but I addressed the one widely regarded as the most likely to cross to the senate. In the Senate there was SB 6625 sponsored by Senators Conway, Hasegawa, Keiser, Chase, which restricted non-competes to 6 months for hourly wage workers. HB 2406 was sponsored by Representatives Manweller, Sells, Stanford, Magendanz, Tarleton, Moscoso, Ormsby and S. Hunt and stipulated that non-compete clauses were null and void in the case of a listed number of low hourly wage work such as fast food and dry wall applicators. HB 2931, sponsored by Representatives Stanford and Ormsby was the most sophisticated of the three and tried to outline certain parameters for which it is inappropriate to impose a non-compete. In short, if you are not an executive, non-competes would not be enforceable beyond one year.

None of the bills proposed geographic limits as “reasonable” in a non-compete.

All I can say is “we’ll be back,” even though I am poised to become an employer of physcians and stand to benefit from the applicability of these absurd covenants. There is still this thing called “doing the right thing.” Here is my unpublished opinion piece.

House Bill 2931 limits how employers can impose non-compete agreements on prospective employees and will be good for all industries in the state, although it will have an unexpected beneficial effect on health of Washingtonians. The bill received a vote on the House Floor Tuesday and will now go to the Senate for consideration.

 

Non-compete agreements in health care protect hospitals and larger medical groups, ostensibly from the high cost of physician recruitment. However, once a doctor agrees to be employed by a medical group, these agreements become a not-so-subtle means of controlling the doctors. An unhappy doctor could be required to leave the city, county or state because the agreement states that he or she is not allowed to practice their profession under any circumstances within the exclusion area. Since doctors have families and children, the non-compete agreement becomes a leash which can only be broken at substantial personal cost, which many families simply are not willing to accept. In one draconian example, one employer in Southwest Washington defines the geographic exclusion area as three counties. The doctor is often left with a Hobson’s choice of staying at an unhappy job with incompetent and potentially dangerous management or leaving town. No one is left to advocate for you, the patient.

 

Non-compete agreements are outrageous and unethical in healthcare. They disrupt the doctor patient relationship and hurt our workforce. When physicians leave the state, even for a short period of time, they rarely come back. Most medical groups spend a huge amount of money recruiting, but nobody tracks losses when doctors leave. In the end, it is the patients who suffer when they lose a trusted provider. I have never seen an administrator look an elderly woman in the eye and explain how his contract forced her doctor out of town.

 

It should come as no surprise that the Washington Hospital Association is profoundly opposes HB 2931. The Washington State Medical Association debated the issue heatedly, and emerged officially neutral. At least one large group made veiled threats to leave the association if even a watered down proposal were considered. The Washington Academy of Family Physicians is the only group that supports the bill, reflecting the public health orientation of primary care sector. Oddly enough, Republicans tend to like bills like HB 2931, because they foster free markets. Democrats like them because they protect employees. This is a bipartisan issue that aims to clip “Big Corporate,” not “Big Government.”

 

In many industries, non-compete agreements are merely an over-reaching effort to own their workforce. As one misdirected lobbyist asserted at the House Labor Committee, “our people ARE our intellectual property.” One wonders how Silicon Valley has thrived, since California is a place where these covenants are nearly completely unenforceable. Perhaps economic development is constrained when tech companies are allowed to impose draconian non-compete clauses?

 

There are numerous options which would make covenants more fair to communities, patients and doctors, but none of the corporations that run the state’s health care apparatus will even discuss the matter. It is time to reclaim the natural rights of individuals to work where they please without undue interference from anonymous corporations. Now it is up to the Senate to make HB 2931 law.