The Let’s Talk Compliance partnership between PYA and Foley & Lardner continues with a new podcast in the Let’s Talk Compliance series. The podcast, “What the FTC’s Ban on Non-Competes Means for the Healthcare Industry,” was posted on July 1, 2024.
Jana Kolarik, a Foley Partner, and co-host Angie Caldwell, PYA Consulting Principal and Tampa Managing Principal, introduce the episode, featuring Ben Dryden, Vice Chair of Foley’s Antitrust & Competition Practice Group, and David McMillan, PYA’s Managing Principal of Consulting and Chief Financial Officer. Dryden and McMillan discuss the Federal Trade Commission’s (FTC) recent decision to ban employee non-compete agreements and how this ban could affect the healthcare and life sciences industries.
On April 23, 2024, the FTC adopted a regulation that bans virtually all employee non-compete agreements or clauses as unfair methods of competition effective Sept. 4, 2024, according to McMillan and Dryden. Exceptions to the ban exist for non-compete agreements with senior executives and a few other categories of employees.
In response, the U.S. Chamber of Commerce, which believes the ban “poses an existential threat to the rule of law for businesses in this country,” according to Dryden, stated it would take the matter to the Supreme Court. Other lawsuits also were filed along with a request for an injunction, and on July 3, 2024, the district court will vote on a preliminary injunction on the FTC’s ban.
Currently, a “diverse patchwork of approaches” to non-compete agreements exists across 46 states, says Dryden, but if the FTC proposed rule stands, those state-level laws will be overridden.
In healthcare, Dryden cites research that suggests physicians’ salaries go up when a non-compete agreement is in effect due to the growth of the practice from long-term marketing and patient relationship-building activities (i.e., when the physician is “locked in” to the community). The FTC predicts spending on physician services will go down by between $74 billion and $194 billion in the next decade. Dryden explains that the ban on non-competes could actually result in lower physician incomes.
“I don’t think this is necessarily going to be a ‘sky is falling’ situation,” Dryden says. “…if that means that doctors make a little bit less money after graduating from med school, well that’s going to mean there are…fewer qualified doctors applying to med school. And in a country that has tremendous physician shortages as it is, that’s a cause for concern.”
Listen to Episode 32, “What the FTC’s Ban on Non-Competes Means for the Healthcare Industry,” of Let’s Talk Compliance.
The Let’s Talk Compliance podcast series is for healthcare leaders and compliance professionals, as well as providers, suppliers, vendors, and others in the healthcare industry. In each episode, a Foley & Lardner attorney and a PYA advisor discuss a trending compliance topic and address questions they hear most often from clients.
The podcast is part of Foley & Lardner’s Health Care Law Today series. Listeners can subscribe to both series on Apple Podcasts, Spotify, or their preferred podcast app. All episodes of Let’s Talk Compliance also can be found on the PYA website.
If you would like assistance with physician compensation plan design, compensation valuation, auditing compliance programs, or any other matter related to compliance, regulatory requirements, strategy, or transactions, one of our executives would be happy to assist.
