'Now is not the time to upend healthcare labor markets:' AHA wants FTC noncompete proposal scrapped

The American Hospital Association has called on the Federal Trade Commission to withdraw its proposed rule to ban noncompete agreements, which prevent employees from leaving for a rival or starting a competing business for a period of time after their employment ends.

Hospitals and health systems employ a variety of personnel, from surgeons and nurses who operate in operating rooms and clinics, to food service workers in cafeterias, and translators and social workers in patient rooms. Some hospital employees are lower-skilled and earn lower wages, while others are highly trained and highly compensated. 

"But many of these hospital employees, especially physicians and senior executives, do not present the same considerations with respect to noncompete agreements as other types of employees," the AHA wrote in a Feb. 22 letter to the FTC. "The proposed regulation errs by seeking to create a one-size-fits-all rule for all employees across all industries, especially because Congress has not granted the FTC the authority to act in such a sweeping manner."

Even if the FCT had the authority to institute the proposed noncompete rule, "now is not the time to upend the healthcare labor markets with a rule like this," according to the AHA, which pointed to ongoing staffing shortages that are projected to affect hospitals and health systems far beyond the pandemic. 

Despite long-term labor shortages, the AHA said the proposed noncompete rule would hurt the healthcare industry by invalidating millions of dollars of existing physician and senior hospital executive contracts and exacerbate workforce challenges, particularly in rural communities.

The AHA said it is also concerned that the FTC may look to push this proposed rule forward without understanding the benefits noncompetes offer hospitals and health systems, nor the consequences of applying the rule to only for-profit hospitals "when nearly 80 percent of for-profit hospitals operate in the same markets as non-profit hospitals with many of the same demands for highly skilled labor and senior executives."

At the very least, the AHA said that any noncompete rule should exempt physicians and senior executives or — more generally — highly skilled, highly paid employees using categories that are well-established under federal law.

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