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The New Normal: The Physician as an Employee
Pro: Restrictive Covenants are Anticompetitive Res ...
Pro: Restrictive Covenants are Anticompetitive Restraints on Trade and Freedom
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Video Transcription
So I'm going to talk about restricted covenants. I believe very strongly that they're anti-competitive, restraints on trade and freedom. Anybody who followed my tweets online for the past year or two know that this is a big issue, passionate for myself. I have moved twice in my career. And at each phase, there's this restricted covenant I have to deal with. I've been able to get around that because of goodwill with the institution. And I actually had three members of the board as patients. These things help. Looking at Bill, I'm sure he has many. Because I just called them and said, look, I'm leaving, but I want to open a practice nearby. And so this is why I moved an hour away and kept a practice a mile away from my prior hospital. And I kept all my patients, including the trustees of that hospital. So it can be done, but it shouldn't have to go through those lengths. So what is the landscape? We talked about this a little bit. Over the past decade or so, government initiatives and changing reimbursement drove higher payments in hospitals versus prior practices. We saw this. We thought we were doing such a great job telling practices why they should join us. But the truth is, it was a foregone conclusion because of reimbursement. Faced with declining revenue, physician practices sold themselves to hospitals, insurance companies, and now more and more private equity. Roughly over 80% and we're now hearing 89% of cardiologists are now employed. And these represent the largest groups by and large. The ones that are remaining are just these mom and pop shops, essentially. And these physicians had to sign non-compete and non-solicitation clauses, usually including a geography and a time period, which endangers losing the number one thing that they care about, their patients. And something that we don't typically think about because it's never been a concern of ours before that, are they serious about this? But the truth is, many hospitals can be very serious about it. And there's this concept of too big to fail in my mind for these hospitals, which is that I think they claim that they need to be protected from doctors leaving, protect their investment, so to speak. And they don't really think about our investment or the relationships we have with the patients, which is really what they're trying to capture, that they don't do a good job of themselves. But this is really David and Goliath. We all know which one needs protecting here. It's not usually the big person that needs protecting. It's the little person that needs protecting. One could argue instead that hospitals should be forced to compete and not get complacent. And this would be better for us all, including them. But let's see this from all perspectives. And I do want to give some credit to the American College of Cardiology. Both Jeff and I were on the Board of Governors for the past couple of years, a few years. And Jeff really spearheaded one of the efforts on the Board of Governors to investigate this issue and to see if ACC should take a stance. And we had a position statement that came out about this. We actually published it in Jack Advances. And my section, with a few colleagues, was about really diving into the different perspectives on how it would benefit everybody to get rid of non-competes. So from the patient perspective, it's very easy. Continuity of care. Patients should be able to follow their position. You build long-term relationships with patients. You already know the testing. You know what their body is like. They can walk in the room. You know these patients. You know when they need more echoes, when they don't need more echoes. If you have to move patients, and patients have to move around, they're going to have more unnecessary testing, have to revisit other positions. They may not be part of the same team. If they're in a cancer team or some other team, they have to find a new doctor that's no longer part of that team. So continuity and comprehensiveness of care is endangered. And this is a big, big problem. Patient access to diversity of care. Not all, we know that we have a minimum number of minorities, especially in different areas of the country, gender issues. And so patients may not be able to choose who in the practice they want if there's a few remaining physicians after the person you chose left. Patient access to better care. One of the things that when physicians leave, oftentimes it's for a good reason. So patients should also be able to leave. So for example, if I leave to the next door hospital because of X, Y, and Z, it might be likely that the patient may want to leave too for X, Y, and Z. And they may want to follow me for that reason. There might be a better offering at that place. And that is important for the patient. And then full transparency. This happened to me also from my job. They made it look like I essentially died or something. Because they just make it like, well, you don't know what happened. It's a sad thing or whatever. So what do they think? It's like, oh my God, look at the obituaries. Maybe he's in there. But I mean, they're like, he's really young. It doesn't make sense. But that's how they make it seem. And that's unethical in my opinion. And even if it's unethical by default or by indirect means. It's obvious from the cardiologist and the physician's standpoint, we thrive on autonomy. We thrive on being able to take care of our patients and being able to know what we want to do with our patients, make decisions. That's why we have problems with insurance companies. But from the hospital standpoint, we need to feel that we're autonomous and able to contribute to our patients without unnecessary impact from the hospital. So we feel lack of autonomy if we can't just get up and go. Every employee should be able to feel like they should get up and go. If they're not happy with the situation, not have repercussions. And this is why there's an FTC panel on this. Negotiation limitations. There's no question there's a power dynamic. You can't, as a one-off person, go to your administration unless you get very senior and have lots of patients and really willing to walk away, to say that I don't want the non-competing there, I want to negotiate it down. You know, they'll say it's a boilerplate and then you have to get the lawyers involved, right? That's not something that is easy to do. I think it does breed complacency. I always tended to joke, and no offense to anybody here, but the people who tend to stay at an institution oftentimes are the ones that are less risk-taking and the ones who tend to be more complacent. So I think it breeds complacency in hospitals in some respects. And don't take that the wrong way, but I think that happens. I do think that physicians have a buyout option as well. So from our standpoint, even if there is one, there should be some way to get out of it. That's always in the contract, some way to look at that. And they shouldn't, you know, they should be more objective. So for example, in New York, as hospitals grow and get more and more hospitals in their system, well, where is the covenant end? Is it from every hospital in the system? That means I can't work anywhere in New York. If you work for Northwell, for example, it's just not possible. So I think that's a gray area that should be obvious and written down. So for the hospital or the prior practice, I honestly think that they should want non-competes to go away because it also makes them better. They will be forced to make an environment where people wanna stay, and that's better, right? If you have kids, you don't wanna make the home a place that they dread coming back to. They should wanna come to their home. And so hospitals should be the same way, practices should be the same way that you build an environment where they wanna be at, and that helps with recruitment and retention, as you see here. And also the ability to attract talent. People always forget that if you're worried about people leaving, well, the flip side of that is that you can't take anybody. So you can't compete by getting the best talent in the area, and that competition actually makes your hospital better, as opposed to just kind of staying with what you got and growing by market share, which, by the way, can't last forever. The health system as a whole, I think this is why Biden administration, FTC has looked at this. How do you create competition in the system so everybody tries to get better? The same types of things, ability to attract talent, nationwide competition drives quality innovation, lowering costs. The FTC estimated $194 billion of savings in healthcare over the first decade, based on competition, which should drive down costs, as opposed to complacency. And from a society standpoint, we took this on, and I think I'm proud that all the societies, essentially, even though there's always some people who think the other way, most of them usually in higher leadership positions, most members want recidivist covenants and not to go away. The ACC survey found 95% of cardiologists agreed with that, and the only ones who didn't were people very senior in administration, moved from cardiology to administrative cardiology. Improving quality and equity of care. Yeah, I mean, not implying anything, but Jeff, you're next. Yeah. That's right. All right, it has a physician ability to negotiate for salary and support. This is the other thing, we wanna build our programs. So they need to know that if they're not building the programs, investing in the system, that we have an option to leave, or other places may be able to offer us that, and that, I think, is important for the hospital to grow. Otherwise, they lock down their funding left and right, oftentimes. And again, to protect the doctor-patient relationship. At the end of the day, as a society, we need to make sure that doctors can listen to their patients, protect that relationship. That relationship, if you've been doing this a while, is much longer than any hospital relationship for most people. I have patients from Cornell, that were then at Winthrop, that are then at Western, they've been with me forever. They stay with me. If I stay in the tri-state area, they're with me. And I want that to continue. It's probably the, besides training individual mentees, my patient relationships are by far the best ones I have, and family, of course. So where are we now? Multiple states have already, long ago, eliminated covenants, and healthcare has thrived. Massachusetts, Rhode Island, D.C., lots of others. There's a whole map of this that we put together that I'm happy to share. Multiple additional states are moving in this direction with bills in various stages, Maryland, New York. We failed last year, and I can go into that. Physicians in each of these states have been working on the issues together with professional societies. One thing we did last year is we were able to get all these societies to agree. So we got formal statements from ACC, Sky, HRS, AMA, MISNY, have all said non-competes are bad. And that took a while. That took a while behind the scenes to get that. So with this next wave, we now have a lot more people on our side. It's already a done deal, they're gonna support it. Now how do we do the tactics to support that? In New York State, I will say this died despite going past Senate and the House there because of the fact that the governor vetoed it. That was it. The governor vetoed it because of lobbies from Wall Street and healthcare. And at the end of the day, Wall Street mostly caved, healthcare would not. So at the end of the day, even though the barber and everybody else wants non-competes to go away, healthcare demolished the non-compete clause, okay? So we know that we are the actual problem, and so it's important for us to talk about it for them. The FTC decision in April came out, it was broad sweeping non-competes are banned. 90-day period of open comment, it goes into effect. They actually drafted wording for hospitals to send to all, for everybody to send to all employees that even retroactively, the non-competes should be banned, which is something I didn't think they were going to do. So they may all go. The only question was the non-profits or not. It was for-profit hospitals, so HCA and other for-profit hospitals have to do this. But the non-profits technically were not supposed to, but now they're thinking, and they wrote in their discussion that they feel they have jurisdiction over non-profits that are actually profitable, for example. So there's details there, and there's true, obviously there are non-profits that are profitable. So that being said, within 48 hours, they were sued by the Chamber of Commerce, so that's gonna go into the courts, and there will be a drawn-out battle with political implications. So I do think the state rights action is probably a stronger one. In the meantime, it probably does mean, in my opinion, that most hospitals will try to settle. So if I try to leave, at least I have some argument, the FTC came out with this, so it's more of a gray area now, and so you could make the argument that I'm gonna leave and start my practice somewhere else and let them sue me and let's see what happens, and it may draw out, and if many doctors do that, I doubt the hospital's going to wanna pay all of those bills.
Video Summary
The speaker strongly opposes restricted covenants for physicians, citing them as anti-competitive and restricting patient care continuity. They discuss how healthcare landscape changes have led to more physicians being employed by hospitals, facing non-compete clauses. The impact on patient care, physician autonomy, and hospital complacency is highlighted. Efforts by professional societies to eliminate non-competes are discussed, with some states already making progress. The FTC's recent decision to ban broad non-competes faces legal challenges. The speaker emphasizes the importance of protecting the doctor-patient relationship and advocating for physician autonomy.
Asset Subtitle
Srihari S. Naidu, MD
Keywords
restricted covenants
physicians
non-compete clauses
patient care
physician autonomy
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