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A bill in the Pa. legislature could end non-compete agreements for most doctors

Katie Blackley
90.5 WESA
UPMC is not only the largest medical system in Pennsylvania, but also the state's largest non-govermnetal employer.

When Dr. Lorraine Rosamilia left her job at a dermatology practice in State College, she said the non-compete she'd signed 17 years ago banned her from working within 30 miles of her former office. It also prevented her from saying goodbye to her patients, or telling them about her new job, roughly an hour's drive away in DuBois, Pa.

Non-competes are often part of the employment contracts that physicians sign when hired. If a doctor resigns, is fired or laid off, the clause can prohibit them from working for rival health systems within a certain geographic area.

But Rosamilia said her former patients were having difficulty finding a new provider and kept trying to get in touch: They called her mom or her husband's law firm — some even sent Rosamilia pictures of their rashes over Facebook Messenger.

"They're like, 'I just need someone to see this and tell me if it's urgent.’ And you find yourself, you know, really shackled because the people who are nearby who need you — you can't care for them,'" said Rosamilia, who grew up near State College and didn't want to relocate her family.

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Physicians all over Pennsylvania and the U.S. face similar situations. But within the past couple of weeks, there's been significant momentum on both federal and state levels to limit the use of these contracts in medicine.

The Hospital and Healthsystem Association of Pennsylvania declined an interview with WESA. In an email, CEO Nicole Stallings said that non-competes help smaller organizations retain staff and provide predictable access to care for patients. She also noted that health systems must shoulder the upfront costs of credentialing, insurance and training.

"Hospitals are often doing that work and making those investments before providers even start to see patients," she wrote.

But after over a year of consideration, the Federal Trade Commission (FTC) issued a ban on non-competes on Tuesday that applies to all industries. Health systems had lobbied the FTC to make an exception for medical providers, arguing these agreements help prevent hospital closures and stop doctors from leaving underserved areas. However, in the final ruling, the commission specifically addressed the health care industry, saying non-competes are a method of unfair competition.

This new federal rule is cold comfort to many Pennsylvania doctors. The FTC has limited authority over tax-exempt organizations and the Pennsylvania Medical Society reports that approximately 70% of hospitals in the state are non-profits, including those owned by UPMC, Allegheny Health Network and Geisinger Health System.

Though the FTC says there are circumstances where a nonprofit falls under its jurisdiction, this rule is not a death blow and likely faces years of litigation in federal court.

In the meantime, some Pennsylvania physicians are watching developments in Harrisburg: Legislation that drastically limits the use of non-competes in medical care was voted out of the House last week, 150 – 50, and is now awaiting consideration in the Senate's Health and Human Services Committee.

State Rep. Arvind Venkat (D-Allegheny Co.) is an emergency medicine doctor and one of the bill's primary sponsors. He said that non-competes send the message that patients are owned by hospitals and health systems.

"If a physician or some other clinician decides to leave, that patients don't get to decide whether they get to go and be cared for continuously by that clinician or not," said Venkat. "I think that's an inversion and a perversion of health care."

The bill does allow non-competes for practices in counties with fewer than 90,000 people. Venkat said that though it would be ideal to get rid of all non-competes, there are pragmatic arguments to allow them in certain circumstances, such as to protect health care access in rural Pennsylvania.

Both Venkat and Rosamilia said ending non-competes is essential as large health systems like UPMC continue to buy up independent practices and hospitals, turning the health care landscape into regional monopolies.

"You shouldn't have to necessarily be beholden to something that you signed so long ago when the health care market and even your own practice was completely different," she said.

Sarah Boden covers health and science for 90.5 WESA. Before coming to Pittsburgh in November 2017, she was a reporter for Iowa Public Radio. As a contributor to the NPR-Kaiser Health News Member Station Reporting Project on Health Care in the States, Sarah's print and audio reporting frequently appears on NPR and KFF Health News.