The Noncompete Agreement: A Detriment to Patients and Dermatologists Alike

Dear Editor:

In the United States, over 500 dermatology residents join the physician workforce every year. With the next phase of their career looming, they are faced with numerous important decisions: pursuing fellowships, practicing in urban versus rural settings, and choosing to work in either academia or private practice, just to name a few. The choice to enter academic medicine carries several considerations. On one hand, academic dermatology positions offer the opportunity to educate the next crop of dermatologists and engage in transformative research, while simultaneously having the opportunity to care for a distinct patient population who engages academic healthcare systems. On the other hand, physicians practicing in an employed model academic healthcare system often have less competitive salaries and restrictive employment contracts.1,2 A meta-analysis published last year demonstrated that burnout and poorer job satisfaction was greatest in hospital settings, which may be attributable to the fact that working as an employee of an organization subjects physicians to more administrative regulations that infringe on autonomy.3,4 Physician employment contracts often include several constraints, including non-disclosure agreements, non-disparagement clauses, and non-compete agreements (NCAs). A NCA restricts physicians from practicing medicine within a certain timeframe and geographical distance from their employer. While residents are not subject to such rules during their training, they may face a myriad of punitive regulations when comparing job opportunities.

The American Medical Association (AMA) has published an official opinion on the use of NCAs in employment contracts for physicians, stating that restrictive covenants hamper competition, continuity of care, and access to care for patients. Unlike other professional organizations such as the American Bar Association, the AMA has not asserted any definitive protections against NCAs. Thus, despite the AMA’s condemnation of NCAs, they are still widely utilized across all medical specialties. In a recent study assessing the impact of such rules and regulations, it was found that approximately one half of primary care physicians are subject to an NCA.5 Furthermore, as the national healthcare landscape continues to trend toward corporate investment and consolidation of private medical practices, newly minted dermatologists face threats to their autonomy in both academic and private practice settings.

To offset these harmful limitations for physicians and workers in other industries, President Joseph Biden signed executive order 14036: Promoting competition in the American economy. This new federal policy, along with the Federal Trade Commission’s (FTC) recent proposal to ban noncompete clauses, is aimed at reducing rules that limit worker mobility. However, as the proposal currently stands, non-profit organizations would be exempt from a ban on NCAs for their employees. This caveat would effectively exclude any academic hospitals that operate as 501(c)(3) entities, thus excluding the doctors most impacted by restrictive covenants. Protecting physician autonomy and satisfaction is vital, especially considering impending physician shortages across the nation. In fact, the Association of American Medical Colleges predicts a shortage of up to 13,400 dermatologists in the next ten years.6 Patients living in poor, underinsured, and rural settings could be impacted the most by an exemption of non-profit organizations from a potential ban on NCAs. Restricting physicians from working in areas of high need may only further exacerbate the already limited access to care for patients in these regions. Given these concerns about the mere number of dermatologists practicing in a specified area, the American healthcare system cannot afford to have further restrictions on when and where doctors can practice.

With an aging population and a growing demand for dermatologists, implementing protections to conserve physician autonomy and satisfaction, like banning NCAs, is paramount. A 2015 study in the Mayo Clinical Proceedings found that burnout among dermatologists almost doubled between 2011 and 2014.7 Moreover, in another study aimed at quantifying dermatology trainee interest in academic careers, it was shown that interest in academia waned over the course of residency training; almost three-quarters of medical students applying into dermatology cited an interest in academia, while only 36.9 percent of dermatology residents reported any such interest.8 The eradication of NCAs may help to reduce burnout by way of allowing dermatologists to practice in regions where they can achieve maximum support for their personal and work lives. Additionally, this FTC ruling will force academic centers to actually consider AMA recommendations, reevaluate physician employment contracts, and ultimately, make them more appealing for trainees, which may help to abate the shortage of academic dermatologists that has persisted for almost fifty years.

Promoting dermatologists’ autonomy and regional mobility is not only significant in the combat against burnout, but it has also been shown to improve patient outcomes. A study focused on the geographic distribution of dermatologists throughout the United States demonstrated that a higher density of dermatologists in a circumscribed region is associated with lower melanoma mortality rates. Indeed, a large portion of the country has zero dermatologists per 100,000 people, most of which is concentrated in the central United States.9 Additionally, patients themselves should have the freedom to choose their doctor. For example, if a physician leaves a practice and must relocate due to an NCA, his or her patients are now subject to a disruption in continuity of care, left without their provider, and forced to reestablish care with another doctor they may not be familiar with. Putting a stop to restrictive covenants is just one modifiable factor that can help to augment dermatologist mobility, incentivize resource redistribution, and improve dermatologic outcomes.

With looming dermatologist shortages, persistent scarcity in academia, and an ever-growing need for dermatologic care, preserving and protecting physician autonomy is critical. With the discussion about NCAs, we are on track to ensure that dermatologists, physicians in other subspecialties, and workers of all industries have the freedom to work wherever they please. Eradication of NCAs may also help employers, such as hospitals and large physician groups, to focus more on employee satisfaction and retention, as opposed to manufacturing ways to hold physicians hostage. Removing NCAs may be one of the first steps toward allowing the market to create a more equitable healthcare landscape in which access to care and continuity of care are prioritized.

With regard,