Ohio GOP senator proposes new limits on health care non-compete contracts

The Federal Trade Commission is pushing to ban non-compete contracts nationwide. One of their staunchest opponents in that effort is Republican Congressman Jim Jordan. But at the state level, some Republicans are skeptical of how extensive non-compete agreements have become.

State Sen. Terry Johnson, R-McDermott, has proposed legislation that would limit many health care non-competes to six months and a radius of 15 miles. Johnson, a retired osteopathic physician, filed similar legislation during the previous term.

Who’s covered?

The current legislation only applies to a specific slice of the health practitioners. Physicians, physician assistants, and advanced practice registered nurses fall within the bill’s scope. That leaves out management employees and nurses with less training.

The measure also only applies to nonprofit hospitals. Most of Ohio’s hospitals operate as nonprofits. But some partner with for-profit specialty hospitals offering services like rehabilitation or behavioral health.

Johnson’s bill places explicit geographic limits on non-compete contracts. Those limits can’t extend beyond 15 miles of the “physical location where the employee was employed with the hospital.” The bill goes on to require that the employment contract must list “one specific physical address” to calculate the radius.

Many hospitals in Ohio are part of multi-site systems. That means contracts with a seemingly modest radius wind up encompassing vast regions when calculated from all the system’s locations.

The restrictions in Johnson’s proposal only apply to post-employment non-compete contracts. Hospitals are still allowed to impose restrictions that would keep their workers from moonlighting.

The Ohio Hospital Association, which represents 247 hospitals in the state, defended the use of non-compete contracts.

“We generally support the use of non-competes, which are part of negotiated contracts between two willing parties,” the group said in a statement. “Non-competes are an important way for hospitals to protect their significant investments in bringing and retaining physicians to their communities.”

“We are an interested party with this legislation and will be reviewing this latest version,” the group added.

Johnson didn’t respond to an interview request.

How this bill compares

Johnson’s previous proposal eliminated non-competes outright, but only for physicians. The current measure expands the pool of practitioners, but allows non-compete agreements to continue, albeit in a limited capacity.

The earlier proposal got support from the Ohio State Medical Association which represents physicians, and it generated opposition from the Ohio Hospital Association.

The latter argued non-compete agreements help them extend care, particularly from specialists, into rural communities.

“Providing an underserved area with a new general or specialty physician practice, for example, would often not be feasible absent a reasonable non-compete agreement to assure continuity of care and access to those services within a community,” Madison Health CEO Dana Eagle argued on behalf of the OHA.

Meanwhile, the OSMA argued that those agreements exacerbate physician shortages, and they cited an opinion form the American Medical Association opposing non-competes.

“Ohio’s patient population has a right to receive health care services from the physician of their choice,” the OSMA argued, “and to that end, employment contracts should not interfere with access to their doctors.”

The previous version got a handful of hearings, but in the end, didn’t make it out of committee.

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This story was republished from the Ohio Capital Journal under a Creative Commons license.