Health care winners and losers after FTC bans noncompetes

“ChatGPT, MDHe has taught at both the Stanford School of Medicine and the Stanford Graduate School of Business and is the former CEO of Permanente Medical Group.

With one ruling, the FTC has removed the handcuffs on the nation’s jobs and made nearly every American worker eligible to work.Non-competition clauses A system that prohibits employees from working for a competitor for a certain period of time after leaving the company.

American health care in particular will benefit: The FTC projects that the new rules will raise wages for health care workers, increase competition, spur hiring, and reduce health care costs by $74 billion to $194 billion over the next decade. This comes at a critical time for American health care.Half of physicians report burnout 100 million people (41% of U.S. adults)I am paying for medical expenses They don’t have the luxury of it.

FTC Final RuleThe ruling, which took effect in April, not only frees new hires but also the 30 million Americans currently bound by non-compete agreements. The ruling, which is set to take effect in September pending a lawsuit by the U.S. Chamber of Commerce and other business groups, will allow health care workers to change jobs within their communities, rather than having to move 10, 20 or even 50 miles away to avoid violating their non-compete clauses.

Sign up for The Fulcrum newsletter

As with all major rulings, this one will produce clear winners and losers, and the outcome could reshape careers and change the U.S. health care system itself.

Recipient: Newly trained clinician

Without a doubt, the FTC’s ruling is a victory for young doctors and nurses who entered the medical industry in their late 20s and early 30s and are saddled with significant student loan debt.$200,000 for the average doctor.

Young professionals seeking stable, high-paying jobs join hospitals and health systems with promises of future raises and increased autonomy. But when those promises don’t materialize, non-compete clauses give clinicians no choice but to uproot their lives, move far away, and start over. One doctor in rural Appalachia said:FTC“Healthcare workers feel trapped in their current employment situations, which can lead to severe burnout and shorten their career longevity.”

By banning non-compete clauses, the FTC’s rules would increase career mobility and foster competition among health care employers, helping them attract and, more importantly, retain top talent.

Now, the rule has one notable caveat: Nonprofit hospitals and health systems are not under the jurisdiction of the FTC. However, the FTC has warned that these facilities ” Self-inflicted harm Moreover, as Congress increases its scrutiny of the nonprofit status of U.S. hospitals, hospitals that reject the FTC guidelines may be forced to comply through legislative action.

Winners: Patients in a competitive healthcare market

The FTC’s ban on non-compete clauses would directly improve patient outcomes. For example, doctors and nurses who experience less burnout and greater job satisfactionmake a serious medical errorAccording to research.

In addition, clinicians who are now free to practice elsewhere in their communities are likely to offer wider access, lower prices, and more personalized services to attract and retain patients. Other doctors and nurses will join local outpatient centers, offering convenient, cost-effective alternatives to expensive diagnostic tests, surgeries, and emergency care offered at nearby hospitals.

Losers: Large health systems

Large health systems, with multiple hospitals in the same geographic area, have traditionally built market power by entering into non-compete agreements. By prohibiting in-demand medical professionals, such as radiologists and anesthesiologists, from joining rivals or starting their own practices, these health systems have stifled competition and forced insurers to pay more for services.

Currently, these systems command high reimbursement rates from governments and commercial payers. At the same time, staff wages are kept relatively low, making it a highly profitable model. Research by Yale economist Zach Cooper illustrates the current situation: In highly concentrated hospital markets,Prices rise and quality falls.

The FTC’s ruling will challenge this situation, weakening the health care monopoly and reducing its enormous profits.

Losers: Hospital administrators

Individual hospitals have faced unique challenges over the past decade. Inpatient admissions continue to decline nationwide, making it harder for hospital administrators to fill beds. Driven by new technology, evidence-based practices, and changes in insurance reimbursement policies, this trend is forcing hospital administrators to adjust their financial strategies.

And they adapted. Today, outpatient care accounts for half of hospital revenue, reflecting aggressive acquisitions of local clinics that offer physician visits, diagnostic radiology and cardiology procedures, chemotherapy, same-day surgery and other procedures.

Medicare and other insurers pay hospital-owned outpatient services more than they pay local doctors or other facilities for the same services. By acquiring local outpatient clinics, hospitals can earn higher fees without incurring increased costs, generating larger profits.

But this strategy only works if hospital administrators can prevent doctors from retiring and re-opening practices in the same area, making it more likely that patients will follow suit.

That’s why non-compete clauses are so important to a hospital’s financial success. Predictably, the American Hospital Association opposed the FTC’s rule, calling it “bad law, bad policy, and a clear sign of agency run amok.”

Looking to the future

Today’s hospital systems are divided between the haves and the have-nots: Facilities in wealthy areas receive higher reimbursements from private insurers and enjoy greater financial success and higher administrative salaries (but not necessarily better patient outcomes). Rural hospitals suffer from declining patient volumes, while facilities in economically disadvantaged and more populous areas face greater financial challenges.

None of these models serve ordinary Americans. The ultimate measure of health care policy should be its impact on patients. Based on FTC decisions, the evidence is clear: eliminating non-competes would greatly benefit patients.