Healthcare Providers: Employment Contracts and the FTC Ruling

By Feraud Calixte, CFP®

Senior Financial Advisor

May 6, 2024

On April 23, 2024, the Federal Trade Commission (FTC) announced a rule banning noncomepetes nationwide.

In the announcement, FTC Chair Lina M. Khan states, “Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism.” The FTC’s final rule to ban non-competes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.

This new ruling will affect many industries, but it is of particular interest to those in healthcare, such as physicians and dentists. To fully understand the impact of this ruling, it is important to have a general understanding of what a noncompete is and how they work in the healthcare industry.

Non-compete agreements are typically entered into at the outset of an employment relationship. Often when doctors/dentists join a practice group, their employment contract will contain a clause indicating the professional cannot work for a competing practice for a certain period after leaving the current employer. Certain states impose some restrictions on these clauses by limiting the scope, time, and territory of the noncompete as well as the reasonableness of the agreement. Here is an example of a recent employment contract containing noncompete language:

Restrictive Covenant:

Notwithstanding anything herein to the contrary, you hereby covenant and agree that during the Term and, if the Term ends due to your resignation or termination for cause by (The hospital) in accordance with Section VI(d), for the one-year period thereafter (the “Restricted Period”), you will not, without the prior written approval of the Vice Dean for Clinical Affairs and Strategy/Chief Clinical Office, either directly or indirectly, manage, operate, control, engage in, consult with or for, be employed by or otherwise provide anesthesiology services to or participate in any manner with any hospital, ambulatory facility or medical practice located or doing business within a five(5)mile radius of any hospital, ambulatory facility or medical site of (current hospital) or any of its affiliates where you provided anesthesiology services during the Term of your employment with (current hospital).

It is prudent for anyone signing these agreements to have them reviewed by a local contract or employment lawyer to understand the nuances and particulars of the agreement.

Now that we’ve briefly discussed the FTC announcement and how noncompetes can affect healthcare professionals, we now need to address how this relates to financial planning and how we serve these professionals.

A comprehensive financial planning arrangement often requires that we assess clients’ short-term and long-term goals. We also assess their assets/investments and sources of income. For most people, their most significant income source is their wage income.

Here are some financial planning opportunities that may arise from this new ruling from the FTC:

Re-evaluation of career goals

Healthcare workers will now have increased leverage and negotiation power when reviewing contracts. They will have less concern about being “locked in” to a particular hospital or practice group. They will also have a choice in deciding whether the timing is right to start or buy a practice or to join another practice group more closely aligned with their goals.

Benefits analysis

When healthcare professionals first started working, the benefits offered may have met their needs at the time. Now, for one reason or another, it may be time to test the market. As the job market becomes more competitive for top talent, exceptional providers will now be able to test the market and evaluate the benefits being offered by different employers.


Along the same lines as the benefits, providers may now be in a stronger position to increase their cash flow without fear of being unable to practice in their chosen specialties.

Family and emotional wellbeing

Unfortunately, we have spoken with providers that feel that they are “trapped” in less than ideal or even toxic work environments. They are not in a position to or interested in relocating to another geographical area. This new ruling allows these professionals the freedom to explore opportunities that are better suited for themselves and their families and to prioritize their mental health.

This FTC ruling is a recent development and one that has potential impacts on the clients we serve. Our specialty group strives to keep current on all the issues that are important to healthcare providers. If you have questions regarding your specific employment contract, we recommend you consult a local attorney versed in your state-specific laws. We’re proud to work with several good attorneys throughout our footprint. We would be happy to discuss your options with you so that you can consider and perhaps proactively implement prudent financial planning strategies in light of this new ruling.


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