In the practice of medicine, noncompete agreements have special public policy concerns, “as their use can impact continuity of care, access to needed medical services, and patient choice of a physician,” the Texas Medical Association recently testified to the Texas Senate Business and Commerce Committee.
That’s largely why any future bills on noncompete agreements should “strike a reasonable balance between the employer’s interests and the interests of the employee and the public.”
Tilden Childs, MD, immediate past chair of TMA’s Council on Legislation (COL), was invited to provide such insights on noncompetes, which affect between 37% and 45% of physicians per American Medical Association data. The Senate committee is considering the topic ahead of the 2025 legislative session, which comes as the Federal Trade Commission (FTC) and the courts tangle over the topic.
“We seek to protect a physician’s ability to practice medicine and promote patient continuity of care while respecting an employer’s ability to reasonably protect its legitimate business interests,” Dr. Childs told Texas lawmakers in prepared testimony.
The committee’s chair, Sen. Charles Schwertner, MD (R-Georgetown), extended the invitation to Dr. Childs after COL’s involvement in the 2023 session, when TMA worked to ensure companion bills by Senator Schwertner and Rep. Greg Bonnen, MD (R-Friendswood) balanced the needs of both employer and employee physicians.
While that legislation ultimately stalled, TMA later developed further recommendations Dr. Childs shared with the committee, including that:
- The duration of noncompete clauses does not exceed one year post-employment;
- Geographic scope be limited to the practice location where the physician worked, rather than all of the practice’s locations; and
- Clear exceptions be outlined for circumstances involving the public interest, including physicians serving in medically underserved areas or in specialties with a critical shortage of doctors.
Dr. Childs also called attention to nonprofit organizations, including those in health care, which largely fall outside FTC’s jurisdiction. According to 2022 data from the American Hospital Association, nearly 30% of Texas hospitals (152 of 509) are nonprofit, compared with 260 for-profit and 97 state and local government-run hospitals.
“This underscores the continued importance of the Texas Legislature’s work to examine and improve noncompetes for physicians and the patients they care for,” Dr. Childs said.
An August ruling from U.S. District Judge Ada Brown of the Northern District of Texas blocked a FTC final rule that, per the agency, aimed “to promote competition by banning noncompetes nationwide, protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation.”
A month prior, a judge in Pennsylvania sided with FTC in a similar case, and it’s possible FTC will look for the 5th U.S. Circuit Court of Appeals to reconcile the pair of conflicting rulings. Therefore, Texas could pass legislation even before the status of the FTC’s final rule is fully clarified.
“There's still room for Texas to act regarding noncompetes because of the nonprofit part of it,” said Michelle Romero, TMA associate vice president of public affairs. “We don't know what's going to happen with the FTC final rule, but we still think there's room, and we still think that it's important to address fairness with physicians.”
To learn more about potential legislation for the upcoming session, visit TMA’s advocacy webpage. You can also attend TMA’s Business of Medicine Conference, which will feature a legislative update.
Phil West
Associate Editor
(512) 370-1394
phil.west[at]texmed[dot]org
Phil West is a writer and editor whose publications include the Los Angeles Times, Seattle Times, Austin American-Statesman, and San Antonio Express-News. He earned a BA in journalism from the University of Washington and an MFA from the University of Texas at Austin’s James A. Michener Center for Writers. He lives in Austin with his wife, children, and a trio of free-spirited dogs.