Pennsylvania’s New Law Shakes up Non-Compete Agreements for Health Care Practitioners
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Pennsylvania has taken a bold step to reshape the landscape of employment agreements for health care professionals with the introduction of the Fair Contracting for Health Care Practitioners Act. Effective January 1, 2025, this groundbreaking law restricts the use of non-compete agreements, aiming to enhance patient care, retain health care talent, and foster a more competitive health care market. Signed by Governor Josh Shapiro on July 23, 2024, the Act reflects a growing national trend to scrutinize restrictive covenants, especially in the health care sector.
What Does the Act Do?
The Fair Contracting for Health Care Practitioners Act targets non-compete agreements that limit the ability of health care professionals to practise after leaving an employer.Under the new law, non-compete covenants longer than one year are deemed “contrary to public policy and void and unenforceable by an employer.” This applies to a wide range of professionals, including medical doctors, osteopaths, certified registered nurse anesthetists, nurse practitioners, and physician assistants.
though, the law does allow for some exceptions. Non-compete agreements lasting up to one year remain enforceable if the practitioner voluntarily resigns or if the agreement is tied to the sale of a practice. Employers can also recover reasonable expenses, such as relocation or training costs, incurred within three years before a practitioner’s departure.
Key Provisions at a Glance
| Provision | Details |
|———————————–|———————————————————————————————–|
| non-Compete Restrictions | Non-competes longer than one year are void. One-year agreements are enforceable if voluntary. |
| Cost Recovery for Employers | Employers can recoup relocation, training, or patient acquisition costs.|
| Non-Competes in Business Sales| Non-competes tied to the sale of a practice remain valid. |
| Patient Notification | Employers must notify patients within 90 days of a practitioner’s departure. |
| Effective Date | Applies to agreements signed after January 1,2025. |
Why This Matters
The Act is a response to growing concerns about the impact of non-compete agreements on patient care and health care workforce mobility. By limiting these restrictive covenants, Pennsylvania aims to ensure continuity of care for patients and reduce barriers for practitioners seeking new opportunities.
“This law marks a important shift in how we approach employment practices in the health care sector,” said Governor Shapiro. “It’s about putting patients first and ensuring that health care professionals can provide care without needless restrictions.”
The law also includes a patient notification requirement. Employers must inform patients within 90 days if a practitioner with whom they’ve had a two-year outpatient relationship leaves the practice. the notice must explain the departure, provide instructions for transferring medical records, and outline options for continuing care.
A Growing National Trend
Pennsylvania is not alone in this movement. States like Iowa, Maryland, and Louisiana have also introduced measures to restrict non-compete agreements for health care providers. at the federal level, the Federal Trade Commission’s proposed ban on non-compete agreements is currently facing legal challenges. However, this federal rule does not apply to not-for-profit entities, leaving many hospital systems unaffected.
Pennsylvania’s law, however, applies to both private and not-for-profit health care organizations, making it one of the most complete measures of its kind.
What’s Next?
Health care employers and practitioners in Pennsylvania must review existing agreements to ensure compliance with the new law. Non-compete agreements signed before January 1, 2025, remain unaffected, but any new agreements must adhere to the Act’s provisions.
As the health care industry continues to evolve, laws like pennsylvania’s Fair Contracting for Health Care Practitioners Act are likely to play a pivotal role in shaping the future of employment practices. By prioritizing patient care and practitioner mobility, this law sets a precedent for other states to follow.What do you think about Pennsylvania’s new law? Share your thoughts in the comments below or join the conversation on social media using #HealthCareReform.
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For more facts on how this law impacts your practice or institution,consult with a legal expert or visit the Pennsylvania General Assembly’s website.
Pennsylvania’s New Law Shakes Up Non-Compete Agreements for Health Care Practitioners
Pennsylvania has taken a bold step to reshape the landscape of employment agreements for health care professionals with the introduction of the Fair Contracting for Health Care Practitioners Act. Effective January 1, 2025, this groundbreaking law restricts the use of non-compete agreements, aiming to enhance patient care, retain health care talent, and foster a more competitive health care market. Signed by governor Josh Shapiro on July 23, 2024, the Act reflects a growing national trend to scrutinize restrictive covenants, especially in the health care sector.
Interview with Dr. Emily Carter, Health Policy Expert
to better understand the implications of this new law, we sat down with Dr. Emily Carter, a renowned health policy expert and professor of health law at the University of pennsylvania. Dr. Carter has extensively studied the impact of non-compete agreements on health care systems and workforce mobility.
What does the Act do?
Senior Editor: Dr. Carter, can you explain the key provisions of the Fair Contracting for Health Care Practitioners Act and how it changes the rules for non-compete agreements?
Dr. Emily carter: Absolutely. The Act fundamentally limits the enforceability of non-compete agreements for health care practitioners. Specifically, non-compete covenants longer than one year are now deemed “contrary to public policy and void and unenforceable by an employer.” This applies to a wide range of professionals, including medical doctors, nurse practitioners, and physician assistants. However, there are exceptions. As an example, non-compete agreements lasting up to one year remain enforceable if the practitioner voluntarily resigns or if the agreement is tied to the sale of a practice. Employers can also recover reasonable expenses, such as relocation or training costs, incurred within three years before a practitioner’s departure [[1]].
Why This Matters
Senior Editor: Why is this law significant for both health care practitioners and patients?
Dr. Emily Carter: This law is a response to growing concerns about how non-compete agreements can disrupt patient care and limit workforce mobility. By restricting these covenants, Pennsylvania aims to ensure continuity of care for patients and reduce barriers for practitioners seeking new opportunities. Governor Shapiro has emphasized that this law is about putting patients first and ensuring that health care professionals can provide care without needless restrictions [[2]].
Additionally, the law includes a patient notification requirement. Employers must inform patients within 90 days if a practitioner with whom they’ve had a two-year outpatient relationship leaves the practice. the notice must explain the departure, provide instructions for transferring medical records, and outline options for continuing care. This transparency is crucial for maintaining trust and continuity in patient-provider relationships.
A Growing National Trend
Senior Editor: How does Pennsylvania’s law fit into the broader national conversation about non-compete agreements?
Dr. Emily Carter: Pennsylvania is part of a growing movement across the country to restrict non-compete agreements, particularly in the health care sector. States like Iowa, Maryland, and Louisiana have introduced similar measures. At the federal level, the Federal Trade Commission has proposed a ban on non-compete agreements, though it’s currently facing legal challenges. Though, the FTC’s rule does not apply to not-for-profit entities, which means many hospital systems are unaffected. Pennsylvania’s law, on the other hand, applies to both private and not-for-profit health care organizations, making it one of the most thorough measures of its kind [[3]].
What’s Next?
Senior Editor: What should health care employers and practitioners in Pennsylvania do to prepare for these changes?
Dr. Emily Carter: Health care employers and practitioners must review existing agreements to ensure compliance with the new law. Non-compete agreements signed before January 1,2025,remain unaffected,but any new agreements must adhere to the Act’s provisions. Employers should also prepare to meet the patient notification requirements,which are a critical component of the law. As the health care industry continues to evolve, laws like Pennsylvania’s Fair Contracting for Health Care Practitioners Act are likely to play a pivotal role in shaping the future of employment practices. By prioritizing patient care and practitioner mobility,this law sets a precedent for other states to follow.
Senior Editor: Thank you, Dr.Carter, for your insights. This law is undoubtedly a significant step forward for health care reform in Pennsylvania.
For more facts on how this law impacts your practice or institution, consult with a legal expert or visit the Pennsylvania General Assembly’s website.
