Understanding a physician non-compete agreement

On Behalf of | Jun 13, 2022 | Health Care Law

Texas physicians are often asked to sign a non-compete agreement when beginning employment. It is important to have a thorough understanding of the agreement before signing, and not sign the agreement if you have questions or concerns about any of the terms.

What is a non-compete agreement?

A non-compete agreement is a binding, legal contract a physician signs when joining a practice. The agreement states that the physician agrees to not work for a competitor for a certain time after leaving the practice. A competitor can be another practice, medical group or hospital.

Penalties are assessed for breaking a non-compete agreement, usually monetary. Fear of these penalties often causes physicians to do everything possible to avoid breaking the non-compete agreement, since they may not be able to afford the penalty amount.

Don’t be afraid to negotiate

Many physicians assume they have no power when it comes to signing a non-compete agreement, but this is simply not true. As a physician, you are allowed to negotiate the terms.

This may be difficult, especially if you are a newer doctor and don’t want to start your career on the wrong foot. Having an experienced attorney review the non-compete agreement and provide any advice and guidance can help.

Positives and negatives

Non-compete agreements do serve some important purposes. They prevent practices from facing a huge loss of patients if a favorite physician leaves, and discourage physicians from leaving for another practice, provided they are happy where they are at.

However, there are negative aspects to non-compete agreements, as well. The terms can be unreasonable, with the monetary penalty amounts being excessive, or the competitor’s geographic region being too wide.

For example, a doctor may hesitate to leave a practice they are unhappy at because they would have to move several hundred miles away to avoid working for a competitor. Patients may also suffer since they would lose their physician and be unable to follow them to a new practice.

Non-compete agreements are common, but that does not mean you should immediately sign. Reviewing all terms carefully and getting professional advice can help you avoid future problems.