- The American Hospital Association is urging the Federal Trade Commission to abandon a sweeping proposal that seeks to ban noncompete arrangements in labor contracts and to invalidate existing ones. The hospital lobby submitted comments on Wednesday in response to the proposed rule the FTC released earlier this year.
- The AHA said the proposal creates a one-size-fits-all rule for all employees across all industries and lacks nuance.
- The proposal would profoundly transform the healthcare labor market, especially for physicians and senior executives, the group said.
The pandemic has exacerbated existing staffing shortages and “now is not the time to upend the health care labor markets with a rule like this,” the AHA said in its written comments.
The AHA is pushing the FTC to exempt the hospital sector in its proposed rule.
At the very least, the rule should exempt the highly skilled and highly compensated workers like physicians and senior executives, the AHA said, arguing some research shows noncompete arrangements can be beneficial in these instances.
The hospital sector employs thousands of people with varying skill sets, from food service workers to translators to surgeons. Some employees are highly compensated while others are low-wage workers.
It is unfair to treat the broad range of employees the same under the sweeping rule, the AHA said.
“It would instantly invalidate millions of dollars of existing contracts, while exacerbating problems of health care labor scarcity, especially for medically underserved areas like rural communities,” the group wrote.
Also, the AHA argued that the FTC lacks authority to issue such a rule in the first place because it does not have the statutory authority.
The FTC’s proposal is poised to alter the healthcare sector, which frequently relies on restrictive covenants to retain physicians and the patients they treat, while nonprofit hospitals, a large swath of the sector, are likely to be exempt from the proposal, experts have said.