Becker's ASC Review

35 Thought Leadership Physician noncompete disputes continue, but Biden administration wants them exiled By Alan Condon P hysician noncompete contracts are a common but sometimes contentious issue in the healthcare industry as they have the po- tential to disrupt the physician-patient relationship and remove physicians — who are already in short supply — from the workforce. President Joe Biden on July 9 signed an executive order encouraging the Federal Trade Commission to limit or ban noncompete agree- ments. For the healthcare industry, the move would likely facilitate physicians leaving hospital employment for ASC ownership in the same community, but could increase competition between ASCs to attract and retain talent as they wouldn't be able to enforce their own noncompete agreements. Here are four key noncompete disputes that made headlines this year: 1. Washington State vs. Bellingham Anesthesia Associates: e state of Washington filed an antitrust consent decree in August against Bell- ingham (Wa.) Anesthesia Associates, urging the group to end allegedly illegal noncompete contracts and pay $110,000 to the state. e state claims that the 50-physician group used illegal noncompete clauses and exclusive contracts with local providers to take about 90 percent of the market share for physician-administered anesthesia services in two Washington counties, allegedly in violation of the Washington Con- sumer Protection Act. If approved, the consent decree would require Bellingham Anesthesia Associates to stop illegally requiring physicians to sign three-year noncompete contracts. e group would be able to keep exclusive contracts with hospitals that need anesthesiologists on constant standby, but it would be required to cancel contracts with providers that do not need emergency coverage, such as ASCs and medical clinics. 2. St. Louis Heart and Vascular vs. SSM Health (St. Louis): St. Louis Heart and Vascular is seeking $50 million in damages from SSM Health aer it sued the St. Louis-based system to prevent it from entering into an exclusive contract with another cardiology provider. e lawsuit argues that the contract would limit St. Louis Heart and Vascular's abil- ity "to compete for and treat adult cardiac patients" because it would no longer have privileges at SSM hospitals. SSM said the contract would improve care and business practices. 3. Gastroenterologists vs. TriHealth (Cincinnati): TriHealth sued to enforce a noncompete clause for 18 gastroenterologists aiming to leave the Cincinnati-based system in June. e noncompete clauses prevent the physicians from practicing in the area for one year aer leaving TriHealth, unless 75 percent (18 physicians) of the department exits to- gether, among other provisions. Seventeen gastroenterologists told Tri- Health of plans to exit contracts on June 28, and another gastroenter- ologist changed his retirement date from June 30 to June 28. TriHealth sued the physicians to enact the noncompete clause, and argues that the 18th gastroenterologist's retirement date should not be included in the number of gastroenterologists required to avoid the clause. 4. Family practice physicians vs. CaroMont Health (Gastonia, N.C.): Seven physicians who sued CaroMont Health in 2019 over a noncom- pete clause in their employment contracts voluntarily dismissed their suit in May. e physicians le CaroMont's South Point Family Practice in 2019 to join Tryon Medical Partners, a physician practice launched in 2018 by nearly 100 physicians formerly employed by Charlotte, N.C.-based Atrium Health. CaroMont requested the seven physicians pay $1.8 million to be released from their noncompetes. e physicians sued to avoid payment, arguing that their noncompetes only prevented them from joining a competing health system within 20 miles of Caro- Mont, and Tryon is not a hospital or health system. e two parties reached a settlement to resolve the dispute. n New Jersey ASC admin says recruiting challenges could jeopardize physician ownership By Marcus Robertson R unning an ASC amid the COVID-19 pandemic comes with no shortage of challenges. Leasa Hermanson, MSN, RN, administrator of Vineland, N.J.-based Ambulatory Care Center, said her physician- owned center could be forced to partner with a larger entity if recruiting challenges persist. Question: When you think about your surgery cen- ter's potential growth, what comes to mind? Leasa Hermanson: We're in a really precarious position here in our area. We have one hospital system and it's sort of a monopolistic environment. So we've had some real challenges with the restrictive covenants and recruit- ing physicians, because a lot of the new doctors are look- ing toward the bigger groups and looking toward the hospitals. ... So I think in the future — like I said, we're one of the few physician-owned centers that are left around — I would not be surprised if we decided to partner with a larger entity, as many surgical centers have had to do. It is only because of our board of directors and their effi- ciencies, looking for every way to staff and finance things creatively, that we are able to manage without having a managing partner or working with a hospital system. n

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