For an audio version of this post, please click on the speaker icon (top left).
No one enters a partnership, be it in marriage or business, thinking that it will not work out and requiring the parties to part separate ways.
But unfortunately, after the honeymoon period wears off, some may find out that what was initially thought of as a good union may not be the case.
On the business side of things physicians may find that they are legally required to practice elsewhere due to a “non-compete” clause.
It is vital to know some of the subtle nuances that may be present in contracts with a non-compete included, lest you find yourself needing to uproot your entire family because there is nowhere you can continue to practice medicine in your current location.
Fortunately Contract Diagnostics, a trusted sponsor of this website, specializes in thorough analysis of physician contracts and helps you get the most favorable outcome possible.
The following is a post from Contract Diagnostics that gives some pointers on what to look for when a non-compete is in play.
The non-compete clause is a critical element of your contract.
If you get a job and it doesn’t work out, what are the terms of termination?
Where can you work, and what is the acceptable radius within which you can practice?
Does it mean you have to move two states away in order to continue what you are doing?
There is some variability within non-compete clauses.
Also, as with all things, there are general principles that will apply to most situations.
What type of practice is it?
Keep in mind that it depends so much on the type of practice.
If you take a very highly successful private practice in a setting where they own the market, having a non-compete is probably not as big of a deal because there is little chance you could compete with them.
But rather than having a radius within which you cannot practice, they may say, “We have exclusive contracts to provide anesthesia services at these certain hospitals, and you cannot take those contracts.”
And that totally makes sense from their perspective.
In a situation like that, it doesn’t mean you cannot open up your own practice.
But would you want to do that, knowing they are the ones in town providing that service?
It’s important to understand the nuances of a non-compete clause, but sometimes it’s a non-issue.
Because if your job does not work out, you almost have to move because there is nowhere else you could work in that area.
Of course, it all depends on the specific type of medicine you practice.
For example, if it’s a pain practice, maybe you have a defined amount of time, say one year, and a clause that says you have to stay ten miles from the practice locations.
Sometimes it is from one location, and sometimes it’s from every location.
It’s important that the physician knows how that is structured.
If it is from every location and they’ve got five locations, it might be more catastrophic than if it is just from the one location that the physician is working.
As the employer adds accounts or adds locations, your restrictions could grow.
Of course, that is outside the physician’s control.
Maybe you sign a contract and they have one location ten miles from you, then over the next five years, they expand to ten more offices.
If you did not know how the non-compete clause was structured when you started, you could be in trouble if they stated you had to stay a certain distance away from ever office.
The nuances of non-competes.
In our contract reviews, we see many different nuances.
For example, in a rural setting, we’ll see a radius of fifty miles for one year.
In that situation you will most likely move away.
Other times we will see something like, “You can work wherever you want to. You just can’t compete with the accounts that we have contracts with,” which makes sense.
They are exclusive contracts, so if and when those contracts come up, you can’t file a proposal with the hospital.
You have to steer clear.
Sometimes we will see stipulations about damages if the physicians break the non-compete element of their contract.
We will also sometimes see a noninterference clause, which doesn’t prevent you from working—only from interfering with their practice.
This could mean taking their accounts, which could happen unintentionally since there are no other places to practice your medicine in that area.
Sometimes a non-compete clause is a point you can negotiate, and other times it is not.
Larger groups sometimes do not budget on non-competes.
Or maybe they don’t budge on the radius, but they would budge on how breaching the radius would be forgiven or giving you leeway on the primary location verses every location, or other nuances.
Other times, the non-compete clause is going to be there, period.
However, don’t let that stop you from attempting to negotiate or clarify that element of your contract.
It can mean the difference between being totally hamstrung by a contract or giving yourself more freedom if and when the relationship does not work out long term.
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
NOTE: The website XRAYVSN contains affiliate links and thus receives compensation whenever a purchase through these links is made (at no further cost to you). As an Amazon Associate I earn from qualifying purchases. Although these proceeds help keep this site going they do not have any bearing on the reviews of any products I endorse which are from my own honest experiences. Thank you- XRAYVSN
Nice post, non compete clauses are a for sure discussion point as even if they can’t be enforced, you can still be sued for breaking one (even though you might win).
Thanks for dropping by. I do think a lot of docs try to not go the legal route and comply with these clauses that may or not be enforceable legally