IU Health to drop noncompete clauses for primary care physicians

INDIANAPOLIS (WISH) — Indiana University Health on Dec. 15 will drop noncompete clauses in all contracts for primary care physicians, the health care provider said Thursday.

Indiana lawmakers in 2003 passed a law to ban noncompete clauses in new contracts for physicians practicing primary care. However, IU Health says its change will go beyond the state law.

In a news release, IU Health said, “While the focus of this policy change is on physicians practicing primary care, IU Health acknowledges the ongoing discussions regarding noncompete clauses for other medical specialties. The organization will continue to monitor and evaluate this topic to understand its impact on IU Health’s mission to make Indiana one of the nation’s healthiest states.”  

IU Health’s decision comes after the Federal Trade Commission voted in April to ban noncompete agreements, which bar workers from jumping to or starting competing companies for a prescribed period of time. The FTC estimates the noncompete ban will lead to new business formation growing by 2.7% per year, with more than 8,500 new businesses created each year.

The FTC rule, assuming it isn’t stopped in the courts, would take effect as soon as Sept. 4.

According to the FTC, 30 million people — roughly 1 in 5 workers — are subject to noncompetes. A 2021 study by the Federal Reserve Bank of Minneapolis found that more than 1 in 10 workers who earn $20 or less an hour are covered by noncompete agreements.

Statement

“This decision underscores our commitment to our physicians practicing primary care and the patients they serve. We believe removing noncompete clauses for this group of physicians will be a benefit and help foster an environment where our physicians can continue to provide exceptional care without barriers, ultimately improving health outcomes in our shared communities.” 

Kevin Gebke, senior vice president of community medicine at IU Health