Senate approves doctor non-compete ban

The Indiana Senate on Tuesday overwhelmingly passed a ban on physician non-compete agreements, a top Senate GOP priority and one of several bills meant to lower the cost of health care. But some fear Senate Bill 7 could hurt poorer hospitals.

The non-compete agreements bar physicians who leave their jobs from working in similar positions within a certain timeframe, and often a geographical range. That means doctors who want or need to take other jobs either can’t practice medicine for the agreed-upon time period, or must move elsewhere — even out of state.

“Eliminating non-compete clauses will help increase competition among health care providers, which will lead to lower prices and more options for Hoosiers,” author Sen. Justin Busch, R-Fort Wayne, said on the floor.

Eliminating the practice nationally, Busch said, could save health care consumers about $148 billion annually. That’s according to the Federal Trade Commission, which is considering a nationwide ban.

Minority Leader Greg Taylor, D-Indianapolis, said he supported the bill because the non-compete agreements can also require physicians to refer patients to colleagues within the same medical system.

“People should be referred to the best doctor, not just based on a business decision,” Taylor said.

But some feared the bill would threaten hospitals with narrow margins.

“This has been a very, very difficult bill to find the center spot on because you do see both sides,” said Sen. Jean Breaux, D-Indianapolis. “The flip side is that the hospitals do invest an awful lot in the physicians that they bring to their organizations.”

Banning non-competes, she said, would let doctors leave their employers at will and “negate all of the investments made on the front end by the hospital.”

In committee, some hospitals said non-competes kept their talent in place, but incisive Sen. Liz Brown, R-Fort Wayne, argued that non-competes also kept doctors from leaving other health systems and joining ones desperately in need of help.

The conservative-leaning Indiana Chamber of Commerce also came out against the bill, arguing that the government should have no role in private contractual matters.

“We have a fundamental philosophical position — long standing — that we oppose government interfering in employers’ rights to enter into contracts,” President and CEO Kevin Brinegar said Tuesday.

He warned the bill could introduce a slippery slope.

“If we’re going to do it here for doctors, then what occupations or what other types of contracts might come next, that the state might want to interfere in?” he asked.

The Senate passed the bill 45-5, with Breaux and three other Democrats voting against. Sen. Jean Leising, R-Oldenburg, also voted against, citing similar concerns for rural hospitals.

It now goes to the House for consideration.