It is common practice for a hospital to require a physician to sign a non-compete agreement whenever the hospital employs the physician or acquires the physician’s medical practice. In certain respects, that is to be expected. Non-compete agreements are a common feature in employment agreements and business acquisition documents across all industries and therefore it makes sense that they would be prevalent in the healthcare industry, too. However, the healthcare industry is different; uniquely so. Among other things, the healthcare industry is subject to state and federal laws and regulations that prohibit physicians from referring patients in exchange for compensation (collectively, the “anti-kickback and physician self-referral laws”). The focus of this article is on the interplay between those anti-kickback and physician self-referral laws and hospital-physician non-compete agreements. Specifically, this article explores whether there really is a rightful place for non-compete agreements in hospital-physician employment and practice acquisition agreements given the regulatory constraints imposed by the anti-kickback and physician self-referral laws.
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