Restrictive Covenants - Why It Should Matter to All Physicians Regardless of Practice Setting

Last Updated: May 6, 2021

UPDATE: We’ve received some questions and comments from members regarding HB 681. PAMED provides clarification on what the bill would and wouldn’t do, and clears up some confusion about the bill’s language in this summary.

Get the Summary 


For many lawmakers, the issue of restrictive covenants is about making a choice between hospitals protecting their turf and physicians’ ability to move freely in a particular area or region. But what this is really about is patients.

Like any employee, physicians may choose to leave employment for a whole host of reasons.  But when they do leave a particular facility and are required to leave the area as a result of a restrictive covenant, patients lose access to a health care provider that they have an established relationship with, oftentimes for many years. For patients, this change can be both clinically and emotionally disruptive.

No one knows better than physicians how restrictive covenants can negatively impact patient care. It is imperative that lawmakers hear this from physicians in their community – both hospital employed physicians and those practicing independently.

Speak Up to Stop the Patient-Physician Relationship from Being Fractured

HB 681, which is awaiting final consideration and a vote by the Pa. House of Representatives, will ensure that hospitals will no longer be able to stand between patients and their physicians, and physicians will gain the freedom to practice where they choose. The over-arching intent of the bill is to address health care practitioner shortages and continuity of care for patients.

Hospital administrators will be voicing their opposition to HB 681 to legislators across the state, expressing concern that removing restrictive covenants will put them at a competitive disadvantage. Legislators need to hear how these restrictive contracts erode physician freedoms and disrupt the physician-patient relationship.

Please take a few minutes to share your concerns about restrictive covenants with your elected Representative and ask that they support HB 681. It’s time to level the playing field between dominant hospitals and health systems and physicians. If you don’t speak up, the only voices legislators will hear will be those from hospital leadership.

Take Action 


While HB 681 is potentially poised to pass the House of Representatives, its fate in the Senate is unknown. Much depends on what committee the bill is referred to in the Senate. So, it’s important that you also talk to your State Senator about the importance of passing this legislation.

Background

  • The legislation was originally introduced as an outright prohibition against the use of restrictive covenants, more colloquially known as non-compete clauses, in health care practitioner employment contacts within Pennsylvania.

  • However, both the bill sponsor, Representative Ecker and House Health Committee Chairwoman Rapp provided the opportunity to work out compromised language as an amendment to the bill. This compromise was offered by House Health Committee Chairman Frankel and sought to protect the interests of both employers and practitioner employees according to PAMED policy.

  • With the offered compromised amendment, the legislation advanced out of the House Health Committee by a vote of 24-1. Having advanced past both first and second consideration in the Pa. House of Representatives, HB 681 is now awaiting final consideration and passage in the House.

3 comments

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  1. Missing user | May 07, 2021
    Thank you for your comments. PAMED has prepared a summary of what the bill does and does not do to provide additional information. If you still have questions or would like to discuss this bill further, please reach out to John Tommasini, PAMED’s Director of Legislative Affairs, at jtommasini@pamed.org.
  2. Gerard Margiotti | Apr 29, 2021

    SAVE AND STRENGTHEN RESTRICTIVE COVENANTS

    Without restrictive covenant’s small to medium practices will no longer exist.When younger physicians join an established practice they are given a panel of patients to see on thier first day. Many years of hard work and expense has gone into building this patient base. After a short time a deep pocketed hospital system might make them an offer. They can desimate a practice by soliciting patients along with physicians These systems get paid up to 1 and 1/2 times as much as those of us in private practice. They use there size to monopolize the market. They have great advantage in negotiation of contracts. Most certainly the removal of restrictive covenants will end Patient choice. We will be left with only mega hospital systems. It is the job of the Pennsylvania medical society to represent us the physicians. Please allow us to have our independence and allow patients to continue to have a choice. Save and strengthen restrictive covenant’s in Pennsylvania.

  3. Timothy Welby | Apr 29, 2021
    It would be helpful to have PAMED provide members with a summary of what the latest iteration of the bill actually proposes. Reasonable restrictive covenants protect physician led practices who need to outlay some capital on newly hired doctors. I'd like to see a distillation of the bill's main points before the final house vote.

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