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The Indiana Senate on Tuesday overwhelmingly passed a ban on physician noncompete agreements, a top Senate GOP priority and one of several bills meant to lower the cost of health care. The bill now goes to the House for consideration.
The noncompete agreements bar physicians who leave their jobs from working in similar positions within a certain time frame, 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 the practice nationally could save health care consumers about $148 billion annually, Sen. Justin Busch, the Fort Wayne Republican who authored Senate Bill 7, said. 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 noncompete 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 noncompetes, Breaux 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 noncompetes kept their talent in place, but Sen. Liz Brown, R-Fort Wayne, argued that noncompetes 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,” Chamber President and CEO Kevin Brinegar said Tuesday.
Brinegar 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.
The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.
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