As an obstetrician-gynecologist, Dr. Regan Gage is in high demand across the state. But because of a legal agreement with her previous employer, Gage said she can’t even volunteer at the free clinic in Bend or elsewhere in the region, let alone work for pay.
Gage told her story Wednesday to the Oregon Senate Judiciary Committee, which is considering legislation that would effectively rip up so-called “noncompete” agreements for the state’s sought-after health care workers. The legislation comes as shortages of medical professionals are affecting patient care and amid heightened concerns that physicians are losing independence in an increasingly consolidated health care system.
“I think it’s important to recognize that health care should not be treated as a commodity,” state Rep. Nancy Nathanson, D-Eugene, told The Lund Report. “It’s not the same as going to buy a car or a box of cereal. When you need health care, you need health care.”
The legal agreements restrict future employment as a condition of current employment. They are increasingly a source of concern among providers and patient advocates who say they depress worker pay and limit choice. The FTC banned them last year but the Trump administration is expected to kill that rule.
Thousands of patients in the Eugene area were left without primary care last year after doctors began leaving the Oregon Medical Group but were prevented from working by noncompetes. The Oregon Medical Group is owned by Optum, a national company that is part of a sprawling health care conglomerate. Nathanson and other lawmakers convinced Optum to drop the agreements.
“These are situations where you are doing 24-hour call coverage. You are not advertising. You are just supporting these communities and their need for local labor and delivery units.”
Nathanson and other Eugene-area lawmakers are sponsoring Senate Bill 468, which would exempt licensed health care professionals from noncompetes.
Another group of lawmakers are sponsoring Senate Bill 957, which would apply only to noncompete agreements for professionals licensed by the Oregon Medical Board, including doctors, physician associates, podiatrists and acupuncturists. It would make an exception for professionals with at least a 5% ownership in a business.
The Oregon Medical Association supports both bills. Mark Bonanno, the association’s general counsel, told lawmakers that it was previously common for physicians to own their own medical practices. Physicians, he said, used the agreements to prevent newer physicians from working at their practices and then setting up a competing office nearby.
But more than 70% of physicians are now employed by a medical clinic, hospital, health plan subsidy or corporation, he said.
“The use of noncompetes is now about one employer restricting many employees,” he said.
Hospitals in Oregon and elsewhere have been closing maternity units in recent years because of high costs. Gage said her noncompete agreement prevents her from serving communities that are in need. She added that she is not trying to “steal patients.”
“These are situations where you are doing 24-hour call coverage,” she said. “You are not advertising. You are just supporting these communities and their need for local labor and delivery units.”
Most people who testified at the hearing supported it. Henry O’Keefe, a lobbyist representing Salem Clinic, spoke in opposition.
“I think it’s important to recognize that health care should not be treated as a commodity. It’s not the same as going to buy a car or a box of cereal. When you need health care, you need health care.”
O’Keefe told lawmakers that Salem Clinic started a century ago by three providers that has since grown to about 50 with full-service laboratory and imaging departments. He added, “It takes a lot of physicians at scale to make that pencil out,” and that the clinic competes with hospitals and larger players for staff.
The clinic, he said, uses limited non-compete agreements that apply to providers with a 2% ownership interest across a roughly 10-mile radius. Additionally, he pointed out that Oregon has already restricted non-compete agreements to higher-paid workers and limited how long they can be enforced.
Galina Serdtsev, a physician associate specializing in dermatology from Bend, submitted written testimony in support of SB 468. But she wrote in opposition to SB 957, writing that it would not change anything and just “employers to ‘own’ you for a duration of time after a contract ends.”
She wrote that she has been unemployed for the past seven months because of a noncompete and she will have to hire an attorney even to attempt to work where she lives.
