Foley & Lardner LLP Partner Roger Strode is quoted in the Becker’s Hospital Review article, “Hospitals have more questions than answers on noncompetes amid FTC proposal,” discussing the potential impact hospitals face following the proposed ban on noncompete clauses by the Federal Trade Commission (FTC). Strode said the proposal’s application to hospitals is a question many people are trying to determine.
“It’s interesting because the FTC Act itself has some sort of vague language in it about it applying to corporations, and they talk about corporations being corporations that essentially generate a profit for the company or its members,” he explained. “So for a long time people looked at it and said, ‘That must mean that [for] nonprofit organizations, it doesn’t apply,’ or taking it to its extreme, it doesn’t apply to hospitals. Nothing has ever been litigated on this and there is scant — if any — guidance as to whether or not it will apply to hospitals.”
Strode believes the language of the proposal is going to be “clarified greatly” as the FTC is going to receive thousands of comments on the proposal.
“This would be a sea change in the healthcare industry, whether it’s hospitals, whether it’s physician groups, whether it’s private equity buying physician practices. There’s an awful lot of value that’s built into a noncompete that gets paid for, in many cases,” he added.