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HAP Opposes Bill Banning Essential Recruitment Tool for Hospitals and Health Systems

April 07, 2021

Today, the House Health Committee passed a bill that would prohibit the use of the restrictive covenants, also known as non-compete agreements, in employment agreements between employers and health care practitioners. The Hospital and Healthsystem Association of Pennsylvania (HAP) opposes the legislation.

House Bill 681, sponsored by Representative Torren Ecker (R-Adams), now moves to the full House for consideration. The legislation would:​

•    Make non-compete covenants void and unenforceable if the agreements restrict the right of practitioners to practice in any geographic area for any period of time after a separating event. The bill was amended in committee to allow for employers in sixth, seventh, and eighth class counties to utilize non-compete agreements

•    Require employers to provide notice of a practitioner's departure to the practitioner's prior patients, including information about how to request the transfer of medical records to the departing health care practitioner within 60 days

HAP is joined by the Pennsylvania Chamber in continuing to oppose the legislation.

Pennsylvania’s hospitals and health systems make significant investments in recruiting and retaining exceptional health care providers—like physicians—to provide high-quality care to patients in all areas of the commonwealth. These investments include compensation, as well as providing liability coverage, medical school loan forgiveness, credentialing with insurers, onboarding, and training.

A non-compete agreement is an essential element of consideration when recruiting highly compensated employees. Eliminating these agreements could invite bidding wars between hospitals—increasing health care costs for everyone—and threaten hospitals’ ability to retain health care professionals.

The legislation is not only harmful to the hospital community’s ability to attract high-quality health care professionals, but is also unnecessary and duplicative. A mechanism currently exists in Pennsylvania for courts to void non-compete clauses if they are deemed unreasonable or contrary to the community’s health care needs.

HAP will continue to educate lawmakers on the detrimental effect HB 681 would have on hospitals' ability to recruit and retain their workforce and that government should not dictate contractual negotiations between employers and employees.

For more information contact Stephanie Watkins, HAP’s vice president, state legislative advocacy.