The Impact Of Restrictive Covenants

The balance between providing high-quality medical care and running a profitable business is a constant battle in the medical community. Thirty years ago, less than two percent of physicians changed jobs during their career. Today, approximately ten percent of physicians change jobs on an annual basis. As physician mobility begins to rise, the medical community’s need to protect its business interest become increasingly necessary. Physician restrictive covenants, or covenant not to compete provisions, have gradually become the prominent tool in order to facilitate that protection. As such, it is important to note and analyze the significant impact that enforcement of these restrictive covenants has not only on the business and the physician individually, but on third parties such as the community and the public at large. This paper will provide a brief outline the history of restrictive covenants, detail the application of those restrictive covenants in the healthcare context, and finally analyze the effects that judicial enforcement of those restrictive covenants has on the physician-patient relationship, the patient’s right to choose, and medically underserved areas.
HISTORY OF RESTRICTIVE COVENANTS AND THE RULE OF REASON
Restrictive covenants found their mark primarily in the commercial context within the legal system. “Historically, covenants not to compete were viewed as restraints of trade and were invalid at common law.” As time progressed, covenants not to
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