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Effective January 1, 2025, Pennsylvania's Fair Contracting for Health Care Practitioners Act introduces significant changes to employment agreements for health care practitioners.  The Act primarily limits the enforceability of non-compete covenants in contracts between health care practitioners and their employers.
 

Key Provisions  

A non-compete covenant between a "health care practitioner" and an "employer" is deemed contrary to public policy and is therefore void and unenforceable.  However, non-compete covenants remain enforceable if the duration is for no more than one year and the health care practitioner was not dismissed by the employer.  Non-compete covenants also remain valid when tied to the sale or transfer of a business if the health care practitioner is a party to the transaction. 
 

Defining "Health Care Practitioner" and "Employer"

The Act defines "health care practitioner" to include medical doctors, doctors of osteopathy, certified registered nurse anesthetists, certified registered nurse practitioners, and physician assistants.  It therefore excludes other health care workers such as registered nurses and mental health professionals.  

"Employer" is broadly and simply defined as "[a] person or group of persons that employ a health care practitioner at a health care facility or office."  As described under Section 2 ("Legislative intent"), the General Assembly found that seventy-five percent of physicians are employed by hospitals, health care systems, or corporate entities.  The increasing consolidation of these hospital systems means "that a hospital network's noncompete clause can prevent health care practitioners from practicing in large areas of this Commonwealth, well beyond their initial employment location." 
 

Recovery of Reasonable Expenses After Voluntary Departure 

Employers can still enforce contract provisions regarding reasonable expenses related to relocation and training, building a patient base, and other expenses directly tied to the practitioner.  These expenses must have accrued within three years prior to the practitioner's voluntary departure.  The expenses can be amortized over five years. 
 

Patient Notification 

When a health care practitioner departs and has treated the affected patients for two or more years, the employer must notify those patients within 90 days, provided they were seen within the past year.  Patients must be informed of the practitioner's departure, their options regarding continuation of care with that provider or selecting another provider, and the process for transferring medical records. 
 

Looking Ahead 

Eliminating non-compete covenants in health care ensures greater continuity of care in Pennsylvania.  Research has consistently demonstrated that continuity of care leads to better patient outcomes, including increased treatment compliance and lower mortality rates.  The General Assembly recognized that we have health care deserts in most of our rural areas, requiring patients to travel long distances to receive necessary medical care.  Providers should not be restricted from practicing in regions that already lack access to vital medical services.

Policies that benefit health care practitioners often directly benefit their patients.  Protecting employment mobility means retaining our talent in Pennsylvania rather than losing them to other states that already prohibit non-compete covenants in health care.  The General Assembly clearly stated that Pennsylvania "cannot afford to continue losing health care practitioners to surrounding states and must do more to attract and retain them." 

To assess the law's effectiveness, the Health Care Cost Containment Council will conduct a study within three years of enactment and report its findings to the state legislature.