Physician non-compete ban passes Indiana Senate intact

Senate Bill 7, which would ban employers from placing physicians under new non-compete agreements, left committee last month in uncertain waters.

After about an hour and a half of testimony and debate, several committee members in both parties suggested they wouldn’t vote for it on the Senate floor without amendments that would soften the ban by excluding rural and smaller providers, for example.

SB 7 ultimately passed Tuesday with the ban fully intact after Sen. Justin Busch (R-Fort Wayne), the bill’s author, delayed having the bill read on the floor for a week after it passed committee.

“Eliminating non-compete clauses would help increase competition among health care providers, which will lead to lower prices and more options for Hoosiers,” Busch said on the floor Tuesday. “Furthermore, the elimination of non-competes would allow physicians to move more easily between practices without fear of litigation, leading to higher job satisfaction, lower turnover and increased number of physicians in Indiana where the gap in the market has appeared.”

A majority of Senators on both sides of the aisle voted to move it forward to the House.

“[Non-competes are] difficult for them to negotiate in and out of, and it does cause physicians to want to leave the state, and perhaps patients having the inability to follow their physician,” said Sen. Jean Breaux (D-Indianapolis). “And the flip side is that the hospitals do invest an awful lot … they provide very bountiful packets in encouraging physicians to come work for them.”

She echoed concerns brought up by various hospital and employer groups opposing the bill. That includes concerns that the ban on non-competes would create “bidding wars” for physicians that drive up hospitals' recruiting costs.

“When you remove the non-competes, potentially that physician can go across the street. And that will then negate all of the investments made on the front end by the hospital,” Breaux said. “So this is a very complex issue. There are two sides. And having said that, I’m still not sure where I'm going to land.”

READ MORE: Indiana to consider ban on physician non-competes as national debate over agreements heats up

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When it came time, Breaux was one of the last two Senators to enter a vote – ultimately choosing to join three other Democrats and one Republican in voting "nay."

Three amendments were filed, but only one by the bill’s author was heard and voted on. It stripped out a separate provision in the bill pertaining to doctor referrals, leaving only the non-compete ban.

The other two amendments would have softened the ban, but were not brought up by their authors during the bill’s second reading Monday. One, by Sen. Rodney Pol (D-Ogden Dunes), would have allowed non-competes but only during the duration of the physician’s employment term. The second, by Sen. Mike Bohacek (R-Michiana Shores), would have had the bill limit physician non-competes to a year instead of a total ban.

Bohacheck was among the strongest critics of the ban during committee debate. He ultimately voted in favor of advancing it from committee, and said he wanted Busch to find a way to “hit this thing down the middle” before it got to the full floor. Bohacheck ultimately did not speak on the bill Tuesday and voted to pass it.

Adam is our labor and employment reporter. Contact him at arayes@wvpe.org or follow him on Twitter at @arayesIPB.

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