FTC Announces Rule Banning Non-competes : How Can It Impact Optometry?

The Federal Trade Commission announced a conclusive regulation aimed at enhancing competition by prohibiting noncompete agreements nationwide. This move allows workers to transition between jobs more easily then ever before. “The Commission estimates that approximately one in five American workers—or approximately 30 million workers—is subject to a non-compete.” Many eye care professionals have non competes, it probably is more than 1 in 5 in the eye care industry.

FTC Chair Lina M. Khan emphasized, “Noncompete clauses stifle wage growth, impede the emergence of fresh concepts, and hinder the dynamism of the American economy, including the potential creation of over 8,500 new startups annually once noncompetes are invalidated. The FTC’s definitive ruling to outlaw noncompetes will ensure that Americans retain the liberty to explore new job opportunities, embark on entrepreneurial ventures, or introduce innovative concepts to the market.” This will take effect in August if there isn’t push back in the courts.

According to an individual commenter #58 in the FTC documents,

“I was terminated by a large hospital organization suddenly with a thriving, full Pediatric practice. . . . My lawyer and I believe the non-compete does not apply in my circumstances and that the noncompete is overly broad, restrictive and harmful to the public (my patients). I started seeing my patients mostly gratuitously in their homes so they would not go without the care they wanted and needed. . . The judge awarded the order and I was told I cannot talk to patients on the phone, text patients, zoom visits or provide any pediatric care within my non-compete area. Patients are angry and panicked.
I’m worried every day about my patients and how I can continue to care for them. . . Patients have a right to choose and keep their doctor. The trust built between a patient and his doctor is crucial to keeping a patient healthy. It’s not a relationship that can or should be replaced. . . . Patients should always come first and that is not happening.”

How Can it Impact Optometry?

The absence of non-compete agreements can have significant impacts for the industry, particularly in terms of fostering competition, innovation, and promoting talented eye care professionals. Here are some ways in which the elimination of non-compete agreements could change an industry.

  • Promoting New Talent in our Industry
  • Encouraging fresh talent within our industry can drive innovation and disrupt the status quo, preventing the recycling of outdated ideas. Typically, non-compete agreements can restrict individuals from transitioning between companies, leading some organizations to impose unnecessary tasks on employees as a condition for advancement. This knowledge often deters them from promoting employees, as they assume individuals are bound to stay. Thus increasing innovation in our industry. It also creates matches for talent in new industry roles.

  • Employee Leverage: Non-compete agreements can potentially limiting employees’ bargaining power. Eliminating non-compete agreements can help protect employee leverage for fair compensation and increase bonus for performance. It can also help eliminate unfair treatment and open doors to more collaboration and giving credit for others ideas. It can help with recruiting efforts in saturated areas, where ODs with non competes have radius mileage that increases with the years of work. Companies can “compete” for the best talent and ODs can freely pick best employer based on their own terms.

  • Entrepreneurship: Non-compete agreements can deter employees from leaving their current jobs to start their own businesses, fearing legal repercussions or restrictions on their ability to compete in the same industry. Eliminating non-compete agreements can encourage entrepreneurship by reducing these barriers to entry and enabling individuals to pursue their entrepreneurial ambitions more freely
  • Non-compete agreements can foster entrepreneurship within our industry. For instance, many optometrists are restricted from establishing their own practices due to contractual clauses. In California, some ODs face non-compete clauses in their subleases, despite such agreements being illegal in the state.
  • Similarly, certain telemedicine companies enforce clauses prohibiting ODs from working remotely for 1 year in that state after leaving the organization. This legislation could profoundly transform our industry, potentially leading to the emergence of new start-up practices from previous sublease holders. ODs might gain autonomy in choosing which insurance plans to accept, their working hours, and even implementing innovative healthcare models to address the needs of aging populations. The sublease ODs will also have more value in the marketplace to switch from one sublease to the other.
  • Additionally, employed ODs who have long been tied to a single employer might now have the opportunity to purchase nearby practices at fair prices, rather than being coerced into buying their existing practice at exorbitant rates.
  • Another tactic employed in our industry involves the signing of non-disclosure agreements that prohibits individuals from working in proximity to a private practice if they have access to its financial data. This practice is widely regarded as unreasonable and excessive within the realm of non-compete agreements.
  • Lowering Health Care Costs and Creating more Access to Care
  • Banning non-compete agreements in the optometry industry could revolutionize patient care. With the freedom to move between practices and collaborate more freely, optometrists can recommend the best products for their patients’ eyes based on expertise rather than contractual obligations set by employers. It can bring back as the Optometrists as the decision makers. Providing best custom products to our patients. Increased competition among optometrists can lead to improved service quality, innovation, and pricing, benefiting patients with more choices and potentially lower costs. Removing restrictions on industry we might see more new independent products and labs. This will create more competition that can reduce unnecessary middlemen and resulting in cost savings for our patients. Ultimately, this has the potential to empower optometrists to innovate and deliver superior patient care. With new locations it will fostering a more competitive environment and accessible eye care industry, where some waits are for an appointment can be up to 3-6 months! With shortage of optometrists right now this can help innovate our industry to find ways for ODs to see patients in a timely fashion.
  • Don’t Forget about OMDS
  • This shift will have repercussions for the ophthalmology industry, where the majority of OMDs are employed by large groups. Currently, schedules are predetermined, and decisions are made by admins. We anticipate significant changes in our industry regarding the timeliness of surgical care and the efficiency of referrals. Should an experienced OMD opt to venture into independent practice, it could greatly enhance access to medical care. We will have a major disruption in the OMD field!

In conclusion, the coming months will reveal the outcome as these matters will create a push back in the courts. Should these regulations come into force, we should anticipate a significant transformation within our industry. This could be a new era of innovation, fostering collaboration among optometrists and corporations. This can pave the way for unexplored approaches in our industry.

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