This fall, the Federal Trade Commission quietly sent a message that could reshape the healthcare staffing noncompete landscape: restrictive employment agreements that limit clinician mobility are no longer going to be tolerated.
Key Takeaways:
- FTC scrutiny hits staffing contracts hard: Expect reviews of MSP/VMS pass-through noncompetes, especially at high-risk facilities.
- Hospitals defend status quo: AHA pushes back on physician restrictions but overlooks contingent labor shifts.
- Clinician mobility rises: More nurses/locums demand flex terms, pressuring traditional models.
- Facilities must pivot fast: Proactive changes now prevent talent and margin losses later.
Nineteen of the nation’s largest for-profit health systems and staffing firms, including HCA, Tenet, UHS, AMN, and CHG, received letters urging them to ensure their employment practices aren’t suppressing competition or limiting patients’ access to care. The FTC didn’t accuse anyone of wrongdoing, but the implication was clear: noncompetes and excessive contractual restrictions are becoming a federal target.
This comes on the heels of the FTC’s failed attempt to implement a nationwide noncompete ban. Even without new regulations, the agency is signaling it will use existing authority to address what it increasingly views as a healthcare access problem, not just a labor issue.
Why Does a Noncompete in Healthcare Staffing Matter?
Healthcare staffing noncompetes have direct impact on the care provided to patients. Restrictive covenants don’t just constrain clinicians, they constrain communities. A physician prevented from practicing in a region leaves a gap in care. A nurse locked into a contract reduces flexibility in a system already strained by shortages. Regulators know this, and their posture is shifting accordingly.
The letters also expose a deeper inconsistency: the FTC has jurisdiction only over for-profit systems. Nonprofits, some of the largest employers in the country, were untouched. That imbalance creates a two-tier labor market in which for-profit employers face scrutiny that nonprofits may not. As healthcare futurist Jeff Goldsmith put it, this “tilts labor market leverage away from for-profits,” raising equity questions the FTC has yet to answer.
“I don’t think it’s equitable to just focus on for-profit enterprises. It really tilts labor market leverage away from for-profits toward enterprises like nonprofits, which the FTC has questionable leverage over.”
Jeff Goldsmith, Healthcare Futures
Hospitals Surprisingly Push Back
Hospitals push back, but miss the staffing cost crisis. The American Hospital Association countered FTC’s RFI, arguing noncompetes protect rural investments: 70% of primary care shortages are rural, 25% of physicians retire by 2030. They cite FTC economists showing noncompetes boost training (11-14%) and physician earnings growth (14%), urging exemptions for “learned professionals” like docs/execs while targeting low-wage workers.
The blind spot? Contingent labor economics. AHA focuses on direct hires, overlooking how FTC pressure on staffing firms (AMN/CHG) ends “no-poach” pass-throughs. This floods the market with mobile clinicians, crashing travel nurse rates (down 20-30% in mobile states) and MSP markups. PE-owned rurals (135+ nationwide) lose their cost-control lever on 20-30% contingent shifts.
What Happens Next for Healthcare Staffing Noncompetes?
As a consequence, expect a wave of contract reviews, more clinicians pushing back against restrictive terms, and health systems being forced to compete on culture, compensation, and flexibility.
Contract audits now target MSP/VMS pass-through clauses
Review vendor agreements for embedded noncompetes or “no-poach” terms that could expose facilities to FTC inquiries. These are common in healthcare staffing where locums and travel nurses flow through multiple contracts.
Rural private-equity owned hospitals (135+ nationwide) depend on contingent staffing. Audit MSP clauses for noncompetes that FTC now flags as anti-competitive in high-shortage areas.
Clinician pushback accelerates shift to flex models
Expect nurses and locums to demand shorter terms and mobility perks. Staffing firms should prioritize VMS platforms that track “freedom to move” data to win bids against locked-in competitors.
For-profits pivot to total rewards over restrictions
With nonprofits unscathed, for-profit systems and agencies must compete via real-time comp benchmarking and culture signals in their workforce management tools, reducing reliance on covenants that regulators now flag as anti-competitive.
The Broader Takeaway
The broader takeaway is unmistakable: Clinician mobility is becoming a regulatory priority, and the old employment model, built on limiting options rather than improving conditions, is on borrowed time.
Health systems that adapt now will lead. Those that don’t may soon find both their workforce and the federal government moving ahead without them.
