Non-Compete Clauses for Veterinarians: Are they Ethical?

My non-compete is over

In November, my non-complete finally ended.  When BluePearl Veterinary Partners sold to MARS November 19, 2015, I was handed a new 5 year, non-compete from the date of the sale.  As a minor partner, I had no say in the sale nor in the non-compete.  The non-compete meant that I could not practice my specialty in private practice, consult with anyone who owned a specialty practice, or invest in any specialty practice in North America.  When I decided to leave BluePearl, I had to regain my primary care veterinary skills to be a veterinarian in the city that was my home.  With kids in middle and high school, a spouse with a career job, and extended family in the area, moving was not a palatable option.

Evolving thoughts

My feelings about non-compete clauses have changed and morphed over time.  When my partner and I opened our own practice, we felt that non-competition clauses did not make sense for emergency doctors and they were not part of our contracts.  When we added specialists, we did add non-competes. However, these were a distance and time frame that allowed people to work and not have to move.  When we started our second practice, the decisions about how to frame non-competes were harder.  As I watch corporate owners aggressively stake out their territory, I now believe non-competition clauses decrease options for veterinarians and decrease choice and options for pet owners.

I believe it is time for a bigger conversation about these contract clauses in the veterinary industry

Ethics as a Framework

Ethics can be defined as the study of principles relating to right and wrong. Ethical standards help support governance of the conduct of individuals and groups. Healthcare ethics is the specific exploration of ethics in medicine and requires examination of the relationship of health care professionals, those they serve, as well as the structures and systems involved.

When it was founded in 1847, the American Medical Association (AMA) developed principles of medical ethics to be the baseline standard for professional medical conduct. Similarly, the AVMA Principles of Veterinary Medical Ethics set standards for professional behavior for veterinarians.  The AVMA Principles can be viewed here.

AVMA Principle VII

 AVMA’s Principle VII states that veterinarians must be able to choose the environment in which they practice veterinary medicine. This principle suggests that veterinarians should be free to leave a practice in which they do not believe they can provide care that is consistent with their ethical beliefs.

Most veterinary practices, large and small, privately and corporately owned, use employment contracts with non-competition provisions. Most state laws allow these clauses as a protection for business owners. Some argue that these clauses help independent veterinary practices stay competitive by protecting the client referral base.

However, more non-compete clauses now include wider geographic restrictions  and restrictions around multiple locations. Furthermore, larger entities may require non-compete clauses for employees in practices that they (the corporations) intend to purchase. In states that permit  non-compete clauses, veterinarians may need to leave their home city, or even region, if they leave current employment. When large numbers of veterinary specialists leave an entity and thus a geographic area, pet owners may have trouble accessing specialty care. This decreases client choice and can lead to long wait times for pets to be seen by specific specialties.

AVMA and Non-compete clauses

The AVMA has made no specific statements about non-compete clauses except to encourage veterinarians to understand the contracts they sign. In contrast, the American Medical Association’s code of ethics specifically states that physicians should not enter into covenants that unreasonably restrict their right to practice medicine in a geographic region. The American College of Surgeons statement on restrictive covenants states, “Any restrictive covenant that interferes with the uninterrupted delivery of qualified surgical care to patients is considered unethical. In human medico-legal cases, the courts have considered the public’s need for services when deciding what distance of geographic restraint is reasonable. However, it is unclear whether courts would apply the same criterion to veterinary cases.  Unlike human medical care, even minimal veterinary care is not considered to be a legal or ethical right.

Should Interns and Residents be asked to sign Non-Compete agreements?

Non-competition clauses also are appearing more frequently for interns and residents.  Residency training programs historically were an academic experience that was provided by veterinary educational institutions. Increasingly, residencies are offerred at large private hospitals OR subsidized by large hospitals at universities. Residencies may require both a non-competition agreement AND a length of service requirement beyond the residency.

The AMA Code of Medical Ethics specifically states that physicians in training should not be asked to sign covenants not to compete as a condition of entry into residencies or fellowships. The AVMA only states that non-compete clauses are not typically included for interns and should be reasonable but don’t go farther. The AAVMC wrote an 8 page set of guidelines for internship programs but don’t address non competes at all.

There are no standards or guidelines that I could locate addressing the overall issue of non-competes and veterinary residencies.

I believe the AVMA, AAVMC and AVMA Board of Veterinary Specialties should directly address the issue of non-competition contract provisions for interns, residents, and associate veterinarians. 

Understand what you sign

If you are interviewing for a new position, it is crucial to understand any non-competition clause in the contract.  Draw the mileage around the hospital you are going to join. What would you do if the job does not work out?  Will you be able to commute to a different job?  Will you be forced to move?  Is your family in a situation to move if that happens?

It is worthwhile to have any contract you sign reviewed by an attorney.  The state laws regarding non-compete clauses vary and I have seen contracts that do not meet state requirements. California does not allow non-compete clauses in its employment contracts. Massachusetts and Washington have also passed legislation strictly limiting these clauses. In Washington, you can not be asked to sign a non-compete unless you make over $100,000 and the non-compete can be no longer than 18 months.

Currently there is a shortage of qualified veterinarians, especially in emergency and specialty medicine.  Thus, veterinarians are in the driver’s seat. Negotiate for fair contracts that don’t require you to move if you leave your job.