The Federal Trade Commission’s (FTC) latest move on employee noncompete agreements is keeping the issue squarely in the spotlight.
Ambulatory surgery center (ASC) leaders are paying close attention.
“The ability of ASCs to recruit and retain staff has always been tied to how noncompetes are written and enforced,” Michael McClain of Leftcoast Health told ASC News. “My fear would be that if businesses continue to expand noncompetes in a tight labor market, it’s only going to increase the cost of labor, and ASCs can ill afford that.”
On Sept. 4, the FTC issued a request for information (RFI) on employer noncompete agreements, asking the public to weigh in on their scope, prevalence and impact. The agency said it would use the feedback to inform potential future enforcement actions.
“We are asking the public to help shine a light on unfair and anticompetitive agreements,” Kelse Moen, deputy director of the Bureau of Competition, said in an announcement. “Unreasonable noncompete agreements have proliferated for too long in the dark.”
Comments are due by Nov. 3.
The RFI comes as the FTC continues to fight in court over its earlier attempt to ban most noncompetes nationwide. In April 2024, the commission under the Biden administration finalized a sweeping rule prohibiting such agreements, citing evidence that they stifle worker mobility and innovation.
That effort to end noncompetes heavily revolved around health care workers, too.
But in July 2024, Judge Ada Brown of the U.S. District Court for the Northern District of Texas blocked enforcement in part, questioning the FTC’s authority. A related case in Pennsylvania could yet determine whether the ban is halted nationwide, leaving the legal status of noncompetes uncertain.
A high-stakes issue for ASCs
While often thought of as a corporate or hospital system matter, noncompetes directly affect surgery centers.
ASCs have long used these agreements to protect against staff migration, especially among administrators, business office managers and physicians.
“ASC management companies and individual centers have historically had noncompetes for leadership positions,” McClain said. “They’ve always been geographically limited to 10 miles, 15 miles, 50 miles, depending on the market.”
Over time, however, the impact has grown. With staffing shortages persist across nursing, anesthesia and business roles, noncompetes can have the effect of stripping communities of their health care providers, McClain said.
“There’s been some pretty high-profile cases around management organizations agreeing to either work together, to share executives back and forth, or even physicians at times, to waive noncompetes when there’s strategic benefit to them,” he said.
In markets like California, where restraints of trade are difficult to enforce, workforce mobility is higher. In more business-friendly states, however, noncompetes have tightened the labor pool and complicated recruitment, he added.
“My fear would be that fewer facilities will be able to recruit without enormous expense tied to buying out noncompetes,” McClain said. “That just drives up the cost of labor, and ASCs are already under enormous pressure from anesthesia costs and staffing challenges.”
The FTC’s April 2024 rule reflected the Biden administration’s labor-friendly stance, seeking to broadly loosen restrictions. The current administration, by contrast, has signaled more openness to business interests, fueling speculation that noncompetes could not only survive, but potentially expand into areas like nursing.
“If I’m a for-profit business, I don’t want to allow my highest cost, which is my labor, to just freely move to my competitor across the street,” McClain said. “So I would be interested in limiting the ability for my clinical staff to leave.””
What’s at stake
The stakes are high for ASCs already facing margin pressures and consolidation trends. A permanent FTC ban would open the door for freer physician movement and potentially lower barriers to joint ventures or new partnerships.
But it could also lead to higher turnover and more aggressive recruiting battles, particularly in competitive urban markets, McClain said.
“A ban on noncompetes may have implications for the profitability of health care providers who have invested billions of dollars to expand services and provide outpatient options, such as ambulatory surgery centers and laboratories, that serve as lower-cost alternatives to hospitals,” Rosa Marina Morales, an attorney with Crowell & Moring LLP, told ASC News in 2024.
Conversely, if noncompetes become more common or expand to new categories of staff, ASCs could see higher recruiting costs and reduced workforce mobility, which would be an especially acute risk in smaller or rural markets, McClain added.
“Either way you slice it, there’s going to be upward pressure on wages,” McClain said. “And that’s going to be very hard for ASCs, whose entire value proposition depends on lower costs compared to hospitals.”
For now, the FTC is gathering information, and the courts are still weighing the limits of its authority.
In the meantime, McClain said operators should prepare for multiple scenarios: one where noncompetes are restricted and turnover risks rise, and another where businesses use them more aggressively, further tightening the labor market.
“It’s going to be hard to maintain lower-cost wages no matter what happens,” he said. “ASCs will have to compete either on compensation or on creating work environments that people don’t want to leave.”
