Senate Passes Bill to Promote Health Care Competition Addresses Physician Non-Compete Agreements

Hartford – Senate President Martin M. Looney (D-New Haven) and Senate Minority Leader Len Fasano (R-North Haven) applaud the overwhelming bipartisan passage of Senate Bill 351 An Act Concerning Matters Affecting Physicians and Hospitals.

After working together on groundbreaking healthcare legislation last year, Sen. Looney and Sen. Fasano are continuing their efforts to address health care concerns in Connecticut with S.B. 351. This bill aims to remove barriers to competition, create more opportunities for physicians, protect the physician patient relationship and modernize state health care policy.

“It is patently unfair that doctors departing the service of a hospital can effectively be barred from practicing medicine or establishing independent practices in most areas of the state as the result of covenants in employment contracts,” said Senate President Martin M. Looney (D-New Haven). “This bill will grant physicians the freedom to leave hospital practice if they realize that they in fact did prefer to be in private practice. The legislation will offer patients increased continuity of care.”

“I want to thank Sen. Looney, Sen. Gerratana and Sen. Markley for their support in advancing this bill,” said Senate Minority Leader Len Fasano (R-North Haven). “The people of our state deserve quality medical attention with choice. This legislation aims to make Connecticut’s medical field more competitive by giving physicians the ability to leave hospital practice for private practice should they desire to. It aims to increase choice and thereby increase competition and accessibility to the highest quality care,” said Sen. Fasano.

Key elements of the bill include:

• Fair non-compete clauses – Bill would prohibit most non-compete clauses between physicians and hospitals or physicians unless the provision restricts activities for not more than one year and 20 miles from the physician’s primary service area. This is intended to establish fair and consistent guidelines and a level playing field.
• Allows physicians to return to independent practice – Allows hospital, health system and medical foundation non-competes to restrict only the physician’s right to leave to practice at another hospital, health system or medical foundation. This would not prohibit physicians from returning to independent community practice if they chose to. This is intended to promote community practice, competition and access to lower cost care.
• Allows physicians to establish medical foundations – Allows physicians associated with Independent Practice Associations and other independent groups to establish a for-profit or nonprofit medical foundation. Hospitals have been allowed to form these foundations since 2009. This bill would give physicians the ability to form these business entities with equity partners so long as they maintain at least 60% of the ownership and control, and then allow that entity to employ physicians through a medical foundation just as hospitals can do today. This will open up financing and investment opportunities for physicians.
• Further research – Requires the Department of Public Health to study the licensure of urgent care and limited service health clinics.
• Transparency – Requires hospitals to include in their bills the cost-to-charge ratio for each item billed so that patients can easily see this information.

The legislation now moves to the House of Representatives.