The Federal Trade Commission approved a far-reaching noncompete ban Tuesday that could force sweeping changes across the health care industry. But those changes may not take effect for years — if they ever do — because the contentious rule will almost certainly be held up in litigation.
Commissioners voted three to two in favor of approving the final rule banning noncompete agreements across all sectors of the economy, a change the agency says will lead to more new businesses and higher earnings for workers. Currently, almost one in five Americans are subject to noncompete agreements, most of which would vanish in late August if the final rule takes effect as planned.
Crucially for the health care industry, the noncompete ban does not apply to nonprofit companies, as the FTC determined it only has jurisdiction over for-profit companies. That means the ban likely won’t apply to most of the country’s hospitals, the majority of which are nonprofit, and some of the country’s biggest health insurers.
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