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Dealing with those confusing non-compete agreements


ImageIt’s no secret that private duty agency owners face human resource challenges on a daily basis. The stress of call-outs, no shows, overtime, and wages can be stressful, but what about those employees who want to leave  to form their own agencies? Jumping ship with agency clients for the purpose of higher wages or launching a new company is a real issue for private duty agency owners. In the past, owners would have staff persons sign non-compete agreements with the idea that they’d be protected should the staff person decide to leave the fold. Depending on the state of operation, these agreements may or may not be enforced. How do I know? I’ve drafted policies and agreements regarding non-compete clauses for over a decade and many states do not honor them. What’s also a harsh reality; many agency owners don’t pursue relief in court because of the cost of pursuing a case. In recent years I’ve advised my clients of the need to update or change policies regarding non-compete issues. Some have listened, some haven’t but what has persisted is the need to address this very real problem. Now there may be a new issue to consider.

Scott Kirsner, correspondent for the Boston globe recently penned an article regarding non-compete agreements and the possibility of being hauled into court for breach of such agreements. Kirsner writes that some states allow for greater enforcement of non-compete agreements and therefore employees are less likely to break them. However, the same cannot be said for all states. Furthermore, many state legislatures are considering the idea of making non-compete agreements a thing of the past. The thinking is that the theory behind non-compete agreements has become obsolete. Consider this, originally non-compete agreements were designed to prevent individuals from gaining access to company secrets and then using the information to sell to competitors or launch new companies, thereby creating an unfair advantage. Nice idea but in today’s transparent environment, are these agreements realistic? Now consider the private duty industry. Exactly what secrets would you be selling? The healthcare business is peculiar. Rarely are there nuances and resources available to one provider that are not available to another. Last and certainly very important are the rights of the staff person and the rights of the patient. Two policies, not in dispute in any state are the staff person’s right to the pursuit of happiness and the patient’s right to choose a care provider. No non-compete agreement can supersede those rights. To this end, I am completely in agreement with Scott Kirsner; it may be time to do away with these agreements.

The savvy provider might ask, “how will I protect myself from my staff leaving with my patients?” Good question and one that should spawn discussion in the provider community. But for now I’ll offer some safeguards that may prevent headaches later on. First, all providers should have integrity agreements and intellectual property agreements. These agreements should be discussed with and signed by the staff person during the hiring process. Next, in-house HIPAA agreements should be signed by staff persons. The three policies suggested will protect the provider if enacted and enforced regularly. That is to say, staff cannot share information belonging to the company or the patient without drawing substantial penalties under most state laws. Also, discussing the serious nature of these policies initially goes a long way toward deterring unethical behavior down the line. Protect your business by having policies in place that protect your patients and your integrity. Talk to your policy consultant or compliance consultant about how to protect your business from unethical practices.

If you’d like to explore how to develop the policies mentioned above, call me. I can be reached at EnvisionCare Strategies 703-245-1124. 

If you’d like to read more about Scott’s opinion regarding non-compete agreements, his article is available on The Boston Globe’s website under the Business Section: Innovation Economy

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Author:

More than an expert, I am a healthcare design strategies and information governance influencer. I'm currently developing policy and content for Pediatric, DME, Direct Primary care, and independent providers. I am serving as the managing director of EnvisionCare Strategies. I guide the mission of the company while continuing to work hands-on with many of the nation's emerging healthcare providers. In addition to governing, I educate healthcare providers about business practices, including policy development & implementation, information technology and governance, budgeting & finance, content marketing, strategic planning, intellectual property, and clinical talent.

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