By John Wallace
Consensus does not exist when it comes to the Federal Trade Commission’s final rule banning noncompetes.
In a news release, the FTC says the final rule is “protecting the fundamental freedom of workers to change jobs, increasing innovation and fostering new business formation.”
“Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned,” said FTC Chair Lina M. Khan. “The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”
The FTC estimates that the final rule banning noncompetes will lead to new business formation growing by 2.7% per year, resulting in more than 8,500 additional new businesses created each year. The final rule is expected to result in higher earnings for workers, with estimated earnings increasing for the average worker by an additional $524 per year, and it is expected to lower health care costs by up to $194 billion over the next decade. In addition, the final rule is expected to help drive innovation, leading to an estimated average increase of 17,000 to 29,000 more patents each year for the next 10 years under the final rule.
While this may sound good to many, the American Hospital Association and AdvaMed issued statements questioning the wisdom behind the rule.
In a statement shared with the media, Chad Golder, AHA general counsel and secretary, said, “For all of the reasons the AHA explained in its comment letter, the FTC’s final rule banning non-compete agreements for all employees across all sectors of the economy is bad law, bad policy, and a clear sign of an agency run amok. The agency’s stubborn insistence on issuing this sweeping rule – despite mountains of contrary legal precedent and evidence about its adverse impacts on the health care markets – is further proof that the agency has little regard for its place in our constitutional order. Three unelected officials should not be permitted to regulate the entire United States economy and stretch their authority far beyond what Congress granted it – including by claiming the power to regulate certain tax-exempt, nonprofit organizations. The only saving grace is that this rule will likely be short-lived, with courts almost certain to stop it before it can do damage to hospitals’ ability to care for their patients and communities.”
AdvaMed, the medtech association, recently commented on the FTC’s proposed rule that would ban employers from imposing or enforcing non-compete clauses in contracts with certain workers. AdvaMed opposes the FTC’s vastly overbroad proposed rule because it says that it threatens patient health, innovation and competition.
“The proposed rule would significantly impede medical technology innovation and reduce competition, resulting in diminished quality and increased cost of health care available to patients,” said Christopher White, general counsel and chief policy officer.
Danny Mobley, founder of Humans of Healthcare, has years of experience in the HTM field. He shared a different opinion of the final rule in a recent phone interview with TechNation. The new rule is exciting for Mobley who sees it as a great opportunity for technicians. It could create a “gig economy” for medical device service. He also said it will reward the bold and courageous who venture out and challenge the system quo.
“I think the HTM industry could change significantly with noncompetes,” Mobley said.
In an example he has used before, he talked about how an OEM may charge $1,000 n hour for imaging service with the technician earning $50 an hour which means the OEM pockets $950. Mobley explains that in a gig economy a technician could do the work and charge $400 an hour.
He sees this as the federal government taking a small step in one direction that creates an opportunity.
“If you want the money you have to fight for it.” Mobely said. “The government took a step here but how many steps will they take?”
“Why not create a gig economy,” he added. “The technician can keep the OEM job but also work on weekends and on the side.”
He said the technicians are the ones providing the service and they should have more power.
Mobley speculated that there could be an app like a ride-sharing app where a health care facility searches for a specific type of repair and has several offers with cost, service time and more spelled out. The information, along with ratings, could provide a process for making an informed decision when selecting a servicer.
Mobley also said he could see FTC’s final rule impacting the ongoing Right to Repair campaign in the medical device industry.
Challenges to the final rule are already underway with patient safety listed among the reasons it is a bad idea. Mobley disagreed.
He said patient care and patient safety could improve. He explains that in a gig economy technicians will take ownership of the repair work they perform more so than a technician working for an OEM or ISO. The technician’s reputation (and future repair work opportunities) will be on the line with each service performed.
Work-life balance is another positive, according to Mobley.
A gig economy could also allow retiring biomeds to ease into retirement by doing repairs/service on their own terms when the want to take on a job.
“The noncompete ban gives you an opportunity now that you’ve never had before,” he said. “Why not have an optimistic outlook? It may not come around again.”
