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May 7, 2024

FTC’s Noncompete Rule Puts Nonprofit Hospitals Under Microscope

Bloomberg Law

The Federal Trade Commission’s (FTC) new rule that bans the use of worker noncompete agreements in healthcare has put a spotlight on the nonprofit healthcare sector. The new rule almost completely bans noncompete provisions, which will affect nearly half of the nation’s nonprofit, tax-exempt hospitals. The FTC rule states the agency will check the income of nonprofits, putting organizations' tax-exempt status under scrutiny.

Nelson Mullins healthcare partner Denise Gunter offered her take in a Bloomberg Law article published on May 1. She was quoted, in part:

“I think the FTC likes to keep people on their toes, and so it wouldn’t shock me if they were potentially looking at opportunities to test the new rule by declaring that a nonprofit hospital or health system engaged in unfair competition in violation of the rule…Part of what they do is advocacy and policymaking. And so, part of their mission, if you will, is to test things.”

Subscribers can read the full article here.