A behind-the-scenes war between some of the state’s largest health systems could soon spill into public view at the State Capitol, after months of negotiations broke down over an obscure but bitterly contested topic: non-compete agreements written into doctors’ contracts.
The fight is years in the making, pitting Franciscan Missionaries of Our Lady Health System against Ochsner Health System – which has made heavy use of non-competes as it has grown into Louisiana’s dominant health provider – and drawing in some of the Legislature’s top leaders, including Senate President Page Cortez.
After a court battle in Shreveport over the issue, LSU and Willis-Knighton have also joined the fray, and several other hospital systems and physicians’ groups have lined up on either side of the issue. Many rural hospitals want to retain the ability to use non-compete agreements, while other systems like Willis-Knighton and LCMC, as well as the State Medical Society, are against them. LSU Health Sciences Center Shreveport, which is partnered with Ochsner, recently filed a lawsuit against a little-known OB-GYN doctor after she left to work at Willis-Knighton, which could test the limits of how far hospital systems can go in using non-compete clauses.
LCMC Health President and Chief Medical Officer John Heaton recently wrote a letter to Cortez and House Speaker Clay Schexnayder calling on lawmakers to outlaw such provisions, arguing they “hold physicians hostage.”
Despite attempts by Cortez and other lawmakers to get the two sides to reach a deal before the legislative session, the fight appears poised to play out in hearings in the coming weeks, after two lawmakers filed bills to restrict the practice.
“I know the hospitals have a lot of money and lawyers,” said Rep. Larry Bagley, a Stonewall Republican who filed a bill to outlaw non-compete agreements at public institutions like LSU Health Sciences Center Shreveport. “I think we owe it to the doctors of the state.”
Opponents of the non-compete provisions say Ochsner’s rapid growth across the state, accompanied by aggressive use of the provisions, has made the situation untenable. The non-competes force doctors to leave Louisiana when they leave Ochsner, hurting the state’s ability to retain physicians and causing some patients to lose access to their primary care doctor or pediatrician as a result. Louisiana ranked 17th in the U.S. for the most areas with a shortage of health professionals in a Kaiser Family Foundation report last year.
Proponents of the practice say it helps hospitals like Ochsner limit risk, ensuring they aren’t investing big money into training and supporting doctors, only to see them leave and take their patients to a private clinic across the street. The practice appears to be common among doctors in the U.S.; one 2018 survey of nearly 2,000 doctors across five states found about 45% were under a non-compete agreement.
Lots of lobbyists
Lobbying on the issue was intense in 2019, the last time the Legislature debated the topic, and another donnybrook is expected this year. Ochsner and Franciscan Missionaries each employs a phalanx of lobbyists, and the systems are influential among lawmakers in part because they are such major employers.
Dan Claitor, the former state senator from Baton Rouge, was at the forefront of the dispute in 2019. In an interview, he said he wanted to make sure that nurses and nurse practitioners wouldn’t eventually be subjected to non-compete provisions, considering they have fewer resources than doctors. He was also concerned that Louisiana was losing doctors to other states.
The bill that year, sponsored by Sen. Bodi White, R-Central, passed out of a Senate committee but was stalled on the Senate floor. Claitor said he didn’t want to make people vote on a bill that wasn’t going to pass.
Claitor said it’s understandable that Ochsner, the biggest employer in many lawmakers’ districts, holds sway at the Capitol. Similarly, Claitor said lawmakers are often inclined to listen to the nuns that run the religious Franciscan Missionaries organization.
In 2019, Claitor said that by the time the bill got to the floor, both sides were “chockablock full” with lobbyists.
“It was the Lobbyist Full Employment Act,” he quipped.
Between Ochsner’s various entities, the health system and its foundation employs more than a dozen lobbyists currently. In December, the system brought a new one on board: Joel Robideaux, who served as a state representative from Lafayette and then as mayor-president of the city-parish government. Robideaux is close friends and neighbors with Cortez. The system also employs Dan Robin, a major booster of Gov. John Bel Edwards, and his two sons. Robin said he hasn’t spoken to the governor about the topic. Robideaux didn’t return calls for this story.
The Franciscan Missionaries system employs at least 10 lobbyists as well, Ethics Board records show.
Earlier this year, before the legislative session began, Cortez convened a summit of top administrators at some of the state’s biggest health systems in an effort to reach a détente.
A host of hospital officials, as well as lawmakers and other combatants, gathered in the Hainkel Room, in the basement of the Louisiana Senate, to try to hash out their differences. The two sides didn’t reach a deal, but aired some of their grievances and promised to work with one another ahead of the legislative session, according to two people at the meeting.
Weeks later, as the session was approaching, officials from Ochsner and Our Lady of the Lake sat down in Cortez’s office. While legislative leaders wanted them to avoid a protracted battle, the two health systems weren’t close on a deal. Cortez didn’t return calls for this story.
Non-competes are a “standard” part of employment agreements with Ochsner physicians, the hospital system said. Ochsner CEO Warner Thomas said in an interview the system was willing to offer compromises, like including a buyout provision, but the other side wouldn’t budge. Ochsner already uses buyouts in many of its contracts, Thomas said. (Opponents of non-compete agreements say they offered several concessions that Ochsner wouldn’t bite on).
Thomas said striking non-competes would be a “bad business practice,” just like it would be if lawmakers outlawed them in other industries. He said in some cases Ochsner has agreed to let doctors leave and practice nearby despite the non-compete clause, and that he doesn’t remember ever going to court over the issue. Typically, if a doctor wants to fight it, they lawyer up and reach a settlement.
“We’re very successful at hiring physicians to come into Louisiana,” Thomas said. “When someone comes in they explore their options and look at lots of different organizations and in many cases they choose Ochsner ... Then we make significant investments to help them be successful. As part of that we expect them to make a commitment – and part of that is noncompete agreements.”
Rep. Mark Wright, R-Covington, said he’s still hoping for a compromise between doctors and hospital systems. He filed a bill that would scale back the use of non-compete agreements. It would outlaw the practice for primary care doctors, and limit their use on specialists through a buyout provision and a time limit.
It’s not just Ochsner that wants to retain the right to use non-compete agreements. Rural hospitals want to keep the ability to use them to avoid having doctors establish a practice at their hospital and then move across the street, taking patients with them. Wright said he’s open to compromising on that front, and loosening up the bill to appease larger health systems.
Wright said he understands why hospitals want to use non-competes on high-powered, high-paid specialists like neurosurgeons into whom the hospital invests big money. But he said primary care doctors should get a break.
“The problem is there are some hospitals that they’re all over the place and if they invoke the non-compete they have to leave the state to practice,” Wright said. “And we don’t want to lose good doctors because of that.”
One non-compete agreement signed by an Ochsner physician covered a huge swath of the state, from Orleans to Ouachita and even some counties in Mississippi. The contract said the doctor couldn’t solicit the patients they saw while at Ochsner for two years, the maximum time frame allowed by current law.
One doctor who worked as a primary care doctor at Ochsner recently left the system and faced a broad non-compete that covered wide swaths of south Louisiana, they said in an interview. Ultimately, the doctor decided to stop practicing clinical medicine in order to stay in the area.
“The challenge with Ochsner’s noncompete is it’s wherever Ochsner is,” said the doctor, who asked to remain anonymous out of fear of retribution. “Which is all over the state.”
LSU plays hardball
In January, the LSU Board of Supervisors filed a lawsuit against Lauren McCalmont, an OB-GYN doctor at Willis-Knighton Health System in Shreveport.
McCalmont had left her job as OB-GYN assistant professor at LSU Health Sciences Center Shreveport a few months earlier. By going to work for Willis-Knighton, LSU claimed in the lawsuit, she was breaking an important part of her contract with the public research hospital: A non-compete provision.
The clause said the doctor would not be able to work for a business “in competition with LSU Health Shreveport within Caddo or Bossier Parishes” for two years after leaving.
The public hospital started using non-compete agreements with doctors in 2018, LSU spokesperson Ernie Ballard said. That’s when Ochsner and LSU entered into a public-private partnership, in which Ochsner manages LSU partner hospitals in Shreveport and Monroe, as well as clinics and LSU Health Shreveport’s faculty group practice.
Earlier this month, a judge sided with the doctor, rejecting LSU’s request for a preliminary injunction to prevent McCalmont from practicing at Willis-Knighton.
“Although (Willis-Knighton) was not a party to the lawsuit, we view this as a significant victory in the fight against unreasonable restrictions, using non-compete agreements, limiting physicians ability to practice medicine,” said Brian Crawford, chief administrative officer at Willis-Knighton, in an email. “The Dr. McCalmont case illustrates the dangerous effect that non-competes have on the ability of private healthcare providers to enlist new physicians, already in short supply in Northwest Louisiana.”
LSU didn’t respond to questions about the case.
Bagley, the chair of the House Health & Welfare Committee, said he had “no idea” such agreements were being put in place for public employees. He noted the area is in “dire need” of doctors.
“When I heard that, I thought it was ludicrous that we made those doctors sign that,” he said. “I’m sure there’s a monetary reason why ... It’s almost like we’re trying to hurt the people who are trying to help us.”
Editor's note: A previous version of this story referred to John Heaton as president and CEO of LCMC. Heaton is president and chief medical officer. The Advocate regrets the error.