Noncompete clauses in physician employment contracts have become a crucial issue in a battle for territory between two southeastern Wisconsin healthcare systems.
The parties involved are All Saints Healthcare System, Aurora Health Care and five family practitioners recently hired by Aurora.
All Saints operates the only two hospitals in Racine, Wis.: 226-bed Saint Mary's Medical Center and 238-bed St. Luke's Hospital. Two years ago, it bought the two large physician clinics in Racine for $16.4 million and formed an 80-physician medical group.
Aurora, based in Milwaukee, runs a network of nine hospitals and more than 20 clinics from the central Wisconsin city of Green Bay to the Illinois-Wisconsin state line.
It plans to open a clinic in Racine, a city of 85,000 about 20 miles south of Milwaukee. Last year, it hired six physicians to staff the clinic.
Five of the physicians were All Saints employees. Their employment contracts, which expired Jan. 1, bar them from practicing medicine or soliciting patients in Racine County and adjacent Kenosha County for the next 18 months. The contract also allows for the automatic revocation of their hospital privileges if they leave All Saints employment before 1999. Both provisions cease to apply after 1999, said Clay Williams, All Saints' attorney.
The physicians sued All Saints on Dec. 29 in Racine County Circuit Court to nullify the contract clauses, said James McKeown, their attorney. They contend the contract provisions are unreasonable and the clinics' acquisition is anti-competitive.
Hearings ended last week on their request for a preliminary injunction to preserve hospital privileges. A ruling was expected shortly. Hearings on the core issues haven't been set.
The noncompete clauses are meant to protect All Saints' investment in the clinic, Williams said.
"(All Saints) bought the clinics, their assets, the doctors' employment and their patient base. The loss of gatekeepers means that a lot of people won't come to the system. Maybe equally important, if these doctors are allowed to blithely ignore their promises, it seems reasonable to assume that other doctors will do so," he said.
An Aurora official said All Saints didn't take action against one other physician who left its employment-but not to work for Aurora. "All Saints is working very hard to prevent the entry of a competitor into their market," Aurora spokeswoman Diane De La Santos said.
The hospital system has indemnified the physicians, so it probably will pick up their legal tab, De La Santos said.
Its contracts also include noncompete clauses, which De La Santos said are more limited.