In a decisive move reflecting growing national concerns about physician mobility and healthcare access, Indiana has enacted another amendment to its Physician Non-Compete Statute. On May 6, 2025, Governor Mike Braun signed Senate Enrolled Act No. 475 into law, which will invalidate non-compete agreements between physicians and hospitals or hospital-related entities entered into after June 30, 2025. This latest amendment marks Indiana's third major restriction on physician non-competes since 2020, creating implications for healthcare providers, hospital systems, and patients throughout the state.
Indiana has progressively limited physician non-compete agreements over the past five years.
Prior to 2020, physician non-compete agreements in Indiana were evaluated like those in any other profession—they needed to be reasonable in scope, and overly broad restrictions were unenforceable as unfair restraints on trade. However, recognizing the unique position physicians hold in healthcare delivery, the Indiana legislature enacted the original Physician Non-Compete Statute in 2020.
This initial legislation established specific requirements for physician non-compete agreements to be considered enforceable. The statute mandated specific provisions regarding patient contact, medical record access, and a buyout option allowing physicians to purchase their release from non-compete restrictions. These requirements marked the beginning of Indiana's journey toward increased physician mobility.
In 2023, Indiana took another step by completely banning non-compete agreements for primary care physicians entered into on or after July 1, 2023. Additionally, the amendment made non-compete restrictions unenforceable for all other physician specialties under specific circumstances, including if the employer terminated the physician without cause, if the physician terminated employment for cause, or if the employment contract expired with both parties fulfilling their obligations.
This targeted protection for primary care physicians reflected growing concerns about access to essential healthcare services, particularly in underserved areas where restrictive agreements might prevent physicians from continuing to serve local communities after leaving a specific employer.
Now, with the 2025 amendment, Indiana has created a blanket prohibition on non-compete agreements between physicians of any specialty and hospitals or hospital-related entities, including parent companies, affiliated managers, and hospital systems. This amendment represents the most vast limitation yet, directly targeting the healthcare organizations most likely to employ a lot of physicians.
The law also provides important definitional clarity about what constitutes a "noncompete agreement," including:
Indiana's progressive approach to physician non-compete restrictions aligns with broader national trends. As Kenneth Dau-Schmidt, the Carr professor of labor and employment law at Indiana University, explains in the article FTC noncompetes rule ripples out into Indiana published by the Indiana Capital Chronicle: "So there are certainly, in the economy, some legitimate cases where an employer can say, 'If you don't let me have non competes here it will actually decrease my investment in a company.' The problem is, that those are a small minority of the cases where non-competes are currently applied."
The Federal Trade Commission has also taken action, implementing a rule expected to "lower health care costs by up to $194 billion over the next decade" by restricting non-compete agreements more broadly. According to the Constituent Support for the FTC’s Noncompete Rule, “On April 23, 2024, the Federal Trade Commission issued a final rule to promote competition by banning noncompetes nationwide, protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation. The FTC estimates that the final rule will result in 8,500 more new businesses each year, and $400-488 in increased wages over the next decade, including for Indiana.”
The FTC projects that 2,490,735 covered workers will see a total increase in annual earnings of $1,280,797,352, translating to an average increase of $514 per worker annually. The support for this federal action is evident in public comments, where 98.6% (216 of 219) of Indiana commenters supported the FTC's non-compete rule.
The personal impact of non-compete restrictions on physicians is illustrated by Dr. Gabriel Bosslet, a pulmonary critical care physician and clinical medicine professor with Indiana University Health. Describing his own situation in the Indiana Capital Chronicle article, Dr. Bosslet noted: "I like my job, but if I was going to leave I would probably have to move," due to his non-compete agreement limiting him from taking another position at a competitor within a 20- or 30-mile radius for two years.
Dr. Bosslet further explains the broader implications: "If my employer fires all the health care staff in my office and wants me to run on a really lean crew of people and that doesn't work — which it doesn't work — and I want to leave … I would have to move. So it's a big deal." This scenario shows how non-compete agreements can trap physicians in unhealthy working conditions, potentially affecting patient care quality.
The real-world impact extends beyond individual physicians to patient care access. As one Indiana family physician with 3,000 patients commented to the FTC, "I am a family physician with 3000 patients practicing in Indiana. I want my voice heard that I strongly support the ban on non-compete clauses! The corporatization of medicine is growing at a fever pitch since the pandemic began, where the goal is profit by corporate bureaucrats and shareholders. Not patient care or improving health. Not supporting physicians. Noncompetes serve to hogtie physicians in an indentured servitude and, if they leave, are forced to go far enough away that their patients can't access them. Patients lose out at a time when access is becoming harder and harder, especially in primary care. If I want to change employment because I believe it will be better for my professional well-being, my patients should have the right to follow me."
The psychological impact on healthcare professionals is also important. A physician assistant working in critical care described the broader employment dynamics, "I am a Physician Assistant that currently works in critical care for almost 5 years. I was intubating patients and rounding on some of our sickest individuals at the height of multiple COVID outbreaks... If a healthcare system treats its workers fairly and with respect, employers will have no need to use a non compete clause to coerce loyalty... A non-compete clause makes an employer's dominance over an employee iron-clad. It uses inherent social pressures such as a stable family life and education for their children as leverage points to make seeking other opportunities as painful as possible."
Some Indiana healthcare organizations have already begun moving away from non-compete agreements voluntarily. Eskenazi Medical Group, Indiana's sixth largest provider coalition, banned the use of non-compete contracts in 2023.
However, hospital industry opposition remains strong. The Indiana Capital Chronicle article explains that the Indiana Hospital Association maintains that non-compete agreements "play an important role in health care because they are a standard business practice to protect an organization's investment in time and training in its workforce," arguing that eliminating them makes it "more difficult to recruit and retain health care professionals," especially during a nationwide shortage.
Despite this opposition, Dr. Bosslet suggests the impact may be less dramatic than hospitals fear: "I think that the ruling is still important in that, I think, a lot of hospital systems are realizing that noncompetes are not needed for a lot of specialties. Frankly, there are a lot of health care organizations that have gotten rid of noncompetes because physicians don't like them and it's worked out fine for them. I really don't think it's probably going to wind up being as big of a deal for health care institutions as they make it out to be."
As July 1, 2025 approaches, healthcare organizations can follow these steps to prepare:
No, it only applies to agreements entered into on or after July 1, 2025.
No, the 2025 amendment specifically targets hospitals and hospital-related entities.
It includes parent companies, affiliated managers, and broader health systems connected to hospitals.
Not entirely—only those employed by hospitals or related entities after June 30, 2025.
Any contractual term restricting future practice, requiring repayment, or employer consent to work elsewhere qualifies.