Indiana prohibits physician noncompete agreements affecting patient care starting July 2025

On April 10, 2025, Indiana lawmakers introduced Senate Bill 475, a significant piece of legislation aimed at reforming noncompete agreements for physicians in the state. The bill seeks to address concerns regarding the restrictive nature of such agreements, which can limit a physician's ability to provide care to patients after leaving a hospital or healthcare facility.

One of the key provisions of Senate Bill 475 is the prohibition of noncompete agreements that interfere with a physician's ability to treat their patients. This applies specifically to agreements made between physicians and hospitals, their parent companies, or affiliated managers, and it will take effect on July 1, 2025. Notably, the bill does not apply to noncompete agreements that were originally entered into before this date, allowing existing contracts to remain in force.

The bill defines "originally entered into" as agreements made for the first time as of a specified date, excluding amendments or renewals of existing agreements. Additionally, it clarifies the definition of the "practice of medicine," explicitly stating that it does not encompass executive or managerial activities.

Senate Bill 475 has sparked notable debate among stakeholders in the healthcare industry. Proponents argue that the bill will enhance patient care by allowing physicians greater freedom to practice without the constraints of noncompete clauses, which can lead to physician shortages in certain areas. Critics, however, express concerns that the bill may undermine the financial investments hospitals make in recruiting and training physicians, potentially leading to increased healthcare costs.

The implications of this legislation could be far-reaching, affecting not only the dynamics of physician employment but also the overall healthcare landscape in Indiana. Experts suggest that if passed, the bill could encourage more physicians to enter the state or remain in practice, ultimately benefiting patient access to care.

As the legislative process continues, stakeholders will be closely monitoring the discussions surrounding Senate Bill 475, which could reshape the future of medical practice agreements in Indiana.