FTC’s Noncompete Rule Puts Nonprofit Hospitals Under Microscope

A new federal rule that bans the use of worker noncompete agreements in health care has focused attention on the nonprofit health sector, and its near-blanket exemption from the terms of the new regulation.

The Federal Trade Commission will determine just how many of the nation’s roughly 3,000 nonprofit, tax-exempt hospitals—almost 60% of all hospitals—won’t be subject to the rule, which imposes almost a total ban on noncompete provisions that keep workers from switching jobs within an industry.

The FTC can only enforce the ban against corporations “organized to carry on business for its own profit or that of its ...