Examiner Probe Uncovers ‘Restrictive’ Employment Contract at Optum; Veteran CareMount Doctors Feel ‘Trapped’

This piece is part of a series about Optum/CareMount and local healthcare.

It was Dec. 4, 2020, and 264 CareMount shareholders — the healthcare group’s doctors — awoke that morning to a potentially exciting, enriching, and career-altering day they hoped would ultimately produce better service for patients.

Many veteran doctors were already exhausted by a variety of vexing institutional problems, from phone system scheduling woes to administrative headaches, and they had voted to sign away their ownership stakes and join Optum Tri-State as subordinate employees.

“We expected better management and support in running our practices,” one veteran doctor recounted for me in an interview last Friday afternoon, requesting anonymity.

The physicians were hopeful that a new corporate owner with 60,000 doctors nationwide in 2,000 locations and massively deep pockets would invest in curing the day-to-day headaches and allow them as healthcare providers to focus on medicine.

They clasped hands, figuratively speaking, and took a leap of faith, signing on the dotted line.

But, as it turned out, doctors say the problems have only expanded in size and scope since that fateful day.

No Escape

And making matters worse, many feel “trapped.”

In reporting this piece, I obtained a portion of the original 31-page employment contract the doctors signed when they relinquished their roles as partial owners and became workers.

“The new owner has drastically reduced our salaries,” the same doctor said. “Now you want to leave, but you’re trapped. It’s wearing people down. I love what I do, and I have no regrets that I became a physician and chose my specialty. I love taking care of patients and living and working in the community, taking care of friends, friends’ parents, and the rest of the community. But what we see is the administration running the group poorly, and patients continue to complain. Patients tell me one of two things. ‘Sorry, I’m not coming to the group anymore,’ or they tell me, ‘When you are leaving, I want to go to the next place you are at.’”

To those who might question the doctors’ business acumen for selling their practices, which many spent decades building (although some retired rich and happily after 2020), it’s more worthwhile to examine a system that allows such a miscue to compromise patient care.

The oppressive contract is onerous to a degree beyond what you might assume.

It stipulates that doctors (if they resign) are barred from practicing medicine within a 20-mile radius of their primary office location for three years. By extension, if you think about it, Optum is barring area patients from receiving care from their trusted local doctors, after a resignation, for three full years, and usually forever as a practical matter.

“In the event of a termination of this agreement, senior associate agrees that senior associate shall not, within the service area…of the corporation and for a period of three years following termination of this agreement, engage, directly or indirectly, as principal, owner, partner agent or employee, in the practice of medicine except as a salaried physician of an institution such as a hospital, university or public health facility, but only in administrative capacity which does not include any rendering or direct supervision of medical services,” asserts the employment contract obtained by The Examiner.

(Optum is a subsidiary of UnitedHealth Group, one of the largest health insurance companies in the United States, and a corporation facing potential anti-trust legal issues.)

The Medical Group Formerly Known as CareMount

As regular readers of this column know, I’ve spent a considerable amount of recent time and spilled much ink on the spectacularly flawed systems at the local medical group formerly known as CareMount, and Mount Kisco Medical Group (MKMG) before that. It is now part of a regional group called Optum Tri-State.

Since publishing my first few pieces, I’ve been inundated with anecdotes from readers describing the severe aggravation they and their friends and family have experienced when seeking care.

Like, say, the patient this week who reluctantly and eventually went to an appointment after trying to cancel it over the phone for the first four-and-a-half hours of the workday, not wanting to get charged for a missed visit. That’s a tip-of-the-iceberg example but illustrative of the day-to-day insanity.

There are also posts on social media about longtime patients getting barred from the group without explanation or attempt at justification. We’ve reviewed letters sent by Optum via certified mail to patients where the company decrees a ban from medical care, even at the local urgent care, absent any stated reason or rationale.

Those examples featured cases where the banned patients described to us existing acrimony between them and Optum. So the likely causes of those bans are not in serious doubt, even though the company opted not to offer an official explanation. For instance, one banned patient acknowledged posting gripes in the digital patient portal despite requests by the (possibly liability-fearing) medical group to stop.

One of the banned patients is a 95-year-old stroke victim with dementia and the mother of a patient who cursed at staff in frustration; the elderly woman was banned by letter the same day as her daughter, on Dec. 15.

(In fairness, one Optum patient/critic contacted me unsolicited last week to celebrate how she’d successfully reached the office to reschedule two appointments quickly and hassle-free in an uncharacteristic fashion. Also, a call one of my colleagues made last week to Optum was answered immediately, and the receptionist was perfectly helpful.)

Social Studies 

If you monitor local community forums on social media, you’ve likely read story after story already of Optum patients losing their collective minds trying to get appointments scheduled, get appointments canceled, get sufficient time with doctors, get seen at urgent care, get billing issues addressed, and all the rest.

But a less widely discussed aspect of the broader story involves the doctors’ frustrations, distressed by many of the same issues that enrage patients while also unnerved by their limited ability to escape the suffocating chokehold of their employer.

As a business owner, if I see a problem wrought by capitalism, I usually feel like responsible open markets can also serve as part of the solution. In other words, if patients are unhappy, that should create a need-filling business opportunity for doctors eager to deliver quality end-to-end patient care and customer service. (Don’t misunderstand, the healthcare providers I’ve spoken to all seem driven by a passionate sense of mission and desire to serve this community, not dollar signs.)

While it might strike many as understandably revolting to view medicine through a financial prism, the bottom line is that a free market could help produce at least partial solutions to the current problems, even if healthcare should be framed as a human right and even if the market helped generate some of the issues.

However, the local market is not free.

No Care for You

One significant factor constraining the market is the use of non-compete agreements by Optum and organizations like it.

The physicians at the group originally signed a non-compete in the old days when they constituted the medical team at MKMG, a doctor told me. They then signed a similar covenant with the new ownership in December 2020.

Sources noted how the current contract is more burdensome than the average industry pact; experts said how a 10-mile non-compete radius over two years (as opposed to this agreement’s 20-mile, three-year restriction) would be widely viewed as significantly fairer (albeit unpleasant) and more in line with industry standards for a suburban medical group.

Non-compete agreements, also known as covenants not to compete, are agreements in which employees agree not to work for a competitor for a certain period of time after leaving their current employer, usually within a certain radius.

In the industry, non-compete agreements – widespread in use by many healthcare operators – can limit doctors’ ability to start competing practices or work for other medical groups after leaving their employer.

While some local doctors might hope to start small medical practices in the area with colleagues, they’re bound by non-competes. If you’re a physician and already have roots in northern Westchester, packing up your medical bag and practicing medicine elsewhere isn’t an easy option.

Optum previously stopped responding to our requests for comment, although I inquired again last week during pre-publication as a matter of protocol.

Passion Project

Business considerations aside, the healthcare professionals I’ve communicated with – in personal and professional conversations – are fueled by a passion for practicing good medicine. Doctors feel trapped by their legal oaths to the poorly managed group. They’re locked inside the organization, deprived of delivering for area patients in the way they wish they could.

Even though the use of non-competes is widespread, it becomes a far more acute problem when employees feel powerless and deeply disgruntled under the thumb of misguided management. Ahem, cough, Optum.

In conversations with insiders, the word “restrictive” came up repeatedly when discussing the contracts.

Yet public sector action to address this private sector problem is possible.

On Jan. 5, the Federal Trade Commission (FTC) proposed a new rule that would forbid employers from exacting these oppressive agreements on their workers.

The asphyxiating effect of the non-competes also extends far beyond healthcare.

The 40 Percenters

Non-compete clauses constrain about one in five American workers, or about 30 million people, according to the FTC. Beyond that, an estimated 40 percent of American workers have been squeezed into a non-compete agreement at some point in their careers, according to the offices of Republican and Democratic U.S. senators that have researched the issue.

“By preventing workers across the labor force from pursuing better opportunities that offer higher pay or better working conditions, and by preventing employers from hiring qualified workers bound by these contracts, non-competes hurt workers and harm competition,” the FTC stated in a fact sheet accompanying the recent announcement.

Proponents of non-compete agreements contend they’re needed to help employers protect investments in staff development. But it’s hard to imagine that aspect aids the public good nearly enough to justify stifling competition.

Even if stipulating how the constraints could embolden employers to provide more expert training for staffers, knowing they’re likely long-term team members and worthy of investment, the positives of restricting competition seem far outweighed by the negatives.

In fact, it seems to be an area where Republicans and Democrats could locate some elusive common ground, with conservatives/right-of-center folks possibly allured by the freer market and liberals/left-of-center folks attracted to the more prudent capitalism.

However, many in the GOP, in particular, might be more swayed by an inclination to defer to private enterprise on contracts and balk at banning non-competes. Unsurprisingly, the conservative Wall Street Journal editorial page opined critically about the proposed rule on Thursday, condemning what it calls the FTC’s “breathtaking power grab.”

As for the broader patient complaint issues, this is one of those rare instances where public sentiment generally cuts across party lines, worldviews, and our obscenely divided culture.

Margin Call

Who likes being rushed out of their doctor’s office in five minutes or less? Who likes getting hung up on after waiting on hold? Who likes byzantine billing systems and fighting double charges? Who likes any of this, other than the folks at the very top of the corporate medicine food chain raking in dough by sacrificing excellence and healthy staff sizes for cuts to experienced personnel and wider margins?

In terms of big corporate ownership of medicine, even if it passes muster for some on ideological grounds, with businessmen doctors fronting local shops, nearly everyone must know in their guts that scaling medicine like McDonald’s can produce dreadful results.

With all that in mind, I contacted the office of our new Republican congressman, Rep. Mike Lawler (R-Pearl River), seeking comment on non-competes and his general sentiments on this local healthcare issue gripping vast swaths of the district.

“The Congressman will be organizing a meeting with Optum officials to discuss the concerns of constituents who have reached out to our office,” spokesman Nathaniel Soule stated in an e-mail to me last Wednesday evening. “Every health facility in the 17^th Congressional District should seek to provide the best quality care they can, and Optum should be no different.”

That’s a relatively big deal if the Republican representative remains committed to pushing for positive change. And not for nothing, it might also be a strategic win for the rookie lawmaker in a swing district where there are political points to be scored if and when anyone occupying that seat becomes widely viewed as a practical problem-solver instead of a partisan panderer.

At the same time, I was just as curious about what some of the area’s state lawmakers had to say.

Meeting of the Minds

In a prepared statement, State Sen. Pete Harckham (D-Lewisboro) remarked how there are multiple bills in front of the legislature regarding non-compete issues. He said he and his colleagues “will be evaluating them through the committee process.”

“It’s no secret that a worker shortage exists in key sectors, including healthcare,” Harckham said. “To the extent that non-competing contracts are exacerbating this problem, that’s incredibly concerning. I am heartened by the federal Fair Trade Commission’s rule-making on a national ban on non-competes.”

Two bills on non-competes were introduced in the last legislative term, Harckham’s Director of Communications Tom Staudter said, citing measures generally designed to prohibit agreements that directly restrict employment.

Meanwhile, Harckham’s Assembly colleague, Chris Burdick (D-Bedford), revealed in a phone interview Friday that he plans to contact Optum’s brand-new chief operations officer this week to schedule a meeting so he can address the broader patient concerns, noting how he wanted to connect with the “top dog.” At the same time, Burdick is also distressed about the non-compete issue.

“I’m quite concerned about reports of Optum’s use of non-compete clauses in their agreements with their practitioners,” Burdick told me. “I feel that this has an adverse impact both on the practitioners as well as potentially the quality of care to patients that utilize Optum. I will look into this and discuss it directly with Optum.”

After discussing the “incredibly long wait times” and the difficulties constituents confront obtaining their own medical records, Burdick zeroed in on the fact that he wants to try and tackle the problem from a “systemic” standpoint to complement the constituent services his office already performs when contacted.

“I intend to speak to senior management with Optum and discuss it and say, ‘Surely, you’re aware of the problems, the exodus of practitioners and what appears to be a very serious problem at Optum, and I’d like to hear from you the plan to address it,’ because the first step is to have a conversation with them to see what they might be doing to fix it,” Burdick said. “I first want to see that response and do they acknowledge they have a significant problem and ask what the plans for addressing it are.”

Prohibition  

While I did not receive any response to my calls to Ottinger Employment Attorneys, experts in the field, the firm’s website features a blog post from April 2020 that discussed the possibility of proposed federal legislation addressing the systemic issue.

“A prohibition on non-compete agreements would force companies to find a new way to protect their company’s legitimate interests without impeding a person’s ability to change jobs and earn higher wages,” wrote Robert Ottinger, an attorney with longtime experience representing both executives and employees in labor disputes.

And it’s not just individual doctors raising personal concerns about restrictive covenants.

The American Medical Association, for its part, maintains that the agreements raise serious ethical issues.

A 176-year-old professional association and lobbying group of physicians and medical students, the organization encourages physicians to resist agreements that “unreasonably restrict the right of a physician to practice medicine for a specified period of time or in a specified geographic area on termination of a contractual relationship.”

“Covenants-not-to-compete restrict competition, can disrupt continuity of care, and may limit access to care,” an official opinion from the Chicago-based organization’s Code of Medical Ethics argues.

States of Play

As for the FTC’s proposed rule, members of the general public are being encouraged by the agency to submit comments on the proposal for 60 days. After the 60 days, the FTC would likely seek to enact the rule, and it would take effect 180 days after the final version is published. (The New York Times, in its coverage, notes how the rule could very well face legal challenges.)

Efforts to enact a nationwide ban on non-competes notwithstanding, current laws about the legal agreements vary in different states. In New York, agreements restricting physicians from competition with a former employer or associate can be enforced as long as the agreements check certain boxes. For example, the agreements must be reasonably limited in time, geographic area, and scope and not impose an undue hardship on the employee.

The agreements must also legitimately protect the employer’s interest while not harming the public good.

The New York State Attorney General’s office explains how an employer’s “legitimate interest” might include items like protecting trade secrets and confidential information and “preventing employees from taking specialized skills they gained on the job to a competitor.”

“A non-compete’s restrictions must be no greater than necessary to protect the legitimate interests of the employer,” the office writes in a frequently asked questions form.

Doctor, Doctor, Give Me the News

But what doctor wants to take their employer to court? Taking on that task carries with it significant professional risk in all the obvious ways you’d imagine, including how it might look to potential future employers. (Not to mention how it could impact their pocketbooks, given legal fees.)

And, of course, the doctors often maintain little leverage when initially signing the covenants.

While advocates of these agreements note how the contracts can serve to limit turnover and enhance stability and patient care, the real-time, real-life results we’re seeing unfold at Optum appear to run counter to that argument, even if it’s just one of many factors.

Although there are states that permit non-competes in ways far more oppressive than New York, there are also states with superior guidelines. For instance, employers are not permitted to enact non-compete clauses in North Dakota, Oklahoma, or California.

In those states, according to the FTC, “industries that depend on trade secrets and other key investments have still flourished.”

“Employers have other ways to protect trade secrets and other valuable investments that are significantly less harmful to workers and consumers,” the FTC argued in its fact sheet.

Western Front

Hey, just think about the types of industries headquartered in California that require massive employee investment within the tech field in Silicon Valley and otherwise. Seems like it’s working out pretty well out west.

Some reformers point to non-solicitation agreements as a fairer avenue to achieve similar and legitimate goals. These types of agreements can ban employees from using their employer’s contact lists or seeking their current company’s clients for future gain. But they’re not non-competes.

And while some doctors feel like they’re drowning inside the Optum corporate vortex, wishing to return to the days of the smaller private practice, others never abandoned the old-school approach.

I spoke on the phone to a practice manager for a doctor in the region. She’s been in the position for the past 10-plus years, working for a physician with nearly a half-century of experience.

The practice manager said her office’s doctor, a solo practitioner, focuses on patients, not profits. Phones get answered, patients get seen, and extended time is granted. She frequently absorbs the venting of patients complaining about big corporate providers they previously visited.

“The patients are being trashed at places like that, treated like they’re just a number and an insurance card,” said the practice manager, who requested anonymity and asked that details about the doctor remain unpublished. “We’re trying to wave the flag, so people go back to physicians that care. That is where you should be placing your support.”

Her office will double-book if needed to get people in, and the doctor will spend a half-hour with patients when necessary.

“The people in the waiting room know that the half-hour with the current patient means the doctor would see them for a half-hour, too, if needed,” she said. “Our philosophy is patients come first.”

No Simple Task

Dr. Richard Becker, the Cortlandt town supervisor, possesses unique insights into the intersection of government and medicine, not to mention the complicated and sometimes competing dynamics between healthcare delivery and healthcare business management.

Any attempt to oversimplify the issue would be a mistake, he stressed.

Although he practiced as a cardiologist in Westchester for his entire career, he’s spent more than half of his professional life in physician management, serving as the medical director of the inpatient hospitalist group at NewYork-Presbyterian, the former Hudson Valley Hospital. He also established its outpatient multispecialty group, known as the Westchester Medical Practice.

He’s seen the landscape profoundly shift from the days when doctors would just open up their offices, hang a shingle and begin their journeys as solo practitioners.

That all changed with the advent of large medical multispecialty groups as well as the emergence of large hospital-based physician employers, Becker noted.

“Physicians typically enter employment with both large private medical groups as well as hospital-based organizations in one of two ways,” explained Becker, who in 2014 transitioned to Phelps Memorial, where he served as the organization’s vice president of physician administration.

“If a physician has been established in practice for many years and therefore has a large following of patients, they are absorbed into the new larger practices and become employed physicians,” he noted. “Because these physicians bring with them a book of business – a large medical practice filled with patients – they usually do not sign a non-compete clause. Although some of these physicians do, in fact, sign non-competes, the legal basis for this is murky at best. How can one prohibit a physician with a large following in a community from practicing in the community in which he started? Many would view this as restraint of trade.”

But Becker understands the issue from all angles. At Phelps, he established its outpatient medical group, Phelps Medical Associates. Over the years, he’s hired hundreds of physicians for both inpatient and outpatient work in all medical specialties. He’s well-versed in the legalities of physician contracting and employment contracts.

“The subject of non-compete clauses concerning physicians is actually quite complicated, and there is no simple answer for all doctors or all organizations,” he emphasized.

Generation Gap

For generations, when doctors were mostly solo practitioners, and when their businesses grew, they’d sometimes employ new physicians with the understanding that the employed physicians would eventually become full partners. Because of that, physicians tended to stay in the community for their entire careers. Although non-compete clauses were frequently a part of the initial employment agreement, Becker said how “they basically became irrelevant and not part of the long-term partnership.”

He also explained how there are different dynamics in different situations. For instance, if a physician is fresh out of training or simply new to the community and joins a multispecialty group (like Optum), the physician, of course, does not bring with them an established practice.

“And therefore, the large entity is taking all the financial risk upfront of employing this physician, advertising him or her, and providing a salary up front – much larger than they would make on their own,” Becker said.

He also detailed how the larger medical groups, by inviting referrals from their organization to a new physician, are taking a significant risk if they neglect to require physicians to sign a non-compete.

“That is, a physician could work for a group for a period of time, subsequently decide to go on their own or to join another entity, and the initial employer would lose these patients,” Becker observed. “Hence a non-compete in this situation makes perfect sense and has been legally found to be fair, appropriate, and justified. Courts have upheld these non-competes consistently.”

Silent Treatment

WestMed, Summit Health, and NewYork-Presbyterian did not reply to requests for comment. Last week, a public relations representative for Northern Westchester Hospital/Northwell told me the organization was still deliberating on whether to share details or a statement.

Meanwhile, Optum is growing at lightning speed. Just this month, the company reportedly sealed a pair of partnerships with health systems, adding almost 2,000 revenue cycle management and IT employees to its ranks.

Those types of investments make recent developments even more difficult to stomach.

For instance, a source e-mailed me a few weeks ago with a letter she received from a doctor, one that other patients also told me they’ve received in recent weeks.

“Going forward, I will work part-time out of the Katonah office, practicing Mondays and Tuesdays from 8:00 a.m. to 7 p.m.,” the letter from a local doctor stated. “I’ll also be available on some select Saturdays as well as providing telehealth appointments in the week.”

Can you imagine the gall of a company unwilling to communicate any basic reasons for these sudden and dramatic changes? Wouldn’t it at least be smarter public relations to provide even contrived explanations for these types of jarring developments?

Less Seasoning

Also, just think about the unpleasant ripple effects that result from all the hair-pulling aggravation. And imagine how much an already fragile, flawed infrastructure probably gets tested when there are seemingly fewer seasoned doctors around or for fewer days of the week.

As for the local doctors themselves, they want to be sure readers know their primary motivation remains delivering first-class care.

The physicians aren’t whining about standard-issue work grievances. Instead, they’re furious that corporate brass stand in front of them as a blockade to the type of patient-first medicine they want to practice.

On Sept. 8, 2022, in eventual response to our original interview request, an Optum spokesperson provided us with a prepared statement attributed to Optum Tri-State Region CEO Dr. Scott Hayworth – the head of CareMount before CareMount joined Optum – and President Kevin Conroy.

“Our goal is to deliver the right care, at the right time and in a way that results in the best outcome for our patients,” a portion of the statement concluded.

Hopefully, that’s still the goal. Either way, it’s many miles from being met.

And again, local healthcare patients and personnel, please keep contacting me with tips, information, and documents at astone@theexaminernews.com.