Leaving Employed Medicine to Open a DPC (Non-Competes, Notice and Patients in 2027)

Can You Leave a Hospital Job to Open a DPC If You Signed a Non-Compete?

Often yes, but it depends on your state and your contract. The FTC's nationwide ban on non-competes never took effect, so the clause you signed is judged under your state's law, and a fast-growing list of states now void or sharply limit non-competes for physicians. Even where a non-compete is enforceable, your patients keep the right to choose you, and careful planning around notice, tail coverage and records lets most employed physicians open a DPC without a fight.

This guide is for physicians employed by a hospital, health system or large group who are thinking about opening a direct primary care practice. It is not legal advice. The single best use of a few hours and a modest fee in this whole process is an employment attorney in your state who reads your actual contract before you give notice.

What Happened to the FTC Non-Compete Ban?

The FTC finalized a rule in 2024 that would have banned most non-competes nationwide, including physician non-competes at for-profit employers. In August 2024 a federal court in Texas set the rule aside in Ryan, LLC v. FTC before it could take effect. The FTC appealed, but on September 5, 2025 the Commission voted 3-1 to dismiss its appeals and accede to the vacatur. The rule is gone, and there is no federal ban on physician non-competes heading into 2027.

That does not mean the FTC stopped caring about healthcare. A few days later, on September 10, 2025, the FTC chairman sent warning letters to large healthcare employers and staffing firms urging them to review their employment agreements, including non-competes, for compliance with federal competition law. The agency's posture now is case-by-case enforcement against agreements it sees as unfair, rather than a single rule. For an individual physician, the practical result is that state law decides almost every case.

Do Non-Competes Apply If You Open a DPC Instead of Joining a Competitor?

Usually they can. Most physician non-competes are written around practicing medicine within a radius of your old clinic or any facility of the employer, not around working for a named rival. A direct primary care clinic that sees patients in that radius is still practicing medicine there, even though it takes no insurance and does not compete for the same payer contracts.

You may be able to argue, or negotiate, that a membership practice is a different business from hospital-employed primary care. That is a negotiation point, not a safe assumption. Read the clause for the geography (miles, counties or "any location of employer"), the duration, and whether it covers "practice of medicine" generally or a defined specialty.

Non-compete vs non-solicitation, and why both matter

A non-compete limits where and how long you can practice. A non-solicitation clause lets you practice but limits you from actively recruiting your former employer's patients or staff. A contract with no enforceable non-compete can still have an enforceable non-solicit, and that clause shapes how you announce your new practice.

Several new state laws address both. Colorado's 2025 law prohibits physician non-competes and non-solicits and explicitly lets departing providers give patients their new contact information. Utah's 2026 law voids non-solicits that stop healthcare workers from telling patients where they will practice. Indiana still allows hospital non-solicits of a year or less that do not restrict patient interactions.

What Does the AMA Say About Physician Non-Competes?

The AMA Code of Medical Ethics, Opinion 11.2.3.1 on restrictive covenants, says covenants not to compete "restrict competition, can disrupt continuity of care, and may limit access to care." It advises physicians not to enter into covenants that unreasonably restrict the right to practice for a period of time or in a geographic area, or that fail to make reasonable accommodation for patients' choice of physician.

The opinion is ethical guidance, not law, so it will not void a clause on its own. It is still useful in a negotiation, and courts in some states weigh the public interest in patient access when deciding whether a physician covenant is reasonable.

Physician Non-Compete Laws by State in 2026

The table below is a summary from secondary sources, not the statutes themselves. Most rows come from Becker's ASC's list of states that ban physician non-competes (October 28, 2026), and the rest from law firm alerts by Epstein Becker Green, Seyfarth Shaw (April 2026), BakerHostetler (July 2025), McGuireWoods (April 2026), Littler and Verrill. It is not exhaustive.

Many of these laws apply only to agreements signed or renewed after the effective date, many exempt physicians who own part of the practice or sell it, and several have exceptions for repaying signing bonuses or relocation. Before relying on any row, read the current statute in your state (the legislature's website has the text), and treat this table as a starting point for the conversation with your attorney, not as an answer.

Other states, including Pennsylvania, Maryland, Louisiana and Florida, have physician-specific rules or pending bills that we did not verify for this guide, so they are left out rather than guessed at. For the DPC-specific statutes in your state (how membership agreements are treated outside insurance law), see our DPC laws by state and the state guides at /start-a-dpc.

If Your Non-Compete Is Enforceable, What Are Your Options?

An enforceable clause does not end the plan. It changes the map and the timeline. Physicians who open a DPC under a valid covenant usually take one of these paths:

• Open just outside the radius. A membership practice draws from a wider area than a clinic tied to insurance networks, because patients choose it on purpose. Patients who want you may be willing to drive a little farther.
• Wait out the term. If the restriction is one year, use it to build the business plan, line up space and set up software, and open the week it expires.
• Negotiate a release or buyout. Some employers will release a physician who is moving to a model that does not compete for their payer contracts. In Texas the law requires a buyout option for physician non-competes.
• Start with telehealth or a different county. Read your clause closely, since some cover any practice of medicine and some only in-person care at defined sites.

Whatever you choose, do not start seeing patients in a restricted area while you are still deciding. An injunction in the first month of a new practice is far more expensive than a few months of patience.

How Much Notice Do You Give, and When Do You Tell Patients?

Your contract sets the notice period. Read it alongside any clause about "without cause" termination, because some contracts let either side end the agreement on shorter notice and some tie your tail coverage or your non-compete to who ends it and how. In Texas, for example, a physician non-compete is void if the physician is involuntarily discharged without good cause.

Your ethical duty to patients runs alongside the contract. The AMA's Opinion 1.1.5 on terminating a patient-physician relationship says physicians must notify patients long enough in advance for them to secure another physician, and facilitate transfer of care when appropriate. Leaving an employer is not the same as dismissing a patient, but the principle of continuity of care applies to both. Many state medical boards also have rules on notice when a physician leaves a practice, so check your board's site.

In practice, the employer usually controls the official departure letter to patients, since it holds the patient list and the records. A neutral letter that says you are leaving, where patients can continue care with the group, and how to reach you or request records is the common outcome. Where a non-solicit applies, talk to your attorney before you send any personal announcement, post on social media or put up a website with a waitlist.

Can My Patients Follow Me to My New Practice?

Yes. Patients always have the right to choose their physician, and no employment contract can bind a patient. A non-solicit can limit what you do to recruit them, but it cannot stop a patient who finds you on their own, asks the front desk, or searches the DPC Finder for your new clinic.

Expect only some of your employed panel to follow. A DPC membership asks patients to pay a monthly fee on top of whatever insurance they carry, and many will stay with the group. Plan your break-even panel size around the patients you can realistically enroll, not the panel you have today.

Who Owns the Medical Records When You Leave?

In most employed arrangements, the hospital or group keeps the records. Ownership of medical records is set by state law and by your contract, and employed physicians rarely own the charts they wrote. Do not download, print or email patient lists or charts on your way out, since that can breach your contract and HIPAA at the same time.

The right to a copy belongs to the patient. Under the HIPAA Privacy Rule's right of access, patients can request their records and direct them to another provider, generally within 30 days. Once patients join your DPC, a signed records request is the clean way to bring their history over. Our guides on getting outside records and switching EHRs without losing data walk through that workflow.

Do You Need Tail Coverage When You Leave?

If your employer insured you on a claims-made malpractice policy, coverage for the care you gave while employed ends when you leave unless someone buys a tail (an extended reporting endorsement) or your new carrier covers prior acts. Your contract should say who pays for the tail. It is often negotiable and is sometimes tied to whether you leave with or without cause, so raise it before you resign, not after.

If the employer's policy was occurrence-based, you do not need a tail. Our guide to insurance for a new DPC practice covers tail, prior-acts and the other policies you will need on day one.

A Realistic Timeline From Employed Job to Open DPC

Leaving employed medicine usually takes several months of planning, with the contract review at the very front. A typical order looks like this:

1. Contract review with an employment attorney. Non-compete, non-solicit, notice period, tail, repayment of bonuses or loans, and anything about outside activities while still employed.
2. Quiet planning while employed. Market research, a DPC business plan, pricing (see how much to charge), entity formation and lease search, as long as your contract allows outside business preparation.
3. Resignation and notice period. Give notice in writing and keep relationships warm. Many employers become referral sources later.
4. Credentialing, insurance and tech setup. Malpractice with tail or prior acts, Medicare opt-out decisions, EHR, membership billing and messaging.
5. Opening and enrollment. Patients who choose to follow you sign up, sign records requests and come in for a first visit.

Our pillar guide on how to start a DPC practice covers each of those steps in depth, and if you are converting a practice you already own rather than leaving an employer, see converting a practice to direct primary care. For state-by-state specifics, start at /start-a-dpc.

Getting the First Months Right

The weeks after you open are when the work between tools piles up, because every new member brings a records request, an intake form, a billing setup and a first-visit follow-up. Tabflows is a dedicated tech team that connects the tools a clinic already uses, like the EHR, membership billing and patient messaging, so those follow-ups and tasks land in one place with the patient's context attached and nothing slips while you are still learning the new practice.

The legal side deserves the same care. Bring your contract, your state's current law and this guide to an employment attorney before you give notice, and you will walk out of your employed job with a plan instead of a dispute.