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Compensation is not keeping pace with physician productivity, while patient demand continues to rise and the proportion of advanced practice providers expands across the workforce.

The median investment/subsidy per provider plateaued this quarter, however the distribution between higher and lower performing practices is wide.

By effectively putting strategy into action, hospitals and healthcare systems can thrive amid today’s financial and operational challenges and position themselves to confront the looming threats that are just around the corner.

The One Big Beautiful Bill (OBBB) has drawn attention for its headline provisions: millions likely will lose their health insurance and there will be a reduction in cumulative federal health spending of an estimated $1 trillion over 10 years.

Aligning the right physician/APP model and the right measurements with the right compensation.

Net patient revenue per provider increased overall, and physician productivity continues to rise.

Primary care alignment remains essential, but employment is only one tool in the toolbox. Health systems facing mounting losses, shifting patient populations or rising competition from disruptive entrants should consider whether a different model might better serve their mission, physicians and patients.

Forward-thinking practices should consider succession planning long before they think they need to. Those that do will continue to grow, attract new physician talent, satisfy the needs of retiring physicians and, ultimately, continue to benefit their patients and communities.

The challenges that hospitals and health systems currently face are amplifying this complexity, from uncertainty about potential changes to federal healthcare policy—including Medicaid and NIH funding cuts and tariffs—inflation, and ongoing workforce challenges.

As advanced practice providers represent a growing percentage of the clinical workforce, health systems must ensure that APPs are being deployed in ways that enable the physicians they work with to operate at the top of their potential.

Two out of every five healthcare providers—just over 40%—in the United States are now non-physician, advanced practice providers.

Hospitals continue to lose significant money on employing physicians, and the original goals of care coordination and efficiency haven't materialized. Rising costs, declining reimbursement advantages, overutilization of low-margin services and administrative burdens are factors behind these unsustainable losses.