MGMA data show that median operating cost per full-time-equivalent physician rose 207% from 1999 to 2018, or 10.4% a year. Over the same 20 years, MGMA reports consumer prices rose 51%, or 2.5% a year, so practice costs grew at more than four times the rate of inflation.
The trend did not stop in 2018. MGMA polls from 2023, 2024 and 2026 show that between 84% and 92% of medical groups report higher costs than the year before.
Costs grew faster than revenue from 1999 to 2018
MGMA published a 20-year view of its DataDive Cost and Revenue data for physician-owned multispecialty groups in June 2020. The article does not state a sample size. It tracks three medians per FTE physician: total medical revenue, total operating cost, and revenue left after operating cost.
- Total operating cost per FTE physician rose 207%, an average of 10.4% a year.
- Total medical revenue per FTE physician rose 191%, an average of 9.5% a year. By 2018 it reached $1,394,821.
- Revenue after operating costs rose 159%, an average of 7.9% a year. It grew from $194,772 in 1999 to $503,494 in 2018.
Cost growth ran 16 percentage points above revenue growth over the period, and 32 points above growth in revenue after costs (207% against 159%). Over the same 20 years MGMA reports the Consumer Price Index rose 51%, an average of 2.5% a year.
MGMA also reports that productivity jumped in 2016. Median total procedures per FTE physician rose 14% and total RVUs per FTE physician rose 18% that year.
Which cost lines grew the most
The same MGMA article breaks out the five years before 2018. Consumer prices rose 7.8% over that stretch, or 1.8% a year. Almost every practice cost line grew faster.
| Cost line (per FTE physician) | Five-year change to 2018 | Source |
|---|---|---|
| Radiology and imaging | +74.8% | MGMA Data Mine, June 2020 |
| Information technology | +56.0% | MGMA Data Mine, June 2020 |
| Drug supplies | +48.8% | MGMA Data Mine, June 2020 |
| Total support staff | +30.1% | MGMA Data Mine, June 2020 |
| Consumer Price Index (comparison) | +7.8% | MGMA Data Mine, June 2020 |
| Professional liability insurance | -21.5% | MGMA Data Mine, June 2020 |
Support staff was the largest line in dollars. MGMA put it at $362,817 per FTE physician in 2018. MGMA ties the 56.0% rise in information technology cost to practices investing in EHRs. Professional liability insurance was the only line that fell.
What the pandemic years did to costs
MGMA's June 2024 Stat article looked at 2021 and 2022 for two ownership types. Physician-owned groups saw median operating cost per FTE physician rise 7.3% in 2021 and another 7.6% in 2022. Hospital-owned groups saw a rise of 15.8% in 2021 and another 19.9% in 2022.
MGMA also reports that the subsidy hospital-owned groups receive per FTE physician rose 39.7% in 2022, to $302,160. MGMA attributes that jump to higher operating costs combined with static payments.
Compounding MGMA's yearly rates gives a two-year increase of about 15.5% for physician-owned groups and about 38.8% for hospital-owned groups. MGMA does not publish those two totals.
How many groups report higher costs each year
MGMA runs short text-message polls of medical group leaders under the name MGMA Stat. The cost question has produced a steady answer.
| Poll | Groups reporting higher costs than the prior period | Source |
|---|---|---|
| July 2023 | 89% | MGMA Stat, June 26, 2024 |
| June 25, 2024 (371 responses) | 92% | MGMA Stat, June 26, 2024 |
| June 2026, year to date | 84% | MGMA Stat, July 2, 2026 |
In the June 2024 poll, 5% of groups said costs stayed the same and 4% said costs fell. The 2026 figure compares year-to-date costs with the same period of 2025, and MGMA describes it as easing only slightly. A January 30, 2024 MGMA Stat poll also found that six in 10 groups expected to use the same level of contract and locum work in 2024 as in 2023, and 16% expected to use more.
Revenue is no longer covering the gap
MGMA's June 30, 2026 poll drew 221 responses. It found 47% of groups with year-to-date revenue above the same period of 2025, 14% about the same, 36% lower and 2% unsure.
A June 17, 2025 poll asked the same question. It found 56% higher, 13% flat, 30% lower and 1% unsure. The lead for groups with rising revenue shrank from 26 points to 11 points. The share of groups with flat or falling revenue grew from 43% to 50%.
The Medicare conversion factor rose for 2026. CMS finalized $33.57 for qualifying APM participants, up 3.77%, and $33.40 for everyone else, up 3.26%. CMS also finalized a -2.5% efficiency adjustment to work RVUs for more than 7,000 non-time-based codes, as MGMA notes in the same article. CMS also cut the indirect practice expense allocation for facility-setting services by 50%. MGMA says CMS expects to recalculate the efficiency adjustment every three years. Against 84% of groups reporting higher costs, a 3.26% rate rise covers only part of the gap.
MGMA's 2013 to 2018 data show support staff cost up 30.1% and information technology cost up 56.0% in five years, against 7.8% for consumer prices. Tracking those two lines per FTE physician each month shows which one is moving before the annual budget closes.
Sources
- MGMA, Data Mine: Quo vadis? 20 years of cost and revenue data help point to what's to come, June 10, 2020
- MGMA, Nearly all medical groups still feeling the squeeze of rising operating expenses, June 26, 2024
- MGMA, Revenue growth narrows as costs climb: the 2026 squeeze on medical practices, July 2, 2026
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