Physician practice revenue rose 7.6% in 2026 compared with 2025, while direct expenses rose 3.3%, according to Strata Decision Technology's August 2026 benchmark report. The data covers more than 10,000 practices and more than 135,000 physicians, and it puts revenue growth 4.3 percentage points ahead of direct cost growth.
Output per physician moved the other way. Strata measured productivity down 3.3% against 2025 and support staff levels up 3.6%.
Revenue is growing faster than direct expenses
Strata published its August 2026 figures on September 30, 2026. Against 2025, physician practice revenue grew 7.6% and direct expenses grew 3.3%. Against 2024, revenue grew 9.5% and direct expenses grew 6.7%. The gap between the two lines was 4.3 points in the one-year view and 2.8 points in the two-year view.
Strata also tracks an investment measure for physician practices. It rose 0.6% against 2025 and fell 1.3% against 2024. The measure stayed close to flat while revenue climbed 7.6% and 9.5% over the same two comparison periods.
| Physician practice measure, August 2026 | Change vs. 2025 | Change vs. 2024 |
|---|---|---|
| Revenue | +7.6% | +9.5% |
| Direct expenses | +3.3% | +6.7% |
| Productivity | -3.3% | -2.3% |
| Support staff levels | +3.6% | +2.5% |
| Investment | +0.6% | -1.3% |
Source: Strata Decision Technology, Monthly Healthcare Industry Financial Benchmarks, August 2026 data, published September 30, 2026. Base: more than 10,000 practices, more than 135,000 physicians.
Productivity fell while support staff grew
Productivity per physician fell 3.3% against 2025 and 2.3% against 2024. Support staff levels went the other direction: up 3.6% against 2025 and up 2.5% against 2024. Staffing grew 6.9 points faster than output in the one-year view. In the two-year view the difference was 4.8 points.
Revenue grew 7.6% in the same period, so the extra staff did not pull revenue down. Output per physician is the number to check against payroll. A practice that adds a medical assistant or a front-desk hire without a matching rise in visits or work relative value units (wRVUs) matches the pattern in Strata's data.
Direct expenses grew 3.3% against 2025 even with the staffing increase, below the 7.6% revenue growth. Against 2024 the same two lines grew 6.7% and 9.5%.
What a physician costs to support per year
Strata's October 1, 2025 report put median annualized practice expenses at $1.1 million per physician full-time equivalent (FTE) for August 2025. That was 5.8% above 2024 and 15% above 2023. The sample was more than 135,000 physicians.
Strata's April 30, 2026 report, covering March 2026, put practice expenses at nearly $1.3 million per physician. It also gave a median investment of $391,974 per physician FTE. Strata's report said rising expenses had driven the need for higher levels of financial support for physician practices.
The two expense figures come from different months and different releases, so they are not a clean year-over-year pair. Both place the annual cost of one physician's practice above $1 million.
Hospital cost lines move faster than practice costs
Strata's August 2026 hospital data covers more than 2,200 hospitals. Total hospital expense rose 5.6% against the prior year, which is 2.3 points above the 3.3% rise in physician practice direct expenses. Supply expense rose 7.2%, drug expense rose 7.6% and labor expense rose 5.3%. Gross operating revenue rose 8.8%, led by outpatient revenue at 9.9%. Inpatient revenue rose 6.4%.
| Hospital measure, August 2026 | Year-over-year change |
|---|---|
| Total expense | +5.6% |
| Non-labor expense | +5.8% |
| Supply expense | +7.2% |
| Drug expense | +7.6% |
| Labor expense | +5.3% |
| Outpatient revenue | +9.9% |
| Inpatient revenue | +6.4% |
Source: Strata Decision Technology, Monthly Healthcare Industry Financial Benchmarks, August 2026 data, published September 30, 2026. Base: more than 2,200 hospitals.
Costs were higher earlier in the year. Strata's March 2026 data showed total hospital expense up 7.1%, supply expense up 10.3% and drug expense up 8.6%. Bad debt and charity care expense rose 17.0%. Outpatient visits grew 3.2% in the August 2026 data, down from 7.3% in March 2026. The median health system operating margin was 1.0% in August 2026. Across the 10 million or more visits Strata analyzed, inpatient admissions rose 4.1%, emergency visits fell 2.1% and observation visits fell 1.3% against the prior year.
Steve Wasson, Strata's Chief Data and Intelligence Officer, said in the April 2026 release: "The nation's hospitals and health systems saw incremental improvements to close the first quarter, but we have yet to see a meaningful shift in overall financial performance."
Four ratios to calculate from your own books
Strata's practice data can be rebuilt from a practice's own monthly reports. A billing company or practice administrator can compare each line with the figures above.
- Revenue growth minus direct expense growth, against the 4.3-point gap in the one-year Strata data.
- Change in visits or wRVUs per physician, against the 3.3% decline.
- Change in support staff FTEs, against the 3.6% increase.
- Annual practice expense per physician FTE, against the $1.1 million median Strata reported for August 2025.
A practice whose staffing grows faster than its output has the same pattern as the Strata sample. A practice whose revenue growth sits below its expense growth has a margin that is shrinking, not widening. In Strata's April 2026 data the median investment per physician FTE was $391,974.
Sources
- Strata Decision Technology, Monthly Healthcare Industry Financial Benchmarks (August 2026 data), September 30, 2026
- Strata Decision Technology, Health System Operating Margins Edge Back Above Zero in March as Revenue Gains Help Offset Expense Pressures, April 30, 2026
- Strata Decision Technology, U.S. Health System Operating Margins Hold at 1.0% in August as Non-Labor Expenses Continue to Climb, October 1, 2025
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