For another consecutive year, operating costs are up for medical groups. The next question for leaders is where the pressure is hitting the hardest and which tactics they have to blunt the impact.

Our June 23, 2026, MGMA Stat poll now finds 84% of medical groups reporting year-to-date (YTD) operating costs higher than at the same point in 2025, 8% reporting costs about the same, and 8% reporting a decrease. The poll had 251 applicable responses.

What you told us

Respondents whose costs rose relative to 2025 told MGMA that the average increase was about 11%, and most responses clustered between 5% and 20%; the primary factors they cited were labor-related costs, including wages, benefits, staffing shortages, and minimum wage increases.

In addition, rising supply, drug, and vendor costs — along with increases in insurance (especially health and malpractice), rent, and general overhead — contributed significantly. Some leaders also noted growth-related investments such as new services, hiring providers, outsourcing, or technology upgrades as factors driving higher costs.

Leaders who reported flat or controlled costs pointed to tightly managing expenses, careful budgeting, and reducing labor, including not backfilling roles, limiting new hires, and consolidating or downsizing offices. They also improved efficiency through process optimization, elimination of duplicate or unnecessary costs, and selective use of AI, automation or third parties. Additionally, supply cost reductions, better workforce alignment, and a focus on revenue growth helped offset rising costs.

This suggests the pain of rising costs isn’t as widespread as it recent years: A June 10, 2025, MGMA Stat poll found that 90% of medical groups reported YTD operating costs higher than the same point in 2024, and a polls in 2024 and 2023 put that figure at 92% and 95%, respectively. However, the average spike in costs reported by practices sat in the 10% to 12.5% range each of those years.

The backdrop to this year’s cost trend

Headline inflation has reaccelerated. The Bureau of Labor Statistics reported annual CPI growth of 4.2% in May 2026, up from 3.8% in April and 3.3% in March and the highest reading since April 2023. Medical care prices have moved more modestly — 3.1% year-over-year in March 2026, with medical services up 3.7%, per BLS data — but that single-digit headline understates what practices actually pay for goods and services as input costs cycle through.

The PwC Health Research Institute projects a 2026 medical cost trend of 8.5% in the Group market for the third straight year, and Vizient now expects medical supply chain costs to rise 2.41% in 2026, up from a January forecast of 2.3%, with pharmaceutical prices forecast to rise 3.35%.

For most practices, this combination — moderate medical CPI, sharper energy and capital-goods inflation, and persistent drug and supply-chain pressure — is exactly the mix that produces another year of compounded expense growth without a corresponding pricing tailwind on the revenue side.

Drugs, supplies and the tariff overhang

Through midyear, practices feel the drug and supply costs in the accumulation of several smaller pressures landing in the same expense lines. Groups are carrying forward higher supply and drug prices from 2025, absorbing early-2026 drug price increases, spending more time managing shortages and substitutions, and preparing for tariff-related pricing uncertainty that could affect second-half purchasing and contract renewals. For groups with heavy exposure to buy-and-bill drugs, sterile injectables, vaccines, implants, surgical supplies or infusion services, this creates higher unit costs that can have cash-flow, staffing, inventory and reimbursement-timing impacts.

Where labor costs are heading in 2026

Labor still sits at the center of practice cost pressure, but the story is no longer simply “bigger raises every year.” The July 8, 2025, MGMA Stat poll found 65% of practice leaders identifying labor as the area with the biggest cost increase by percentage in 2025, well ahead of supplies, technology and facilities. By September, however, many groups were planning more restrained 2026 base-pay increases: 64% targeted 1% to 3% increases, while 23% planned 4% to 6%. That points to a slower raise budget, not a loose labor market.

The 2026 MGMA DataDive Management and Staff Compensation benchmarks show why the distinction matters. One-year movement in 2025 was mixed, but several of the roles practices rely on to keep patient access, clinical work and collections moving remained well above their five-year marks. Median total compensation for medical receptionists, medical assistants, and licensed practical nurses (LPNs) saw 15% to 22% increases in the past five years. LPNs also posted the largest one-year increase in 2025 among the core roles tracked in MGMA’s summary data report, followed by general accounting positions, medical receptionists and medical assistants. [Editor’s note: Watch for the new summary data report in an upcoming MGMA Insights newsletter.]

There is also risk in reading one-year shifts too optimistically for budgeting purposes. Median total compensation for managed care administrative positions and patient accounting positions fell in 2025, but both remain well above their five- and 10-year benchmark levels. These roles — tied to eligibility checks, prior authorization status work, denials, claim follow-up, payment posting and patient balances — are increasing in need, and underbudgeting billing specialists, patient accounts representatives or payer-facing staff can hurt retention or slow recruitment, which later shows up as slower cash, more rework and more frustration for clinicians and managers.

This year’s staffing picture requires another caveat. Turnover has stabilized for many practices, but it has not disappeared: medical assistants, nursing and clinical support, and front-desk or administrative roles remain frequent pressure points. MA hiring remains one of the clearest long-running problems, and benefits are not becoming an easy place to cut, either. Most practices report holding benefits steady or expanding them compared with 2025, which means total workforce cost can stay sticky even when base-pay increases are more modest.

The more realistic move that practice leaders can make now is work redesign. Practices are looking first to automation and process fixes — especially in revenue cycle, scheduling, prior authorization, call routing, documentation and front-desk work — to take repeated manual steps off staff plates. It’s not a replacement for competitive pay, but it does make scarce staff time go further while protecting patient handoffs, payer follow-up, clinical review and privacy.

Defending the margin on the cost side

Our 2025 MGMA Financials and Operations data report Margin in Motion highlighted the spread between revenue and operating cost, and the operational levers that pull cash forward or quietly let it slip. Upcoming 2026 cost data should help sharpen that understanding. With 80% of medical groups reporting Medicare reimbursement below their cost to deliver care and a 2026 Medicare conversion factor increase that, while welcome, doesn't close a decade-plus gap (operating cost per FTE physician rose more than 63% from 2013 to 2022; the conversion factor rose just 1.7% over the same period), the spread is being defended on the cost side at least as much as the revenue side.

Next week's MGMA Stat poll turns to the other side of the ledger — YTD revenue trends versus 2025 — to round out the mid-year financial picture.

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Notes:

1. Harrop C. “Medical practice operating costs are still rising in 2025 — here’s how to control them.” MGMA. June 11, 2025. Available from: https://www.mgma.com/mgma-stat/medical-practice-operating-costs-are-still-rising-in-2025-heres-how-to-control-them
2. MGMA Staff Members. “Nearly all medical groups still feeling the squeeze of rising operating expenses.” MGMA. June 26, 2024. Available from: https://www.mgma.com/mgma-stat/nearly-all-medical-groups-still-feeling-the-squeeze-of-rising-operating-expenses
3. Harrop C. “Higher costs persist for medical groups even as inflation’s growth slows.” MGMA. July 13, 2023. Available from: https://www.mgma.com/mgma-stat/higher-costs-persist-for-medical-groups-even-as-inflations-growth-slows
4. U.S. Bureau of Labor Statistics, "Consumer Price Index — May 2026," June 21, 2026. Available from: https://www.bls.gov/news.release/cpi.nr0.htm
5. U.S. Inflation Calculator, "Health Care Inflation in the United States (1948–2026)," accessed June 2026. Available from: https://www.usinflationcalculator.com/inflation/health-care-inflation-in-the-united-states/
6. PwC Health Research Institute, "Medical cost trend: Behind the numbers 2026." Available from: https://www.pwc.com/us/en/industries/health-industries/library/behind-the-numbers.html
7. Taylor M. "State supply costs rise amid tariffs and shortages." Becker's Hospital Review. Oct. 24, 2025. Available from: https://www.beckershospitalreview.com/supply-chain/the-state-of-supply-costs/
8. American Hospital Association, "Statement to House E&C Health Subcommittee on Lowering Health Care Costs for All Americans," Feb. 10, 2026. Available from: https://www.aha.org/testimony/2026-02-10-aha-statement-house-energy-commerce-health-subcommittee-lowering-health-care-costs-all-americans
9. Nitter N. "Tariff update: Implications for pharmaceuticals and patient access." WTW. January 2026. Available from: https://www.wtwco.com/en-us/insights/2025/09/tariff-update-implications-for-pharmaceuticals-and-patient-access
10. Barrett J, Bourne MP. "Tariffs on Medical Devices and Supplies: Healthcare Cost Implications." UNC Center for the Business of Health. Available from: https://cboh.unc.edu/publication/tariffs-on-medical-devices-and-supplies-healthcare-cost-implications/
11. IntuitionLabs, "Pharma Tariffs 2026: Supply Chain & Manufacturing Impacts." Available from: https://intuitionlabs.ai/articles/pharma-tariffs-2026-supply-chain-onshoring
12. Harrop C. "Confronting cost pressures in your medical practice: Short- and long-term strategies." MGMA. July 9, 2025. Available from: https://www.mgma.com/mgma-stat/confronting-cost-pressures-in-your-medical-practice-short-and-long-term-strategies
13. Harrop C. "Budgeting competitive, sustainable 2026 staff pay for your medical practice," MGMA. Sept. 10, 2025. Available from: https://www.mgma.com/mgma-stat/budgeting-2026-staff-pay-for-medical-practice
14. American Hospital Association, "Costs of Caring 2026." March 2026. Available from: https://www.aha.org/costsofcaring
15. MGMA, "2025 MGMA Financials and Operations Data Report: Margin in Motion." Sept. 4, 2025. Available from: https://www.mgma.com/2025-financials-and-operations
16. Harrop C. "2026 Medicare reimbursement changes: Tracking what matters." MGMA. Feb. 26, 2026. Available from: https://www.mgma.com/mgma-stat/2026-medicare-reimbursement-changes
17. Harrop C. "Automation, process fixes top list of cost-cutting moves for medical practices in 2026." MGMA. Jan. 28, 2026. Available from: https://www.mgma.com/mgma-stat/top-cost-cutting-moves-for-medical-practices-in-2026
18. Harrop C. "Where medical groups are putting new dollars in 2026 budgets." MGMA. Oct. 28, 2025. Available from: https://www.mgma.com/mgma-stat/where-medical-groups-are-putting-new-dollars-in-2026