Health systems’ investment in employed physicians has held remarkably steady over the past year, according to Kaufman Hall’s Q2 2026 Physician Flash Report, which analyzed data from more than 200,000 employed physicians and advanced practice providers (APPs) across 100-plus specialties.
The median investment/subsidy per physician FTE was $314,231 in the second quarter of 2026, up less than half a percent from $313,330 in the second quarter of 2025 — essentially flat. Subsidy per provider FTE, a broader measure that includes APPs, was similarly steady at $235,908, compared with $235,417 a year earlier.
Kaufman Hall’s own analysis frames the trend as a positive one. “The investment/subsidy per both provider and physician has remained steady year-over-year, a positive sign for medical group performance,” the report states.
But a closer read of the underlying expense data suggests a more complicated picture — one in which subsidies may be holding steady partly because health systems are pulling back in other places, not because medical group economics have fundamentally improved.
Three trends stand out:
- Support staff expense is shrinking as a share of total spending. Support staff labor fell from 13.6% of total expense in the second quarter of 2025 to 13.4% in the second quarter of 2026, continuing a decline from 14.1% just two years earlier. Support staff FTEs per 10,000 provider work relative value units dropped too, from 3.09 in the second quarter of 2024 to 2.94 in the second quarter of 2026.
- Non-labor spending is falling even faster. Non-labor expense as a percentage of total expense dropped from 15.9% to 15.3% year over year — a 4% relative decline, and down from 16.2% two years ago.
- Provider expense, meanwhile, is claiming a growing share of the pie. Provider labor rose from 70.5% to 71.3% of total expense over the same period, continuing a climb from 69.7% in the second quarter of 2024.
Total direct expense per provider FTE grew 3% year over year, to $678,119, and net patient revenue per provider FTE grew at the same 3% clip, to $418,281 — so overall spending and revenue are climbing in tandem. The composition is shifting, with more of every expense dollar is going toward provider compensation, and less toward the support staff and non-labor resources providers rely on to do their jobs efficiently.
That tension shows up directly in the report’s own key takeaways. “Support staff levels continue to tighten, leaving providers to absorb more work,” Kaufman Hall notes, adding that “physicians and APPs may need to take on more non-clinical tasks, presenting challenges in working at the top of their license.”
It’s also consistent with productivity trends elsewhere in the report: physician wRVUs per FTE grew 3% year over year, while provider compensation per wRVU was essentially unchanged, from $62.60 to $62.89. Physicians and APPs are producing more, in other words, without a proportional increase in what they’re paid for that added output — a dynamic that may be helping keep subsidy growth in check even as it raises longer-term concerns about burnout and quality of care.
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