Most administrators don’t need a dashboard to know when the air feels thin. Revenue still comes in, bills still go out, but the gap between them — in this case, operating margin per full-time-equivalent (FTE) physician — doesn’t stretch like it used to.

An Oct. 14, 2025, MGMA Stat poll found that almost half of medical group leaders (48%) say their operating margin per FTE physician is worse today than last year, while 32% note it is about the same, 15% report it is better, and another 5% were unsure. The poll had 248 applicable responses.

What you told us

Among practices reporting worse operating margins, two themes dominated: falling or stagnant payer reimbursement and sharply higher staffing expenses. Many also cited compounding pressures from drug and supply costs, payer denials or downcoding, and lower productivity or physician headcount. In short, margins eroded because revenue per unit of work failed to keep up with the full spectrum of labor and input inflation.

For practices whose margins held steady year over year, the same headwinds remained — payer rates, staffing costs, and supply expenses — but these groups generally balanced rising inputs with stable productivity. Many described a fragile equilibrium in which efficiency gains or volume held just enough ground to offset reimbursement stagnation.

In contrast, those reporting stronger margins pointed to deliberate productivity growth, targeted cost containment, or payer improvements as the differentiators. A smaller subset cited structural changes — new service lines, incentive payments, or leaner ownership models — that reshaped their economics rather than merely holding the line.

What MGMA DataDive is telling us

Regardless of where your practice lands on this topic, the longer view is sobering: operating costs have climbed far faster than revenue for more than a decade, squeezing the margin “breathing room” per FTE physician across ownership types.

As detailed in Dave Gans’ October 2025 Data Mine article (available in the latest MGMA Connection magazine for members), 14 years of MGMA DataDive benchmarks points to a likely peak in profitability for independent groups in 2024, with hospital-/IDS-owned groups tracking a similar (if delayed) pattern. 

In its simplest terms: Private and system-owned practices have been running uphill for years. Costs rose much faster than the overall economy; revenue gains offset some of that pressure, but not enough to keep margins growing at the pace administrators need. The Data Mine analysis also notes that beyond staffing and payer dynamics, variations in specialty mix, investment cycles, and local payer demographics can meaningfully swing per-FTE margins year to year.

Five findings to frame your performance

1. Costs outran inflation, by a lot

From 2011 to 2024, CPI increased 39.5%. Over the same period, median total operating cost per FTE physician rose 71.6% in physician-owned multispecialty groups and 83.3% in hospital-/IDS-owned peers. That gap is the starting point for almost every margin story in practices today.

2. Margins rose but not enough to matter

From 2011 to 2024, “revenue after operating cost” increased 41.6% for physician-owned groups and 26.0% for hospital-/IDS-owned groups, well below the rise in operating costs and only modestly above CPI. In other words, practices bought only a little more breathing room over 14 years, and much of it has been eroded recently.

3. The 2020-2024 window reveals the squeeze

The past five years have been even more instructive. With CPI up 21.2% in that period, physician-owned groups saw revenue per FTE up 14.9% and costs up 6.2%, yet margin per FTE rose only 7.8% — below inflation. Hospital-/IDS-owned groups show a different mix (revenue up 78.3%, costs up 88.1%), but the same bottom line: margin per FTE up just 7.7%. net: neither cohort kept pace with inflation. 

4. Private practices may have hit “peak profit” in 2024

Physician-owned groups experienced two straight years of declining revenue per FTE physician, driven by Medicare payment shifts, payer mix, and post-pandemic case-volume normalization — enough to produce the first setback in per-FTE profitability after years of incremental gains. The analysis concludes that 2024 may mark peak profitability for independent groups if current trends hold. 

5. System ownership offers only a short-term shield

Hospital-/IDS-owned groups benefited from robust revenue growth recently, but operating costs climbed even faster, yielding only a slight gain in margin. System ownership offers short-term insulation, but the underlying cost-revenue imbalance is converging toward the patterns seen for private practices.

How to interpret your own numbers

• Use the “breathing-room band.” When you look at your margin per FTE physician, visualize the literal gap between revenue and cost. If that space hasn’t widened at least as fast as CPI, you did not keep up, regardless of nominal revenue growth. For private and system-owned practices, the national data shows this is the norm, not the exception.
• Separate structural from tactical effects. Medicare fee-schedule shifts and commercial rate pressure are structural; staffing model tweaks, supply standardization, and IT license rationalization are tactical. You can win tactically (for a time), but the 2011-2024 curve says structure dominates unless payers move or you expand your growth avenues (e.g., service mix, site-of-service, access).
• Benchmark by ownership and by time. Peer against your ownership model and compare your 2020–2024 trend separately from what came before. If your five-year margin growth per FTE is ≈8% or less, you are tracking the national median; materially above that suggests real outperformance (or atypical, one-time factors).
• Watch the denominator: FTE math matters. In tight labor markets, shifts in employed/contracted FTEs and APP deployment can distort per-FTE views. Make sure your internal FTE definitions mirror those used for MGMA DataDive benchmarking (PDF) to avoid false comfort or undue alarm when comparing trend lines.
• Plan for a slower cycle and invest in access. The column’s conclusion is clear: if reimbursement remains constrained and costs continue to outpace revenue, productivity and cost control alone will not preserve margins. That argues for a dual path: aggressive, near-term cost discipline and payer strategy, paired with capacity and access moves that grow the top line (e.g., slot matching, referral routing, queue relief, site-of-service opportunities) without adding fixed costs too quickly.

Bottom line

When your MGMA Stat peers report “better/same/worse,” place your response in the context of the longer trends available to MGMA members in the Data Mine analysis. The national curve shows why many high-functioning groups still feel squeezed: the math of inflation versus cost growth left little oxygen in the system. Your job is to protect — and widen, where possible — that breathing room in 2026.

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