On-Demand Webinar | 2025 Health Care Staff Compensation Insights
Power your health care staff compensation programs with data that drives results!
Explore the latest data with us…
With workforce shortages showing no signs of stopping, hospitals and health systems must attract, retain, and motivate key employees with confidence.
Turn insight into impact with the latest compensation benchmarks!
The results from our annual Health Care Staff Compensation Survey reveal that the market is moving. Median base pay for health care staff positions rose 4.3% in 2025, up from 2.7% in 2024 — a notable increase reflecting ongoing labor market pressures and the need to remain competitive in recruiting and retaining talent. Clinical Support and Technical roles are leading the way with a year-over-year increase in base hourly rates of 5.1%, while Registered Nursing is close behind at 4.9%
Dive during into the data – which includes data from more than 2,660 organizations on nearly 2.5 million incumbents!
During this impactful session, our panelists will:
- Discuss emerging trends in compensation for both key clinical and non-clinical staff-level roles
- Provide insight into premium and variable pay programs
- Address frontline staffing shortages and how organizations are tackling recruitment and retention challenges with data from our latest pulse survey
Sign up for instant access to the recording:
FORBES | Health Care Access, Labor, and Compensation Challenges
The past year was challenging for many health systems.
What should health care leaders be focusing on in 2026 as they look to balance quality care with financial viability?
Accessible, high-quality care is a cornerstone of healthy communities — yet achieving it has become increasingly difficult amidst rising demand for services, persistent labor shortages, and outdated compensation frameworks.
At the heart of the issue is a fundamental imbalance: organizations are struggling to deliver timely care because they can’t recruit and retain sufficient clinical and support staff. Labor shortages not only compromise health care access, but also drive up costs and, ultimately, negatively impact patient outcomes.
In his recent article for Forbes, SullivanCotter’s President and CEO, Ted Chien, calls attention to the need for innovative and strategic workforce planning that places equal emphasis on labor sustainability and financial viability.
He outlines three critical areas health systems can focus on as they navigate this complex environment:
Adopting New Business Models To Boost Health Care Access
- Rethink traditional care delivery models to better utilize clinician time
- Explore partnerships with innovative and membership-based care models
- Reassess the role of virtual care to improve reach, reduce emergency department utilization and support underserved populations
Alleviating Labor Challenges
- Recognize that workforce shortages are not short-term disruptions, but structural issues
- Avoid over-reliance on layoffs, which may weaken long-term growth and care quality
- Use technology, including AI-enabled tools, to improve operational efficiency, scheduling and workforce productivity
- Focus on strategies that reduce burnout and support a more sustainable workforce
Rebalancing Skills and Compensation
- Move beyond compensation structures based solely on tenure, volume or traditional productivity metrics
- Align pay with specific skills, competencies and organizational priorities
- Support value-based care by rewarding quality, outcomes and long-term performance
- Consider skills-based compensation approaches to better attract, engage and retain talent
Solving health care access and workforce challenges requires integrated, forward-looking strategies that align care delivery, labor planning and compensation design. Health care organizations that take a holistic approach will be better positioned to build resilient workforces, improve access for patients and succeed in an increasingly complex health care landscape.
How AI Will Shape the Future of Health Care In 2026
The year ahead will test how quickly health care organizations can turn AI ambition into real change.
The future of health care is here. Are leaders prepared for the rapid pace at which this transformation is unfolding?
By Aaron Sorensen, Senior Partner at Lotis Blue Consulting – in partnership with SullivanCotter
Originally published by Healthcare Business Today
AI is advancing at a pace that defies intuition. Most people think in linear terms: steady, incremental progress. But AI is improving exponentially. The capabilities of AI models are increasing even as computing becomes faster and cheaper – and these forces compound each other. As Jensen Huang, CEO of Nvidia, noted in a recent interview, “Every new generation of AI is not just better; it is building the next generation.” Progress is literally layering on itself, as he points out that AI tools have become “100 times more powerful” in just two years.
This is why many describe the moment as a new Industrial Revolution. In the past, machines replaced physical labor. Today, AI is taking on tasks that once required human cognition and judgment. As models continue to advance, computation costs will decline, and applications will start to become more abundant and integrated into the foundations of daily life. Some estimates suggest that AI may soon play a dominant role in generating first-pass summaries, drafts, analyses, translations, and technical scaffolding that underpin modern knowledge work.
And by the latter half of the decade, the convergence of AI and robotics will reshape physical work as well, from logistics and pharmacy operations to elements of clinical workflow. AI agents will coordinate tasks, initiate next steps, and remove friction across complex clinical and administrative workflows and systems. It seems inevitable that autonomous vehicles will pick up patients at their homes, drive to appointments, and robots will take on the role of patient access specialists and care coordinators, both in and outside the home, in the not-too-distant future.
The question for health care is no longer whether AI will transform the workforce, but whether organizations will be ready for the speed of the shift already underway.
Health Care as an Industry Is Behind the Curve
Despite AI’s rapid evolution, health care has traditionally been slower to adopt it – particularly in clinical roles where the impact could be most significant. While new research shows that this may be starting to change, deeply risk-averse cultures, complex regulations, and fragmented data have created a protective posture that sometimes slows experimentation and rewards caution within the industry.
Abdelwanis and colleagues, in a recent Safety Science review, aptly captured this reality: “Organizational challenges such as infrastructure limitations, inadequate leadership support, and regulatory constraints remain significant barriers to AI adoption in clinical practice.”
Meanwhile, other industries have moved forward. A decade ago, self-driving cars were treated as implausible. Today, full self-driving capability demonstrates that iterative improvement, despite setbacks, can lead to meaningful autonomous performance. Tesla’s vehicle safety data shows that vehicles operating with Full Self-Driving experience substantially fewer collisions than national human-driving benchmarks. Progress didn’t come from avoiding risk; it came from learning through it.
Health care has struggled to build similar momentum – and for good reason. Although AI can already outperform humans in pattern recognition, summarization, and administrative processing, adoption is slowed by concerns about safety, changes to professional roles, unclear regulatory pathways, and in some cases, patient uneasiness in utilizing AI for care delivery. Payers also introduce administrative friction that could be alleviated by AI and automation. However, the deeper issue is structural. The industry must balance its commitment to patient safety while exploring the appropriate incentives and operating models necessary to accelerate responsible innovation around AI.
Changing the Narrative – From Fear to Elevating Purpose and Practice
To move forward, health care must shift its narrative about AI. Much of today’s discourse centers on risk. Will AI make mistakes? Will roles be diminished? Will the clinician’s craft be devalued? However, this framing overlooks the real opportunity: returning people to the purpose of their work, rather than the tasks that have accumulated around it.
Huang articulated this distinction clearly during a recent interview by arguing that jobs are built around a core purpose: creating value or addressing a human need. But over time, layers of tasks accumulate, documentation grows, and administrative work expands. Eventually, the mechanics of the job overshadow its purpose and the meaning that humans derive from it. AI’s real power, Huang suggested, is not in replacing people, but in stripping away everything that was never the point of the job in the first place.
To illustrate the idea, Huang revisited a widely cited prediction made nearly a decade ago. In 2016, Geoffrey Hinton, often referred to as the “godfather of AI,” warned that people should reconsider training as radiologists because AI would soon outperform humans in image recognition. At the time, the prediction fueled concerns that AI would render the profession obsolete entirely. The irony, Huang noted, is that the opposite has happened. The number of radiologists has increased, and today, nearly every radiologist utilizes AI in some capacity.
The explanation lies in returning to purpose. The purpose of a radiologist is not to study images for their own sake; it is to diagnose disease. Image analysis is a task in service of that goal. As AI has made image interpretation faster and more precise, radiologists have been able to read more studies, handle greater complexity, and support higher clinical volumes. Better productivity has improved economics for hospitals, which in turn has driven demand for more, not fewer, radiologists.
Recent workforce projections published in the Journal of the American College of Radiology suggest continued growth in the U.S. radiology profession over the coming decades. Furthermore, meaning and purpose, as evidenced by decades of research in the psychological literature, represent the highest-order drivers of engagement and joy from work.
The lesson extends well beyond radiology. Clinicians did not go into medicine to type notes, navigate prior-authorization portals, or click endlessly through EHR menus. These tasks are artifacts of the system, not expressions of clinical purpose. When AI automates documentation, coding, summarization, scheduling, pattern matching, and protocol retrieval, clinicians can operate more consistently at the top of their license – diagnosing, interpreting, communicating, and caring.
This shift is more than just cultural – it’s structural. AI becomes the first draft of everything. The assistant works ahead of the clinician, not behind. The system tracks what matters so humans can focus on what matters most.
What to Expect in 2026 – How AI Will Reshape the Workforce
If recent years were marked by pilots and experimentation, 2026 will be the year AI becomes integrated into the everyday fabric of health care work. AI will also begin to show a step-change impact in health care by moving from information gathering and pattern recognition to reasoning and judgment. The shift will be apparent in current and new health care jobs, leadership expectations, care models, team structures, workforce strategies, learning programs, and daily workflows.
In 2026, the most visible clinical workforce impact will be in the administrative “time sinks” that divert clinicians away from patient care. Research examining physician workflow and time allocation found that documentation and administrative work consume nearly twice as much time as direct patient care.
The biggest shift is that AI will increasingly produce the first draft of clinical work (notes, summaries, and orders), while clinicians concentrate on higher-level tasks such as validation, interpretation, and decision-making.
Ambient technology will rapidly improve and listening and documentation will become mainstream. Evidence is already accumulating that ambient documentation technology is associated with reduced clinician burnout and improved well-being. In practice, this means physicians and APPs will spend less time in the EHR after hours and more time with patients (and with clinical reasoning and decision-making rather than administrative clerical work).
Decision support will expand from imaging into everyday care pathways. AI’s pattern-recognition advantage will continue to strengthen diagnostics and prioritization workflows. Radiology has demonstrated earlier proof points than other specialty areas, with AI tools increasingly supporting scan prioritization, detection, and, in some cases, workflow efficiency—augmenting clinicians rather than replacing them. The workforce effect is subtle but powerful: faster reads and better triage support more favorable outcomes, change staffing models, and raise demand for clinicians who can supervise and integrate AI outputs responsibly.
Nursing and care team workflows will start to be redesigned to automate repetitive tasks. The American Hospital Association highlights that automation can free meaningful portions of repetitive work and posits that GenAI can be a productivity lever in clinical operations – especially when leaders move beyond pilots into workflow redesign. In 2026, expect to see more virtual nursing, AI-assisted triage, and predictive tools that help teams anticipate patient deterioration, manage capacity, and coordinate follow-up care. This will support clinicians as they look to “top-of-license” work.
AI governance will also emerge as a core clinical competency. As predictive and generative tools spread, hospitals will formalize oversight, including accuracy evaluation, bias assessment, and post-implementation monitoring, because clinical leaders will be held accountable for safe performance in production, not just pilot success
How AI Will Impact Non-Clinical and Administrative Work in 2026
In 2026, administrative functions are expected to see faster “hard ROI” adoption because the work is often rules-based, high-volume, and measurable. The change will not simply be efficiency, it will be job redesign. Specifically, fewer roles will be responsible for shepherding transactional workflows, and there will be more roles focused on handling exceptions, ensuring quality, and maintaining governance.
Contact centers and patient access will shift to AI-augmented service. The AHA points to real-world examples where GenAI-augmented call centers have reduced wait times and improved first-call resolution, a preview of 2026 gains that will begin to scale: fewer rote calls handled by humans, and more complex cases escalated to people with better context and tools.
Revenue cycle capabilities will move from “processing” to “exception handling.” Administrative teams will increasingly supervise automated drafting, sorting, and routing (including claims preparation, documentation support, and appeals packets), intervening when edge cases arise. The AHA also cites how AI-enabled appeals processes reduce handling time and misrouting, exactly the kind of measurable workflow where adoption tends to accelerate.
Clinical documentation integrity (CDI) and coding support are becoming increasingly reliant on AI-driven solutions. Expect CDI functions to lean more heavily on AI assistance and embedded guidance tools as systems push for accuracy and completeness at scale. CDI emphasizes scalable approaches to documentation accuracy and improvement, which are fertile ground for AI copilots that reduce manual lookup and standardize best practices.
AI-focused workforce capability-building will also become formalized programs, driven by collaboration with progressive HR leaders and executive leadership. 2026 is the year many organizations will standardize baseline AI literacy – especially in areas such as privacy, transparency, monitoring, and human-in-the-loop expectations. The responsible-use principles from the American Association of Medical Colleges underscore the broader direction: human-centered use, transparency, privacy protection, and ongoing evaluation – concepts that will increasingly appear in onboarding and role expectations, extending well beyond clinicians.
In a health system where clinical talent will always be in short supply for the foreseeable future, AI can be viewed as one way to accelerate the balance of labor supply and demand. It’s an opportunity to solve what continues to be the often-cited number one challenge in health care: access to clinicians that practice at the top of their license.
Frequently Asked Questions
How will AI meaningfully change health care by 2026?
By 2026, AI is expected to move beyond experimental pilots and become embedded in the daily operations of health care organizations. Rather than replacing clinicians, AI will increasingly function as an augmentation layer—supporting clinical decision-making, automating administrative tasks, improving patient access, and enabling more predictive and personalized care. The most visible impact will likely be in workflow efficiency, capacity management, revenue cycle optimization, and earlier identification of clinical risk, helping organizations operate more sustainably under mounting financial and workforce pressures.
Which areas of health care are most likely to benefit first from AI?
Near-term value from AI is most likely in areas with high data volume, repeatable processes, and clear performance metrics. These include revenue cycle management, scheduling and access optimization, documentation support, population health analytics, imaging interpretation, and early warning systems for clinical deterioration. These use cases tend to deliver measurable ROI without requiring radical changes to care delivery models, making them more feasible for broad adoption.
Will AI replace physicians or other clinicians?
The article emphasizes that AI is far more likely to **reshape** clinical roles than replace them. Physicians and clinicians will remain central to diagnosis, judgment, empathy, and complex decision-making. AI tools are designed to reduce cognitive load, surface relevant insights faster, and handle routine or administrative tasks. The organizations that succeed will be those that intentionally design AI to complement clinical expertise rather than compete with it.
What operational challenges does AI adoption create for health systems?
AI adoption introduces challenges related to workflow integration, data quality, governance, accountability, and change management. Even highly capable algorithms can fail to deliver value if they disrupt clinician workflows, lack trust, or are poorly aligned with operational realities. Organizations must also address issues such as model oversight, bias mitigation, data privacy, cybersecurity, and ongoing performance monitoring. These challenges make AI as much an organizational transformation as a technical one.
Why is governance so critical to successful AI use in health care?
As AI systems increasingly influence clinical and operational decisions, governance becomes essential to ensure safety, fairness, accountability, and regulatory compliance. Effective governance defines who approves AI use cases, how models are validated, how performance is monitored over time, and how clinicians can escalate concerns. Without clear governance, organizations risk inconsistent adoption, loss of trust, regulatory exposure, and unintended harm.
How does AI affect clinician trust and engagement?
Clinician trust is one of the most decisive factors in whether AI delivers real value. Trust is built when AI recommendations are transparent, explainable, and demonstrably accurate, and when clinicians retain appropriate decision authority. Conversely, “black box” tools imposed without engagement or training often face resistance. Successful organizations actively involve clinicians in AI selection, testing, and refinement so tools are seen as partners rather than threats.
What skills will health care leaders need in an AI-enabled future?
Health care leaders will increasingly need hybrid skills that span clinical, operational, and digital domains. This includes understanding AI capabilities and limitations, asking the right questions of vendors and data teams, managing ethical and governance considerations, and leading workforce change. Leaders do not need to become data scientists, but they must be fluent enough to guide strategy, prioritize investments, and align AI initiatives with organizational goals.
How should organizations prioritize AI investments?
The article suggests prioritizing AI initiatives that address the organization’s most pressing pain points rather than chasing novelty. High-value opportunities typically align with access constraints, margin pressure, clinician burnout, or quality variation. Clear success metrics, strong executive sponsorship, and phased implementation help ensure that AI investments translate into measurable impact rather than isolated proofs of concept.
What role does data quality play in AI success?
AI systems are only as effective as the data that feeds them. Inconsistent documentation, fragmented systems, biased datasets, or outdated information can significantly degrade model performance. Organizations must invest in data governance, interoperability, and standardization to support reliable AI outputs. Improving data quality often delivers benefits beyond AI by strengthening analytics, reporting, and decision-making overall.
What distinguishes organizations that succeed with AI from those that struggle?
Organizations that succeed with AI treat it as a strategic capability rather than a standalone technology. They align AI initiatives with enterprise priorities, invest in governance and change management, engage clinicians early, and continuously measure impact. Those that struggle often focus narrowly on tools without addressing workflow integration, trust, leadership alignment, or long-term sustainability.
What does the future of AI-enabled health care ultimately look like?
By 2026 and beyond, AI-enabled health care is likely to be quieter and more embedded than today’s hype suggests. Success will look less like dramatic disruption and more like incremental gains—smoother operations, more proactive care, reduced clinician burden, and better use of scarce resources. Over time, these cumulative improvements can meaningfully reshape how care is delivered, financed, and experienced by both patients and clinicians.
Press Release | Participation Open for 2026 Health Care Compensation Surveys
Enable smarter workforce strategies with industry-leading benchmarks!
January 6, 2026 – CHICAGO – SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs, workforce solutions, and data products for health care and not-for-profits, recently opened participation for its annual suite of health care compensation surveys.
For nearly 35 years, SullivanCotter has delivered critical compensation benchmarks to the nation’s top hospitals and health systems. The firm’s market-leading health care compensation surveys provide data-driven intelligence and actionable insights to help organizations confidently manage their total rewards strategy across all segments of the health care workforce.
SullivanCotter’s longstanding flagship surveys include:
- Health Care Management and Executive Compensation
- Physician Compensation and Productivity
- Advanced Practice Provider Compensation and Productivity
- Health Care Staff Compensation
These cornerstone offerings are part of a broader and more comprehensive survey portfolio that also reports on registered nursing roles, benefits practices, physician and medical group executives, on-call pay programs, hospital-based physicians, and more.
“Leveraging reliable and robust compensation data is foundational to strategic workforce management,” said Ted Chien, President and CEO, SullivanCotter. “Our 2026 surveys are designed to meet organizations where they are – supporting leaders with insight into competitive pay dynamics and helping to anticipate future workforce needs as ongoing talent and financial pressures are still top of mind.”
Organizations that participate in SullivanCotter’s health care compensation surveys benefit from:
- Substantial discounts on full survey reports
- Early access to survey results and data tables
- Invitations to related webinars led by SullivanCotter experts
- Dedicated support throughout the participation process
To participate in or learn more about any of our surveys, please visit our website, email surveys@sullivancotter.com, or call 888.739.7039.
About SullivanCotter
SullivanCotter partners with health care and not-for-profit organizations to improve performance through integrated workforce strategies. Using industry-leading data, expertise, and analytics, SullivanCotter helps organizations align compensation and workforce practices with their mission and goals.
Press Release | 2025 Nursing Compensation Data Reveals Targeted Pay Increases
See how these trends are shaping nursing compensation strategies for the year ahead!
December 16, 2025 – CHICAGO – SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs, workforce solutions, and data products for health care and not-for-profits, has released new data and insights from the 2025 Registered Nursing Compensation Survey.
The results highlight how hospitals and health systems are navigating evolving labor market dynamics by making targeted investments in base pay, taking geographic pay differences into account, and focusing on strategies and programs to stabilize their nursing workforce.
Targeted Investments Drive RN Base Pay Changes
In the first half of 2025, the greatest growth in median base pay was among medium-sized organizations – defined as health systems with between $250M and $750M in annual net revenue – at 3.2%. Organizations with revenues between $751M and $1.5B reported a 2.9% increase, reflecting continued emphasis on retaining experienced nursing talent.
From January through July 1, RN leaders (3.0%) and managers (2.7%) received the largest median base pay increases, signaling that organizations are prioritizing nursing compensation for roles with broad supervisory and clinical oversight. And while supervisors (1.9%), charge nurses (2.4%), and staff RNs (1.7%) experienced lower median base pay increases, organizations were more selective in awarding higher pay adjustments at these levels between 5.7% and 8.2% at the 90th percentile.
Nursing compensation movement varied by specialty as well. Critical Care RNs recorded the highest six-month median increase at 3.2%, followed closely by those in Anesthesiology, Oncology, and the Emergency Department. Among non-acute care roles, RN Case Managers (3.0%) and RN Patient Navigators (2.3%) experienced the strongest median growth, while Licensed Practical Nurses had the lowest growth at 1.1%.
“Organizations are making targeted, strategic investments in nursing pay, prioritizing leaders, critical specialties, and hard-to-fill roles as they work to remain competitive in a market that is always evolving,” said Steve Meyers, Principal, SullivanCotter. “It’s important to elevate pay where pressures are greatest and prepare for continued evaluation in the months ahead.”
Nearly 70% of participating organizations plan to review external nursing market data in the second half of 2025, signaling that many anticipate further adjustments to pay strategies this year.
Geographic Differences Remain a Significant Driver of RN Pay
Regional variability continues to strongly influence nursing compensation. The West reported the highest median hourly rates for Clinical Nurse Specialists ($96), Staff RNs ($61), and LPNs ($36) – positioning this region well above the others. The Northeast followed at $69, $50, and $34, respectively, with slightly lower rates across the North Central, South Central, and Southeast regions.
Specialty pay differences were also notable, particularly in the West, which showed the widest intra-region variation, from $74 per hour for Wound Care RNs to $57 for Oncology RNs. Even at the low end, specialty pay in the West remains higher than comparable roles in every other region.
RN Turnover and Vacancy Rates Show Signs of Stabilization
Managing nursing turnover remains a significant challenge for health care organizations, given its impact on staffing, cost, and continuity of care. Compared to 2024, RN turnover rates have decreased while LPN turnover rates have increased. In the first half of 2025, 62% of organizations reported RN turnover between 11% and 20%. For LPNs, more than one-third of organizations reported turnover above 20%.
For RNs, 5.7% fewer organizations have days-to-fill over 90 days, and 10% fewer organizations have vacancy rates over 11%. Year-over-year declines in vacancy rates and time-to-fill metrics indicate that organizations are making progress in addressing staffing gaps and strengthening recruitment pipelines.
“Taken together, these shifts signal that the nursing labor market may be entering a period of greater stability. Organizations are not only seeing fewer extended vacancies, but they’re also experiencing more predictable hiring activity, an important step toward rebuilding workforce sustainability,” said Meyers.
For more information on SullivanCotter’s surveys, please visit our website or contact us via email or by phone at 888.739.7039.
About SullivanCotter
SullivanCotter partners with health care and not-for-profit organizations to improve performance through integrated workforce strategies. Using industry-leading data, expertise, and analytics, SullivanCotter helps organizations align compensation and workforce practices with their mission and goals.
How Nursing Team Configuration Drives Readmission Rates
Explore the Hidden Variable in Patient Outcomes
Your nursing team configuration matters…
By Donncha Carroll, Partner, Lotis Blue Consulting in partnership with SullivanCotter
The Untapped Lever in Patient Care
Consider the following scenario: we have two hospitals with the same patient population and protocols, but one location experiences significantly fewer readmissions. Despite standardized procedures and compliance with best practices, patient outcomes vary significantly.
What could be driving that difference in performance?
We all know that patient readmission is not just about staffing ratios—it’s also about the individuals and teams that constitute the clinical staff. Most would agree that better talent performs at a higher level and contributes more to achieving patient outcomes…but what do we mean by ‘better talent’?
It’s not just about the quality of individual clinicians. There are features of workforce configuration that create better-performing teams. For example, organizations can reduce system readmission rates by building a nursing team configuration that focuses on high ‘experience density’.1
Experience in Nursing Roles Matters
SullivanCotter and its strategic partner Lotis Blue recently conducted research showing that higher levels of ‘experience density’ are associated with a material and statistically significant reduction in readmissions.2 While the relationship between nurse experience and patient outcomes may seem obvious, this discovery is based on experience ‘in-position’.3 This positional dimension of experience highlights a crucial aspect of how workforce configuration can contribute to performance. Using detailed workforce configuration data from over 100 different health systems – which is further broken down at the individual facility or location level – the relationship between experience and readmission becomes more clearly defined.
Percent of Nurses by Job Experience Group and Readmission Ranking Tercile
Key Observations
– Top tercile readmission facilities have a higher percentage of nurses with 6+ years of experience
– All three terciles have approximately the same percentage of nurses with 2-6 years of experience
– Facilities with a higher percentage of nurses with less than 2 years of in-position experience have higher readmissions
Note: The observed relationship is not due to random variation using two statistical tests
Interestingly, the pattern is observable within a position, but it disappears when an individual’s organizational experience (in years employed) or career experience (in years since graduation) is examined. Insights from position-level analysis provide visibility into nursing organization design – including how teams are formed, managed, and operate in delivering patient services. Maintaining a minimum level of tenured staff ‘in-position’ is an important driver of team cohesion and stability.
This pattern is really an operational manifestation of the following:
- Maintaining an anchor population of nurses developing, retaining, and sharing essential knowledge about “how things work around here” helps to enable the success of less experienced nurses and boosts overall team performance.
- More experience ‘in-position’ translates into higher levels of competence in performing a specific set of responsibilities, delivering higher productivity, and better outcomes for the services offered.
Since organizational structure and nurse deployment decisions are modifiable factors, hospitals and health systems can drive clinical and economic outcomes by configuring the workforce in these ways. More specifically, a minimum level of experienced nurses is necessary in the most critical areas of health care service delivery to achieve optimal patient outcomes.
This prompts three key questions:
- Which parts of the nursing organization disproportionately influence or drive patient care outcomes and readmission?
- Within each of those teams, what is the optimal ‘in-position’ experience profile of today’s nursing staff?
- How does an organization encourage its nurses to stay ‘in-position’ longer when the experience profile is below the desired level?
Economic Impact and Strategic Implications
While health systems are motivated to reduce readmissions to provide the best possible care and outcomes for their patients – there is also a financial imperative.
For major teaching hospitals, avoiding a single readmission can result in a direct financial gain of approximately $18k. For non-teaching hospitals, the benefit is around $15k. Each 1% reduction in readmission rates translates to substantial aggregate savings for a facility. This can add up to millions of dollars annually for larger hospitals.
Illustrative Impact 1% Improvement for Mid-Sized Hospital
Rethinking Nursing Workforce Metrics
The health care industry typically focuses on nurse-patient ratios to guide staffing decisions. It is also commonly used as the primary lens into organizational design effectiveness. However, this measure does not adequately consider these other important dimensions of experience and positional knowledge that materially influence team performance.
While the quality of individual talent in each role is also a crucial factor in driving patient outcomes, configuration-aware staffing analytics – which ensure each area of nursing has a bedrock of experience needed to onboard, orient, and deploy resources efficiently – are essential to success.
Call to Action: Redesign with Purpose
Test the Hypothesis
Looking to build a more optimal experience profile in key nursing positions?
We can help you make the business case using the following approach:
- Select two or more facilities within the health system where patient readmissions are notable (both higher and lower than expected).
- Within each facility, identify nursing teams with 30+ resources who have a disproportionate impact on patient outcomes.
- For each team, calculate the percentage of nurses who are ‘in-position’ for more than six years and capture the patient readmission rate.
- Compare readmissions between each team by plotting the percentage of experienced nurses against the readmission rate on a single chart.
- Calculate the rate at which readmissions decline with increasing experience.
Illustration
‘In-position’ experience is a crucial lever in enhancing patient outcomes, and by extension, operational and financial outcomes as well. Positional experience will matter more in cohesive working teams because the experienced group serves as a curator of domain knowledge, protecting the unique expertise required for the team to operate efficiently and effectively. There may also be material differences between the groups in engagement scores, decision quality, organization cohesion, and other talent management metrics.
Improving Experience Density
What does this mean for your organization? You will naturally start to ask what changes to talent management will create a more optimal experience profile. This is more challenging than it appears on the surface as there are competing dynamics for bedside nursing talent. For example, bedside nurses may leave a position to advance into leadership, to move to an ambulatory environment, become an advanced practice nurse, relocate, and more. – the possibilities are endless.
Organizations will need to develop intentional and innovative pathways that encourage bedside nurses to stay in their role. Compensation is not the only lever for this – and oftentimes isn’t enough on its own. Organizational leadership must think more holistically.
The following approach may help you strike the right balance as you work towards this goal:
- Estimate patient readmission impact and the total economic value of each percentage improvement in nurse experience (up to a maximum of 25%).
- Identify a group of nurses who are respected by their peers, with 4+ years ‘in-position’, and considered happy and engaged as a cohort for focused review and investment.
- Conduct focus groups to understand the unique perspectives, needs, and interests of these nurses; disproportionately invest in changes that improve job satisfaction.
- Consider introducing retention bonuses based on the combination of service years and evidence of sustained performance.
- Develop innovative pathways and programs to support these groups of identified and committed individuals including measures that allow teams to grow together in place, promote from within, gain additional education and skills and have a role in selecting, training, and developing early career individuals.
- Ask these committed individuals to participate in or influence staffing decisions, unit policy changes, equipment selection, scheduling, and clinical practice updates.
- Provide time and resources for these experienced nurses to mentor newer staff while maintaining a clinically fulfilling caseload.
- Invite them to participate in committees, safety projects, and innovation efforts. Then, implement ideas they propose and publicly credit them for their contributions.
- Review and estimate the cost of moving compensation close to the top of the in-level pay range; consider’ in-position’ promotions to ensure pay competitiveness.
- Consider introducing retention bonuses based on the combination of service years and evidence of sustained performance.
- Measure, calculate, and advertise the return on investment achieved by closely monitoring trends in readmission rates as these changes are implemented with consideration of incentives for teams that maintain sustained high performance.
Conclusion
The path forward requires intentional design. Health systems must rethink how they structure teams, how they cultivate the expertise that already exists within their walls, and how they build pathways that allow experienced nurses to thrive in place. These choices will shape not only patient outcomes, but organizational culture, workforce stability, and long-term financial performance.
The challenge to nursing leadership is simple—and urgent: test the hypothesis, measure the impact, and redesign with purpose. The organizations that act now will not only see measurable improvements in readmissions—they will build stronger, more resilient clinical teams capable of delivering consistently exceptional care.
References:
[1] Experience density = ratio of nurses with 6+ years of experience in their current position.
[2] The Sullivan Cotter analytics team calculated readmission ranking using CMS data from the following source https://data.cms.gov/provider-data/dataset/bzsr-4my4
[3] A position in an organization is a specific, defined spot or “slot” within the company’s structure that an individual occupies but remains intact as resources come and go over time.
Want to continue the conversation?
Lotis Blue and SullivanCotter stand ready to help health systems operationalize these insights, validate outcomes, and design sustainable workforce strategies that elevate performance at every level.
Advanced Practice Provider Turnover: A Costly Reality
APP turnover is more than an HR challenge – it’s an operational and financial reality.
Hadley Powless, MBA, PA-C, Consulting Manager
Joel Villegas, MBA, Consulting Manager
Lacey Buckler, DNP, ACNP-BC, FAANP, Principal
Introduction
The labor market has faced significant disruption over the past decade, most notably due to the COVID-19 pandemic. While many sectors have returned to prepandemic employment levels, health care continues to experience volatility driven by persistent staffing shortages and inflationary pressures.1 In response, many clinicians have exited the field entirely or transitioned away from direct patient care. Despite service demand stabilizing near pre-COVID levels, clinical staffing shortages remain widespread and have contributed to persistently high turnover rates.2
According to the 2024 National Health Care Retention & RN Staffing Report from NSI Nursing Solutions, the average hospital turnover rate stands at 20.7% with nursing-specific turnover at 18.4%.3 While these rates have declined from the post-pandemic peak of 26%–27%, they remain elevated compared to historical norms. Data from SullivanCotter’s 2025 Advanced Practice Provider Compensation and Productivity Survey indicates a median
external turnover rate of 8.6% among advanced practice providers (APPs), which includes physician assistants (PAs) and advanced practice registered nurses (APRNs).4 Certain specialties – such as emergency medicine and behavioral health – report turnover rates exceeding 14%.5 In comparison, the median voluntary turnover rate for physicians is approximately 7%.6
Turnover is an unfortunate reality in every industry, and its impact on cost, morale, and operational efficiency can be substantial. While physician and nurse turnover has been studied extensively, less attention has been paid to APPs. In 2020, SullivanCotter published a foundational report examining APP turnover, its associated costs, and the organizational factors that influence it. The report introduced a methodology for quantifying turnover-related expenses and offered a framework for organizations to assess and report these costs more effectively.
This research builds on that foundation by presenting updated cost data, analyzing key drivers of turnover and satisfaction, and outlining actionable strategies to improve APP engagement and retention. It includes insights and data compiled by SullivanCotter’s National APP Advisory Council (NAAC) – which consists of health care organizations with some of the nation’s largest and most advanced APP structures.
Additional insights were gathered from the following SullivanCotter survey reports:
• APP Compensation and Productivity
• APP Preferences
• APP Leadership and Organizational
Background
Advanced practice provider turnover has a measurable impact on both patient outcomes and provider engagement. A clear understanding of its root causes and financial implications is essential for developing effective organizational strategies.
SullivanCotter outlines a three-step approach to evaluate the economic impact of APP turnover:
- Identify organizational drivers contributing to turnover
- Quantify the associated costs
- Perform a comprehensive APP turnover cost analysis
Defining and Measuring APP Turnover
APP turnover can be categorized as either external or internal:
- External turnover is when an APP voluntarily leaves the organization to join another employer or exit the health care industry altogether. Often labeled as attrition or resignation, this type of turnover may be preventable through targeted retention efforts.
- Internal turnover or “churn” occurs when an APP transitions between departments or specialties within the same organization. This is more common among APPs than physicians due to the versatility of their licensure and certification, which allows for greater mobility across clinical areas.
Although internal turnover is a common challenge for many organizations, this analysis focuses exclusively on the cost of external APP turnover. While some internal movement supports retention by offering career growth, excessive shifts may signal concerns around equity, compensation, or culture. APP utilization influences both types of turnover. A comprehensive turnover analysis should include exit interviews, employee engagement surveys, utilization reviews, and benchmarking against industry standards to uncover root causes and inform retention strategies.
While understanding the types of turnover is essential, identifying the factors that influence an APP’s decision to stay or leave is equally critical. The following section explores key drivers of engagement and retention based on survey data.
Likelihood to Leave and/or Recommend the Organization
APP Engagement and Retention: Key Correlations
We analyzed data from SullivanCotter’s APP Preferences Survey, focusing on utilization, compensation, onboarding, and workplace dynamics. These insights were compared to APPs’ likelihood of leaving within 12 months and their willingness to recommend their organization. The analysis revealed strong correlations between specific workplace factors and retention outcomes.
Among APPs considering departure, the highest risk factors included:
- Minimal or no utilization
- Physicians not understanding the APP role
- Perceived lower compensation than peers
- Ineffective orientation
Methodology for Assessing Costs
Understanding the factors that drive APP turnover provides important context for evaluating its financial impact. To assess the cost of turnover, it is useful to focus on measurable factors with direct dollar amounts, such as recruitment, sign-on bonuses, and training. Indirect costs, including provider dissatisfaction, burnout, and lost patient revenue, are harder to quantify and can vary widely by organization.
The following elements represent the primary direct costs associated with APP turnover:
- Moving allowance
- Sign-on bonus
- Recruiter time (e.g., hours spent per APP recruited)
- Advertising
- Physician time for orientation and onboarding with a new APP (e.g., hours spent per APP oriented that took time away from patient care)
- APP time for orientation and onboarding (e.g., hours spent in non-billable orientation time)
- Background check/drug screen and licensure verification
Based on SullivanCotter’s 2024 APP Organizational and Leadership Survey Report and grounded in market research conducted with APP executives from organizations employing large APP workforces, the direct cost of turnover for a single APP ranges from $93,000 (25th percentile) to $147,500 (75th percentile), with a median of $120,000.5 These direct costs represent approximately 70% to 110% of the median APP salary.4
When factoring in indirect costs such as lost productivity, provider burnout, and patient care disruptions, the total estimated cost of APP turnover rises to $150,000 to $250,000, with a median of $187,500.5 This equates to 112% to 187% of the median APP salary.5 These estimates are consistent with data from both physician and nursing turnover research.3, 8, 9, 10
While the costs listed here are objective and quantifiable, advanced practice provider turnover costs can vary by organization – which is why each should conduct its own assessment. Elements of turnover should be clearly defined, easily measured or estimated, and agreed upon in advance. To accurately assess the total cost of APP turnover, organizations should have the following information available:
- Number of APPs working in your organization
- External turnover rate
- Headcount of the turnover rate (total number of APPs multiplied by the turnover rate)
- Factors driving turnover (consider exit interviews and/or engagement surveys)
Factors that Enhance APP Job Satisfaction
While understanding the cost of APP turnover is essential, addressing the factors that influence turnover and drive job satisfaction is key to improving retention. As part of SullivanCotter’s APP Preferences Survey, APPs were also
asked what their employers could do to enhance their work experience. Their responses revealed consistent themes that strongly influence engagement, motivation, and long-term commitment.
Analysis of the survey data identified several critical drivers of satisfaction. The top three motivators were:
- Work-life balance, including flexible scheduling (73%)7
- Competitive compensation (68%)7
- Collegial relationships with other clinicians (46%)7
Additional factors that contribute to APP engagement include:
- Competitive compensation and benefits
- Recognition of professional expertise and value
- Opportunities to practice at the top of license
- Clear paths for career advancement
- Meaningful leadership roles
- Adequate staffing and administrative support
- Effective communication from leadership
- A positive and inclusive workplace culture
Focusing on these areas can help organizations reduce burnout, strengthen retention, and foster a more supportive and fulfilling work environment for APPs.
Actionable Strategies to Enhance APP Engagement
Building on insights from SullivanCotter’s APP Preferences Survey, the following strategies reflect feedback from APPs on what would help to improve their work experience and increase job satisfaction. These actions can help organizations strengthen engagement, reduce burnout, and improve retention.
Compensation and Benefits
- Align pay with market rates, experience, specialty, and responsibilities
- Consider the introduction of variable incentives (e.g., wRVU-based rewards, quality/value-based incentives)
- Enhance PTO, health coverage, student loan repayment, and CME benefits
- Regularly evaluate pay equity for APPs, taking into account differences in years of experience and specialty, and reviewing offerings in comparison to other clinical roles such as physicians and RNs
Recognition and Valuation
- Acknowledge APP contributions individually and collectively
- Reflect experience and seniority in titles and compensation
- Include APPs in decision-making and show consistent appreciation
Work-Life Balance
- Consider flexible scheduling (e.g., four-day weeks, reduced night/weekend shifts)
- Address workload and staffing to reduce burnout
- Ensure balanced shift distribution and adequate administrative time
Leadership and Career Advancement
- Define clear career paths and advancement opportunities
- Establish APP councils or leadership roles with decision-making authority
- Ensure titles and compensation reflect leadership responsibilities
Utilization and Scope of Practice
- Support full scope of practice through updated policies and role optimization
- Offer training to expand procedural and clinical skills
Communication and Support
- Improve transparency around compensation, expectations, and organizational updates
- Provide timely feedback on performance, coding, and documentation
Work Environment and Resources
- Ensure adequate support staff (e.g., RNs, MAs) to reduce administrative burden
- Strengthen onboarding and mentoring programs
- Provide dedicated professional spaces to reinforce APP identity
Culture and Respect
- Promote collaboration and mutual respect among APPs, physicians, and leaders
- Recognize APPs as independent clinicians, not ancillary staff
- Address cultural gaps to foster a collegial and inclusive environment
Conclusion
Reducing APP turnover requires a comprehensive, data-driven approach that goes beyond understanding costs. While direct and indirect turnover costs can exceed $300,000 per APP, these figures don’t fully capture the broader impact on care delivery, team engagement, and operational continuity.
To address the root causes of turnover, organizations should implement targeted strategies such as postgraduate clinical fellowships, leadership development programs, enhanced onboarding, and structured career advancement pathways. Research also supports the value of dedicated APP leadership structures in improving retention outcomes.11, 12
Ultimately, sustaining these efforts depends on cultivating a strong organizational culture grounded in collaboration, respect, and shared purpose. By prioritizing APP feedback and investing in targeted strategies, organizations can build a more resilient workforce and ensure the long-term sustainability of high-quality patient care.
References
- Sheiner L., Wessel D., and Asdourian E. (2024). The US Labor Market post COVID: What’s changed, and what hasn’t? The Brookings Institute. https://www.brookings.edu/articles/the-us-labor-market-post-covid-whats-changed-and-whathasnt/
- Shen K., Eddelbuettel J., and Eisenberg MD. (2024). Job Flows Into and Out of Health Care Before and After the COVID-19 Pandemic. JAMA Health Forum. 5:1. 10.1001/jamahealthforum.2023.4964
- NSI Nursing Solutions, Inc. (2024). 2024 NSI National Health Care Retention & RN Staffing Report. Retrieved from https://www.nsinursingsolutions.com/documents/library/nsi_national_health_care_retention_report.pdf
- SullivanCotter’s 2025 Advanced Practice Provider Compensation and Productivity Survey Report
- SullivanCotter’s 2024 Advanced Practice Provider Leadership and Organizational Survey Report
- SullivanCotter’s 2025 Physician Compensation and Productivity Survey Report
- SullivanCotter’s APP Preferences Survey
- Bae SH. (2022). Noneconomic and economic impacts of nurse turnover in hospitals: A systematic review. Int Nurs Rev. Sep;69(3):392-404. doi: 10.1111/inr.12769.
- Dydra L. (2023). The cost of Physician turnover. Beckers Hospital CFO Report. https://www.beckershospitalreview.com/finance/the-cost-of-physician-turnover.html
- Fibuch, E., & Ahmed, A. (2015). Physician Turnover: A Costly Problem. Physician Leadership Journal, 2(3), 22-25.
- Shanafelt, T., Goh, J., & Sinsky, C. (2017). The Business Case for Investing in Physician Well-being. The Journal of the American Medical Association Internal Medicine. 177(12), 1826-1832. doi:10.1001/jamainternmed.2017.4340
- Kurnat-Thoma, E., Ganger, M., Peterson K. & Channell, L. (2017). Reducing Annual Hospital and Registered Nurse Staff Turnover: A 10-Element Onboarding Program Intervention. Sage Open Nursing, 3, 1-13. Retrieved from https://doi.org/10.1177/2377960817697712
VIDEO | Which national trends are impacting APP turnover?
Although the national APP turnover rate is in decline...
Organizations must continue to address it.
Reducing APP turnover is not just a staffing issue – it’s a strategic imperative for delivering sustainable, high-quality health care.
What’s actually influencing retention in today’s competitive clinical talent landscape? Contrary to common assumptions, compensation isn’t the primary driver. Utilization is.
When APPs aren’t empowered to work at the top of their license, organizations risk disengagement, inefficiency, and ultimately, turnover.
In our new video, Hadley Powless explains how SullivanCotter can help to promote stability, continuity and efficiency across your entire care team.
APP turnover is a costly reality.
Need additional insight? Our new analysis uncovers several powerful predictors of retention.
For organizations seeking to strengthen retention in 2026 and reduce the cost of APP turnover, understanding these drivers is essential.
VIDEO | Fair Market Value: Physician Leadership Compensation
Physician leadership compensation continues to draw heightened attention from regulators.
How can organizations proactively support compliance, demonstrate defensible decision-making, and mitigate potential risk?
In this video, SullivanCotter’s Julie Mannion breaks down five essential best practices that every organization should be incorporating into its approach.
From strengthening role definitions and clarifying leadership responsibilities to aligning compensation with internal governance standards and fair market value expectations, Julie provides actionable insights to help organizations navigate this complex landscape with confidence.
If your organization is refining its approach to physician leadership compensation, this is insight you won’t want to miss.
Reach out to our experts...
Partner with SullivanCotter to maintain compliance in an evolving marketplace!
Press Release | The Next Chapter of Health Care Leadership
SullivanCotter and Lotis Blue Consulting Identify Competencies Defining the Future-Ready Health System CEO
December 4, 2025 – CHICAGO – SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs, workforce solutions, and data products for health care and not-for-profits, and its strategic partner Lotis Blue Consulting have released The Future-Ready Health System CEO: The Competencies and Attributes That Will Define Leadership in the Next Era of Health Care.
The study, developed utilizing the Hogan Leadership Assessment framework, draws on insights from 20 leading client organizations to define the competencies and attributes that will shape the next generation of health system CEOs.
Together, the firms created the Health Care Potential Index (HCPI) – a data-driven framework that replaces traditional indicators like professional history and tenure with evidence-based measures of leadership potential.
Defining Leadership for Health Care’s Next Chapter
“Health care organizations face a perfect storm of financial strain, workforce fatigue, and growing community accountability,” said Aaron Sorensen, Ph.D., Senior Partner, Lotis Blue Consulting. “The leaders who will thrive are those who combine strategic clarity with empathy, operational discipline with courage, and the ability to mobilize others through trust.”
The study highlights ten essential competencies – known as the “Vital Ten” – that define future-ready CEOs. These fall across four domains validated by industry experts:
- Strategic Mindset – Anticipating disruption and positioning systems for the future.
- Execution Engine – Turning vision into measurable results.
- Cultural Leadership – Building trust and alignment among stakeholders.
- Adaptive Capacity – Leading with calm and agility amid volatility.
Beyond these competencies, the research also examines the characteristics important for success in the job. The findings show that ambition, intellectual curiosity, emotional stability, and empathy form the foundation for sustained effectiveness in today’s complex environment.
Implications for CEO Succession and Leadership Development
For boards and executive teams, the HCPI offers an evidence-based approach to identifying and developing leaders equipped for system-level transformation. It helps organizations assess leadership potential objectively to reduce bias and improve succession planning.
“Future-ready CEOs are defined less by what they know and more by how they think and connect,” added Sorensen. “They balance foresight with judgment and ambition with humility – qualities that are essential to leading through disruption.”
About Lotis Blue Consulting
Lotis Blue is committed to helping organizations forge strong connections between workforce, leadership, and organizational performance. With deep expertise in data and behavioral science, we deliver insight-driven solutions tailored to each client’s unique challenges.
For more information on Lotis Blue Consulting, please visit www.lotisblueconsulting.com.
About SullivanCotter
SullivanCotter partners with health care and not-for-profit organizations to improve performance through integrated workforce strategies. Using industry-leading data, expertise, and analytics, SullivanCotter helps organizations align compensation and workforce practices with their mission and goals.
For more information, visit www.sullivancotter.com or contact us at 888.739.7039.
VIDEO | Physician Practice Acquisitions: Competing with Private Equity
Private equity’s presence in the U.S. health care market has grown significantly...
…and with it, the competition for physician practice acquisitions has increased as well.
However, the structure of a private equity transaction differs significantly from that of a health system. Understanding those differences can be key to staying competitive.
Watch our latest video! SullivanCotter’s Kyle Tormoehlen breaks down the nuances and highlights how health systems can strengthen their position by:
- Incorporating intangible assets when evaluating practice value
- Reframing the value proposition through annuitization
- Leveraging and highlighting core system strengths
Want to continue the conversation?
Our unique insight provides organizations with an in-depth understanding of the market forces, regulatory environment and operational infrastructure that drive successful transactions
The Future Ready Health System CEO
The Competencies and Attributes That Will Define the Next Generation of Health System CEOs
Health care is entering a period defined by margin pressure, workforce strain, digital disruption, and growing community expectations.
Against this backdrop, SullivanCotter and Lotis Blue Consulting partnered to conduct new research on what will define successful health system CEOs in the next era of health care.
The findings are clear: The future belongs to leaders with the cognitive, relational, and adaptive capabilities to guide systems through complexity and sustained transformation.
The study introduces the Health Care Potential Index (HCPI) – a data-driven framework that moves beyond traditional measures such as professional history, background, and tenure to measure true leadership potential. From strategic clarity to empathy and agility, future-ready CEOs must navigate disruption and drive transformation.
The research pinpoints the Vital Ten – a set of data-validated competencies organized across four domains:
- Strategic Mindset
- Execution Engine
- Cultural Leadership
- Adaptive Capacity
These leaders see around corners, make high-quality decisions under pressure, drive measurable results, and build trust across clinicians, boards, and communities. They communicate with clarity, lead change with discipline, and navigate uncertainty with confidence. Beneath these competencies lie defining personality traits – ambition, intellectual curiosity, emotional steadiness, and interpersonal sensitivity – that enable sustained performance in volatile environments.
Access the full report to understand the competencies driving performance and potential in health care leadership!
Case Study | Academic Medical Center: Clinical Expansion and Accountability
Transform physician compensation and achieve clinical growth
Learn how we worked with a large cancer center to increase wRVU productivity, establish minimum work effort standards, and support clinical expansion and accountability
As academic medical centers navigate mounting pressure to expand clinical capacity, strengthen accountability, and remain competitive in a tightening talent market, many are finding that outdated or inconsistent compensation structures can hinder progress.
In 2024, a leading cancer center with $2 billion in system revenue confronted these challenges firsthand—struggling with unclear productivity expectations, inconsistent academic work standards, and difficulty recruiting and retaining top physician talent.
This case study highlights how a comprehensive compensation redesign, built on market-informed insights and aligned clinical and academic expectations, helped transform performance, foster stronger physician–administration alignment, and position the organization for sustained clinical growth.
See how you can unlock the full potential of your physician workforce!
CHALLENGES
- Unclear and inconsistent methodologies around physician compensation, productivity expectations, and
- Difficulty recruiting top talent and retaining legacy physician faculty
- Balancing generous base salary levels with realistic productivity incentives to drive clinical growth
- Consistent and transparent accountability for organization funded academic time
- Need for clinical expansion while maintaining equitable expectations across different physician tracks
APPROACH
- Conducted leadership interviews and focus groups to understand pain points and build consensus on objectives
- Performed market assessment to evaluate total cash compensation and productivity alignment, survey data usage, and areas of risk
- Assessed clinical and academic work effort expectations and provided market comparative insights
- Established standardized annual hours expectations; documented approved activities for all nonclinical time for each physician track
- Designed an incentive structure to encourage increased productivity and improved patient outcomes
- Provided fair market value and commercial reasonableness opinions to support the proposed compensation plan and the Center’s legal processes
OUTCOMES
- Culture Shift: Created a more aligned partnership between administrative and physician leadership with respect to organizational goals
- Clinical Expansion: Developed a more robust clinical physician pathway to compliment the existing academic tracks; established related production standards
- Enhanced Accountability: Developed concrete minimum work standards related to all clinical and non-clinical time
- Improved Governance: Established greater oversight of physician compensation programs and related work effort aligned with regulatory standards
Unlock the full potential of your physician workforce!
Academic Medical Centers (AMCs) operate within some of the most complex environments in health care, balancing their tripartite missions of education, research, and patient care while navigating unprecedented pressures on their physician workforce.
As they work to redesign care delivery and optimize limited resources, AMCs must thoughtfully structure, support, and engage physicians by aligning roles, incentives, and expectations across the academic enterprise.
Drawing on deep experience with leading AMCs and access to real-time market intelligence, SullivanCotter delivers specialized insights and data-driven strategies that help organizations strengthen physician performance, enhance collaboration with care teams, and advance their mission.
Contact us to see how we can partner.
INFOGRAPHIC | Navigating Change: The 2026 Medicare Physician Fee Schedule
The 2026 Medicare Physician Fee Schedule and the new TEAM model mark a pivotal shift in reimbursement.
Is your organization prepared?
The Centers for Medicare & Medicaid Services’ (CMS) 2026 Medicare Physician Fee Schedule (MPFS) and the introduction of the Transforming Episode Accountability Model (TEAM) signal one of the most significant shifts in provider reimbursement in recent years. After six years without an increase, the MPFS conversion factor will rise in 2026.
However, this relief is tempered by a new, ongoing efficiency adjustment that reduces work RVUs for non-time-based services—disproportionately affecting specialties with high-volume, short-duration procedures.
At the same time, TEAM expands bundled payment accountability to more than 700 hospitals, tying cost and quality performance to major surgical episodes.
Together, these changes mark a pivotal moment for health care organizations as they navigate mounting financial pressure, evolving value-based models, and the need for strategic, forward-looking compensation planning.
Here’s an overview:
Medicare PFS Conversion Factor
- The proposed 2026 conversion factor has increased to $33.57 for alternative payment methods and $33.40 for non-alternative payment methods.
- The increase accounts for the required 2.5% adjustment detailed in the Big Beautiful Bill Act and additional adjustments to account for changes to RVU values.
- CMS has historically relied on the AMA Relative Value Scale Update Committee (AMA RUC) to estimate practitioner time, work intensity, and practice expense
- To reflect medical practice changes, CMS will apply an efficiency adjustment to non-time-based services, cutting work RVUs by 2.5% in 2026 and every 3 years thereafter, with no stated floor
- Specialties with high-volume, short-duration procedures are likely to be hit hardest
- Learn more from the Centers for Medicare and Medicaid Services
Efficiency Adjustment Impact Analysis
- Specialties with limited E&M activity are expected to experience the greatest impact from CMS’ efficiency adjustments.
- Modeled wRVU reductions could drive productivity and reimbursement shifts, especially for high-volume, short-duration procedural specialties.
- While the conversion factor increase offers some relief, the broader implications could heighten financial complexity and pressure on productivity-based compensation models.
Potential wRVU Impact by Specialty
- Hospital-Based specialties will experience the greatest changes in wRVUs based on the efficiency adjustment
- Primary Care specialties will experience little to no change
- Specialties providing predominantly procedural services will be impacted the most – this includes Radiology Services, Pathology Services, and Surgical Services
Transforming Episode Accountability Model (TEAM)
- Beginning January 1, 2026, the new TEAM Model will expand procedure bundle accountability to over 700 acute care hospitals
- The program ties quality and cost performance to five high-volume surgical episodes, reinforcing the shift toward value-based care and shared financial responsibility
- Focuses on 5 costly, high-volume surgical episodes including lower joint replacement, hip fracture replacement, spinal fusion, coronary artery bypass graft, major bowel procedures
- Holds acute care hospitals accountable for quality and spending during inpatient/ outpatient encounters and the 30-day post-procedure period
- Over 700 acute care hospitals in designated Core-Based Statistical Areas (CBSAs) required to participate
- Bundled payment covers full episode, including physician services
- Financial risk/reward: penalties if costs exceed the CMS target; shared savings if below
- Physicians paid via Medicare physician fee schedule; hospitals receive first shared savings distribution in mid-2027
Looking to align your compensation strategies with evolving payment models?
Case Study | Academic Medical Center: APP Care Model Design
Empower every member of your care team to maximize performance
See how we helped a large academic medical center improve the practice and utilization of its critical APP workforce
Advancing the performance of advanced practice providers has become a strategic imperative for leading health systems striving to enhance patient access, strengthen care team alignment, and support a rapidly evolving clinical workforce. This case study highlights how a large academic medical center with more than 700 APPs partnered with SullivanCotter to address widespread variation in APP practice, clarify care team roles, and improve engagement across key specialties.
Through a structured, collaborative redesign of the APP care model, the organization achieved significant gains in utilization, efficiency, and workforce stability – demonstrating the transformative impact of optimizing practice at scale.
What were this system’s challenges, how did we approach them, and what was the outcome?
CHALLENGES
- Variation in APP practice within clinical departments and throughout system
- Unengaged workforce not practicing at top of license, scope or education
- Misalignment and lack of clarity in care team roles
- High APP turnover
- Patient access limitations
APPROACH
- Focused on Hospital Medicine, Oncology, and Cardiology specialties based on readiness for change
- Developed a collaborative physician/APP care model to maximize APP utilization and improve patient access
- Established standard APP work expectations across specialties and practices
- Targeted APP compensation increases in specialties with below-market compensation and high turnover
OUTCOMES
- Patient access improved by nearly 10%
- APP encounters for inpatient team grew by 500%
- Hospital Medicine APPs increased critical care billing by 100%
- Aligned care team roles and performance based on standard expectations
- APP turnover decreased due to higher engagement and ability to practice at top of license
The system is currently expanding this work across other specialties.
Need to unlock the full potential of your APP workforce?
Academic Medical Centers (AMCs) operate within some of the most complex environments in health care, balancing their tripartite missions of education, research, and patient care while adapting to unprecedented pressures.
As they work to redesign care delivery and optimize limited resources, AMCs must thoughtfully structure and support key clinicians – including the growing APP workforce.
Leveraging deep experience with leading AMCs and access to real-time market intelligence, SullivanCotter provides specialized insights and data-driven strategies that help organizations strengthen workforce performance and advance their mission.
Contact us to see how we can partner!
Frequently Asked Questions
What was the primary goal of this APP care model redesign?
Which challenges did the organization face before partnering with SullivanCotter?
Which specialties were included in the initial phase?
How did SullivanCotter approach the care model redesign?
What measurable outcomes were achieved?
Was APP compensation addressed in this initiative?
Is this model being expanded across the system?
How can an organization begin a similar initiative?
INFOGRAPHIC | 2025 CRNA Compensation Insights
CRNAs are in high demand – and compensation trends are evolving just as quickly.
What do you need to know about CRNA compensation? Look to our survey for answers.
Health care leaders are navigating a critical moment in the CRNA labor market. Despite early signs of stabilization, CRNA shortages are projected to influence compensation for years to come. Design strategies to help your organization remain competitive while supporting long-term sustainability for the CRNA workforce with the latest results from our 2025 APP Compensation and Productivity Survey.
While CRNA compensation is still on the rise, growth is starting to stabilize after two years of steep increases. However, market shortages for this workforce will likely continue to impact pay for the next 5-10 years.
The data also provides insight into critical pay practices such as sign-on bonuses, shift differentials, CME allowance, student loan repayments, and more.
See the data in action!
Need a quick summary?
BASE PAY AND TOTAL CASH COMPENSATION
- Median total cash compensation for CRNAs has increased by 22.9% since 2022, while TCC for pediatric CRNAs has increased by 17.2% within the same timeframe
- Year-over-year changes are stabilizing, however, and have gone from 9.6% from 2022-2023, 6.7% from 2023-2024, down to 5.2% from 2024-2025
- Market shortages for this workforce will likely continue to impact pay for the next 5-10 years
PAY PRACTICES
- 62% of organizations employ their CRNAs
- 44% use employment agreements for some of or all of their CRNAs
- 44% of organizations provide shift differentials
- 70% of exempt CRNAs are eligible for extra shift pay
- 25% offer student loan repayment
RECRUITMENT AND RETENTION BONUSES
- 80% of organizations offer sign-on bonuses, with the median amount being $20,000
- 48% of organizations are offering retention bonuses, whereas 70% require payback if a CRNA leaves within 2 years
Learn more about our APP Compensation and Productivity Survey!
This survey provides organizations with the critical data they need to systematically track and benchmark market changes, which in turn helps managing strategic and financial planning for continued growth and success.
- Base pay, total cash compensation and total cost of benefits
- Productivity data and ratios, including collections and work RVUs
- Pay practices, including salary grades and ranges, shift differentials and extra shifts, on-call pay, education expenses, sign-on bonuses, retention bonuses and moving allowances
- APP incentive plan design, including prevalence and performance measures
- Data reported for nurse practitioners and physician assistants across multiple specialty groups
- Data also reported for certified anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives
- Data reported both nationally and regionally by practice setting (inpatient/outpatient) and locale (urban/suburban/rural)
- Total cash compensation data for a number of APP leadership positions
Beyond Buy-In: Building Physician Readiness for Change in Today's Health Care Environment
Physician readiness for change has become a critical factor in successful transformation efforts.
Explore how your medical group can proactively assess and strengthen this readiness in the early stages of any change initiatives.
By Jackie Bassett, Principal, Lotis Blue Consulting in partnership with SullivanCotter
Medical groups are navigating extraordinary complexity. Margin pressure, workforce shortages, rising patient acuity, evolving payment models, and the rapid integration of digital and AI technologies have reshaped what it takes to lead a high-performing physician organization. In response, many medical groups are reevaluating their leadership structures, clarifying roles, and updating their compensation frameworks. But even the most compelling strategy will fall short if physicians are not ready for the change.
Research shows that physician engagement and physician change readiness are among the strongest predictors of whether transformation efforts succeed in medical groups and other physician organizations. In today’s environment—marked by eroded trust, accumulated change fatigue, and expanding expectations for physician leadership—physician readiness for change cannot be assumed. It must be deliberately understood and cultivated. This article examines the factors that contribute to physician change readiness, why it is emerging as a strategic differentiator for medical groups, and how organizations can identify and mitigate the risks that frequently derail transformation efforts.
To illustrate these concepts, we reference a recent medical group initiative aimed at clarifying the roles, expectations, and compensation of Medical Directors. Although the initiative carried financial implications, its core purpose was to ensure that physician leaders were working at the top of their training and that leadership roles reflected meaningful scope and responsibility. Because the redesign impacted long-standing roles, identity, and leadership expectations, the work was inherently personal, making physician readiness for change essential to a thoughtful and successful transition.
The Strategic Context: Why Physician Change Readiness and Change Management in Healthcare Matter More Than Ever
Medical groups operate at a critical intersection of mission, margin, and clinical performance. They are expected to deliver access, quality, experience, and operational efficiency—often while navigating staffing shortages, reimbursement pressure, technology disruption, and rising expectations for physician leadership. In the past year alone, many medical groups have had to manage:
- Enterprise cost restructuring
- Operating model redesign
- Care team delivery redesign
- Reimbursement changes
- Compensation model changes
- Quality and access transformation
- Digital and AI implementation
- Site consolidation and service realignment
- Leadership transitions
- Intensifying performance expectations
In this environment, physicians are not only absorbing more change, they are being asked to lead it as well. As one physician leader reflected:
“It feels like we’re being asked to build the plane while flying it, and someone keeps changing the destination.”
The success of any transformation effort ultimately hinges on physician buy-in; whether they understand the change, believe in its intent, and feel equipped to adapt to new expectations.
The Data: Why Physician Readiness for Change Matters
Decades of research reinforce the importance of change readiness in health care transformation. McKinsey estimates that nearly 70% of major transformation efforts in health care fail to achieve their intended outcomes2, most often due to cultural barriers, insufficient leadership alignment, and inadequate change readiness, not because of flaws in the strategy itself. Physician leadership is especially critical. In a national survey by the American College of Healthcare Executives (ACHE), 60% of health care executives identified physician buy-in as the single most important determinant of whether a major change effort ultimately succeeds. Taken together, these findings highlight a core truth: physician readiness for change is not a soft concept; it is a measurable, predictive factor that determines whether major initiatives take hold.
Why Physicians Experience Change Differently
Physicians are not inherently resistant to change—if anything, their work requires constant adaptation. But the way physicians process, evaluate, and adopt change differs in important ways:
- Autonomy and identity: Physicians are trained to make independent, evidence-based decisions. Changes that alter their autonomy, role, or compensation can be experienced as deeply personal.
- Peer-driven influence: Physicians tend to be most influenced by colleagues they trust, not by broad organizational messaging.
- Evidence orientation—and skepticism: Physicians want data-backed rationale, yet many carry skepticism shaped by past initiatives that were rolled out quickly or communicated inconsistently.
- Cognitive load and burnout: Ongoing staffing shortages, documentation burden, and workflow pressure make even well-intentioned changes feel like additional weight.
- Cultural norms: Professional cultures that emphasize collegiality and clinical autonomy can conflict with system-driven accountability, standardization, and governance.
These dynamics help explain why traditional, top-down change management often falls short in medical groups. Supporting physician readiness for change requires an approach grounded in trust, transparency, and shared leadership.
Understanding Physician Readiness for Change: A Predictive Lens for Successful Change Adoption
When significant change is on the horizon—especially change affecting leadership roles, compensation structures, or accountability expectations—organizations often move through the entire design phase and only begin thinking about change management once implementation planning is underway. But effective change management should begin much earlier. A change readiness assessment conducted during the design phase, well before implementation planning begins, helps leaders understand how physicians are likely to experience the change and what they will need to adopt it successfully. This early insight prevents unvalidated assumptions from becoming embedded in downstream plans, timelines, and messaging. A structured change readiness assessment conducted early—while the medical group is still defining the change, shaping the future-state model, and making key design decisions—helps leaders understand the realities that will influence physician adoption before implementation plans are locked in. Change readiness assessments enable medical groups to:
- Identify risks that could slow adoption or fuel resistance
- Understand lived experience, including workload, culture, and competing demands
- Tailor communication and engagement strategies while designs remain flexible
- Support leaders intentionally, with attention to alignment, capability, and sponsorship
- Sequence the rollout realistically, reflecting operational and cultural dynamics
This shifts the mindset from “How do we implement?” to “What will it realistically take to adopt this?”
A Structured Lens for Understanding Change Readiness
A comprehensive change readiness assessment examines the key dimensions that influence physician adoption of change, such as the clarity of the case for change, leadership alignment, sponsorship strength, cultural norms, operational preparedness, workforce capability, and stakeholder sentiment.
Different medical groups may use different frameworks, but the objective is consistent: identify where momentum exists, where skepticism is likely, and what barriers must be addressed to support physician adoption of the change.
What Physician Readiness for Change Reveals in Practice
During a recent medical group initiative to clarify leadership roles and redesign compensation, several change readiness themes emerged:
- Unclear or mistrusted rationale: Physicians questioned whether the redesign was strategic or primarily financially driven, influenced by past initiatives where the stated purpose did not fully align with the underlying intent.
- Fragmented leadership alignment: While executives were aligned, downstream leaders held varying interpretations.
- Accumulated fatigue: Physicians described a long series of changes, often experienced as additive rather than supportive.
- Limited sponsorship: Advocacy concentrated among a small number of leaders; influential physicians were not yet engaged.
- Operational uncertainty: Practical questions around timelines, transitions, HR processes, and impact on physicians generated anxiety.
- Capability gaps: Medical group leaders expressed concern about whether physicians would have the skill sets needed for the redesigned leadership roles; identified gaps included change leadership, financial acumen, and performance management.
- Organizational friction: A long-standing culture of autonomy at the organizational leadership level often slowed approvals and progress. This had complicated previous efforts to strengthen consistency and accountability.
These findings did not indicate that the change should slow; they clarified what would be required to implement it successfully. As one physician put it: “We’re not opposed to change. What’s hard is when it feels like the rationale is unclear or the expectations shift without explanation.” Change readiness work gives leaders a way to see and address these dynamics before implementation planning begins.
Turning Change Readiness Findings into Mitigation Strategies
A change readiness assessment is most valuable when it informs a targeted, risk-based plan of action. The table below illustrates how insights into physician readiness for change can be translated into targeted mitigation strategies.
From Change Readiness Insights to Targeted Actions
Linking Change Readiness to an Effective Healthcare Change Management Approach
Once risks are understood, leaders must decide how to guide physicians through the transition. A useful way to structure this thinking is through three phases—Align, Equip, and Sustain—each of which can be tailored to the specific needs of physicians.
1. Align: Establishing clarity, unity, and trust
Physicians engage more readily when the purpose of the change is explicit, when expectations are transparent, and when clinical and administrative leaders speak with a unified voice. For change leaders, this means:
- Co-creating the case for change with physicians
- Ensuring alignment across system, hospital, and departmental leadership
- Communicating early about what is changing, and what is not
- Being explicit about how physicians can provide input and when decisions are fixed
This phase addresses change readiness gaps related to trust, clarity, and alignment—critical drivers of physician adoption.
2. Equip: Building physician capability and confidence to lead through change
Leadership expectations are evolving. Physicians are increasingly asked to manage teams, lead peers, make data-driven decisions, and navigate performance expectations. Preparing physicians to succeed requires:
- Leadership development tailored specifically to physician roles
- Guidance for high-stakes conversations and peer accountability
- Clear decision rights and governance structures
- Practical tools that reduce cognitive load rather than add to it
This phase addresses change readiness gaps related to capability, sponsorship, and new ways of working.
3. Sustain: Reinforcing new expectations through culture, systems, and follow-through
Change doesn’t stick because a plan was launched; it sticks because it is reinforced. Sustaining physician adoption involves:
- Monitoring behavior change, not just implementation milestones
- Highlighting early wins to demonstrate progress
- Clarifying how the change will be embedded in performance management and incentives
- Continuing to listen and adjust as physicians navigate the transition
This phase addresses change readiness gaps related to cultural norms, reinforcement, and operational consistency.
A Framework for Successful Change: Align, Equip, and Sustain
Successful Change Begins with Ensuring Physician Readiness for Change
Health care is entering a new era—one characterized by accelerated transformation, heightened expectations, greater need for accountability, and the increasing centrality of physician leadership. In this environment, physician readiness for change is not simply a step in the process. It is the foundation for whether a change will succeed. A strategy can be analytically sound and operationally precise, but it becomes real only when physicians understand it, trust its intent, and feel equipped to lead through it. Taking time early to understand physician change readiness, openly, honestly, and without assumptions, enables a different kind of change:
- One grounded in partnership rather than compliance
- One focused on transparency rather than ambiguity
- One shaped through dialogue rather than directives
- One that respects the realities of physicians and responds to what they need to navigate transition successfully
As a physician leader shared during a recent transformation:
“I can adapt to almost anything. What I need is to feel respected in the process.”
Ultimately, that is the promise of investing in physician readiness for change. It builds an environment where physicians can lead confidently, where patients benefit from more aligned teams, and where organizations strengthen their resilience, not just for this change, but for the next one and the one after that. When medical groups commit to understanding physician readiness early and deeply, they are not just preparing for a single initiative. They are building their long-term capacity to change well—again and again.
Frequently Asked Questions
What is physician readiness for change?
Physician readiness for change refers to the multifaceted state in which physicians not only **agree** with an upcoming transformation, but feel **equipped, motivated, and supported** to participate and lead in it. It includes understanding the rationale behind the change, believing in the credibility of the sponsoring leadership, perceiving how their own roles and workflows will shift, and having access to the skills, tools, and decision-rights needed to operate effectively in the new model. When physicians are ready, they move beyond skepticism or passive compliance to active engagement and ownership of the change process.
Why is readiness for change so important in today’s health care environment?
The health care environment is under intense pressure: margin compression, clinician workforce shortages, rising patient acuity, value-based care models, and rapid digital innovation all demand operational agility. Physicians increasingly serve not only as caregivers but as leaders of transformation. In such a context, a strategy—even a well-designed one—can fall short if physicians are not prepared to adopt it. Readiness is the difference between a plan that is executed and one that stalls. Without readiness, change initiatives risk resistance, slow uptake, wasted resources, and sub-optimal outcomes in both clinical operations and enterprise goals.
How is readiness different from basic physician “buy-in”?
“Buy-in” traditionally focuses on whether physicians agree or consent to a change initiative’s goals or vision. Readiness goes further. It probes whether they understand how **their daily work** will differ, whether they trust the leadership and decision-making process, whether they perceive adequate support (time, training, tools) and whether the organization has addressed practical and emotional concerns (workflow disruption, identity, loss of control). In short: buy-in asks “do you support it?”; readiness asks “are you prepared to act on it, and will you succeed?”.
Why do physicians experience organizational change differently?
Physicians bring a unique combination of clinical autonomy, professional identity, evidence-based mindset, and often high personal workload. They are frequently asked to lead or participate in change while continuing intense clinical commitments. Changes that affect their role, compensation, workflow or decision-making can feel deeply personal. Moreover, physicians often rely more heavily on peer influence and trust in clinical leadership than on formal project communications. Because of these factors, what may seem like a straightforward operational change to administrators may be perceived by physicians as a threat to identity, autonomy or patient care. Recognizing and designing for that difference is essential.
What is a physician change readiness assessment?
A physician change readiness assessment is a systematic diagnostic process undertaken before major implementation begins. It involves leader interviews, physician focus groups or surveys, workflow analysis, and often a review of past change initiatives to identify strengths, friction points, trust levels, cultural norms, leadership alignment, resource sufficiency, and perceived risk. The goal is to uncover *how physicians will experience the proposed change*—what motivates them, what worries them, what support they’ll need—and to shape the design, timeline, communications and leadership model accordingly rather than retrofitting solutions after resistance appears.
When should organizations perform a readiness assessment?
The optimal window for a readiness assessment is early in the transformation lifecycle—after an initial strategy has been defined but before detailed implementation plans, timelines, roles, incentives and communications are locked. This timing allows the organization to refine the model based on real physician feedback rather than trying to retrofit engagement afterward. Waiting until implementation is underway often leaves little flexibility to address fundamental barriers and increases the likelihood of delays, cost overruns, or physician disengagement.
What areas does a readiness assessment typically examine?
A comprehensive readiness assessment typically evaluates multiple dimensions, such as: (1) clarity and credibility of the case for change—Do physicians understand why change is needed and trust the rationale? (2) Leadership alignment and sponsorship—Are the physician leaders visible, committed, and aligned? (3) Cultural readiness—Does the existing culture support collaboration, accountability, data-driven decisions, and change? (4) Operational readiness—Are the systems, workflows, staffing and technology prepared to support the transition? (5) Capability and capacity—Do physicians and their teams have the skills, time and resources to lead or adapt to change? (6) Physician sentiment and risk perception—What are physicians’ attitudes toward the change, what do they see as the risks, and how likely are they to resist or accept? The insights gained inform tailoring of the implementation plan to address real barriers and boosters.
What risks can be uncovered during a readiness assessment?
Key risks revealed by readiness assessments often include: mis-alignment between senior leadership messages and frontline physician experience (leading to mistrust), change fatigue (due to previous unsuccessful initiatives), unclear or shifting timelines and accountabilities, inadequate visibility of physician sponsorship, insufficient training or decision-rights for physicians, workflow disruption concerns, and fears that quality or autonomy will be compromised. If left unaddressed, these risks can manifest as passive resistance, slower adoption, increased cost, compromise of clinical operations, and lower morale.
How can organizations turn readiness insights into action?
Turning readiness insights into action requires using the assessment findings to refine the change plan. Actions may include: altering the sequence or pacing of rollout; adjusting job and decision roles for physicians; fine-tuning communications to speak to physician concerns; strengthening visible sponsorship and peer champions; allocating training and support resources where gaps were identified; redesigning incentives to align with the desired behaviors; and setting up feedback loops and metrics to monitor uptake and address issues during implementation. Essentially, those insights become the foundation for a more realistic, credible and physician-engaged transformation model.
What is the Align, Equip, and Sustain framework, and how does it support change?
The Align, Equip, and Sustain framework offers a structured way to lead physician-oriented transformation: Align – Ensure clarity of the strategic vision, unify leadership messaging, build trust and establish the case for change. Equip – Provide physicians with the tools, decision rights, training, time and resources needed to lead or adapt; clarify how workflows and roles will change. Sustain – Embed the new model through performance management, incentives, peer networks, ongoing leadership sponsoring, and continuous feedback loops so the change becomes part of the sustained culture rather than a one-off program. By moving through these phases, organizations create a stronger foundation for lasting adoption rather than short-lived compliance.
What long-term value comes from strengthening physician readiness?
Organizations that invest in physician readiness build a culture of partnership rather than directive change—they reduce the risk of costly failed rollouts, increase physician engagement, and accelerate adoption of strategic initiatives. Over time, this readiness becomes a capability: the institution is better prepared for successive waves of transformation, maintains higher physician morale, improves patient outcomes through more aligned teams, and preserves agility in a fast-changing health care market.
Administrative Function Centralization: A Balanced and Strategic Approach
Organizational design has emerged as a critical lever of transformation in today’s dynamic health care environment.
Are your administrative functions structured to enable performance, efficiency, and sustainability?
Administrative functions – such as Finance, Human Resources (HR), Information Technology (IT), Legal, Marketing, and Supply Chain – play a crucial role in driving operational success. These enterprise-level services, while not directly clinical, are part of the infrastructure that enables frontline care delivery. Over the past several years, health systems have been adapting these functional areas to be more efficient and effective. This is where deploying the ideal mix of administrative function centralization and decentralization can play a pivotal role.
First, it’s important to define what this means:
Very few systems are completely centralized or decentralized in their deployment of resources. In fact, many are starting to embrace hybrid models tailored to the unique needs of their organizations. We’ll describe the rise of hybrid models later in this article.
Organizations with a higher degree of centralization are typically characterized by:
- Unified reporting to a single leader (e.g., CHRO, CFO) with clear governance and centralized decision-making
- Standardized processes across entities
- Common technology platforms for data management and performance tracking
Conversely, functions with a greater degree of decentralization may be locally led and governed with more autonomy at the business-unit or facility level – resulting in more process variance and possibly quicker decision-making. As such, larger health systems with multiple hospitals or care sites may have a greater opportunity to centralize compared to their smaller counterparts or single-hospital systems.
WHY STRUCTURE MATTERS: THE CASE FOR REASSESSMENT
The question is no longer whether to centralize or decentralize, but how to align organizational design with strategic intent. A shift in operating model – particularly how administrative functions are structured – can unlock performance, reduce costs, and enhance responsiveness.
According to SullivanCotter’s Workforce Metrics Benchmark Database, many systems have already undertaken some administration function centralization initiatives. This analysis looked at five critical administrative functions – HR, Finance, Marketing, IT, and Legal – and categorized organizations as ‘centralized’ when a larger majority of employees (greater than 70%) in each function report to the head of that function. While the data shows that HR is typically the most centralized function, few systems achieve full administrative function centralization across all shared services. What emerges is a landscape of hybrid models that combine centralized and decentralized components depending on functional needs and organizational complexity.
Your organization’s circumstances are unique, and it’s important to keep those in mind when evaluating the right framework and appropriate level of administrative function centralization. Lotis Blue, a leadership development and organizational design company, has a unique operating model framework that is purposefully neutral. This helps to guide health care organizations through diagnostic and design processes that are informed by behavioral science, stakeholder feedback, and comparative benchmarking.
Rather than default to centralization, the process asks:
- What strategic health care goals are driving the change?
- Where is health care value created—speed, innovation, access, quality, or cost?
- What does the data say about function performance and alignment?
- What health care structures enable better decision rights and governance?
By focusing on intentionality, the framework helps avoid the trap of simply “moving boxes” around on the org chart without addressing deeper structural and cultural misalignments.
ONE SIZE DOESN’T FIT ALL: THE RISE OF HYBRID HEALTH CARE MODELS
For most organizations, the decision to centralize or decentralize health care systems is not a binary choice. It usually requires a more tailored solution that only hybrid models can provide. Administrative functions don’t all need to follow the same path.
For instance:
- Centers of Excellence centralize expert work (e.g., Total Rewards)
- Shared Services Hubs support high-volume, repeatable processes
- Local teams stay embedded to preserve agility and cultural alignment
Garrett Sheridan, CEO of Lotis Blue, notes that academic medical centers, for example, may pursue full integration — centralizing brand, leadership, and operations — while retaining certain decentralized clinical programs for strategic reasons.
That’s why it’s important to consider key design criteria specific to your health care organization. When redesigning your operating model, the following questions are critical:
- Are you over- or under-invested relative to peers?
- Is there duplication across business units?
- Are spans and layers aligned to decision speed and clarity?
- What is your appetite for standardization vs. flexibility?
- Does your health care technology infrastructure support shared workflows?
Before proceeding, however, it’s important to understand the benefits, pitfalls and common challenges to manage the relationship between change and risk. While a higher degree of administrative function centralization may offer measurable cost benefits, organizations should be wary of making sacrifices that may undermine clinical performance and outcomes. Making changes to an operating model purely to drive down cost by consolidating resources without evaluating implications for clinical efficiency and effectiveness can lead to unintended consequences that jeopardize the internal stakeholder service
experience and quality of care.
Data from SullivanCotter’s Workforce Metrics Benchmark Database highlights the following:
- A higher degree of administrative function centralization may enable a more streamlined management structure. Management teams in centralized structures are up to 28% smaller.
Percent of Total Workforce Headcount
Illustrative Example
- Greater administrative function centralization may yield fewer FTEs and lower workforce cost. Finance workforce costs average $41.89 per $1,000 of payroll in centralized systems vs. $48.55 in decentralized systems – a 16% difference.
Workforce Cost
Per $1,000 of Organization Base Payroll
- As health system management structures become streamlined, spans of control widen as each executive, leader, or manager has more direct reports. Wide spans of control are a sign of management efficiency, tied to more autonomy and less bureaucracy.
Average Number of Direct Reports by Career State
Illustrative Example
However, there are other benefits realized by health systems that choose a more decentralized structure. Cost should not be the only consideration. Decentralization may promote responsiveness, innovation, and deeper alignment with community needs, particularly for rural or regionally distinct entities.
For example, consider an Onboarding sub-function that may have a small, centralized team focused on building capability, establishing standard processes, and providing governance and oversight – but has a larger team deployed in a decentralized manner to perform work and deliver services closer to internal stakeholders.
In circumstances like these, a more decentralized onboarding process may help to:
- Reduce bottlenecks by preventing slowdowns caused by over-reliance on central decisionmaking structures (critical in hiring to move quickly).
- Enhance customer focus through localized decision-making. This allows for more tailored approaches and greater responsiveness to specific clinician/patient/facility preferences.
- Increase innovation as teams close to the problem can experiment more freely, driving creativity and improving the quality of solutions to local problems.
Evaluating when a centralized or decentralized model is best is especially important during times of growth or change. A focused review is always appropriate when systems navigate mergers, acquisitions or strategic shifts. Careful consideration of the operating model is warranted when the size of the function is larger than comparators of a similar size and shape, processes vary by facility, by employee, or by patient population, or the growth of the function approaches or exceeds that of clinical staff.
Additionally, understanding where value is created can be instrumental in building the right operating model. Is the value of a new model derived from improved speed and responsiveness? Are there areas where enhanced internal stakeholder or patient focus is critical? Does the function need to create higher levels of innovation? Is creating greater cross-functional teams an important clinical value driver?
STRUCTURE FOLLOWS STRATEGY
Administrative function centralization is not a destination; it’s a design choice. Done well, it can unlock performance, reduce inefficiency, and enhance value. But success lies in choosing the right model based on strategy, not trends.
Combined, SullivanCotter’s industry-leading workforce data and benchmarks and Lotis Blue’s behavioral insights and operating model expertise help health systems navigate these decisions with clarity and confidence.
Frequently Asked Questions
What is administrative function centralization?
Administrative function centralization is the process of consolidating support services—such as Human Resources, Finance, IT, Legal, and Marketing—under a unified structure rather than having them dispersed across multiple departments or business units. This approach allows organizations to standardize processes, reduce duplication, and create more consistent enterprise-wide performance.
Why should a health system reassess its administrative structure?
A well-aligned administrative structure can significantly influence how effectively a health system executes its strategy. Reassessing structure helps ensure that decision-making, accountability, and resource allocation support organizational goals. In many cases, redesigning these functions leads to improved efficiency, reduced cost, and stronger alignment with the health system’s mission and growth plans.
What are the benefits of centralizing administrative functions?
Centralization can deliver measurable value through economies of scale, process consistency, and reduced administrative cost. For example, SullivanCotter’s benchmark data shows that centralized HR functions often operate with lower workforce costs and broader management spans. It also enhances transparency, enables better data integration, and can improve service quality across sites.
What are the risks or trade-offs of centralizing too much?
Excessive centralization can limit flexibility and responsiveness, particularly for local or facility-specific needs. When functions become too distant from operational leaders, it may slow decision-making or reduce innovation. The goal is to centralize where it creates efficiency and consistency, while maintaining local input where agility and service customization matter most.
What is a hybrid model of administrative design?
A hybrid model blends centralized and decentralized elements. For instance, shared service centers may handle transactional tasks, while business units retain decision-making authority over strategic or customer-facing work. This approach leverages efficiency while preserving autonomy, making it the most common structure among leading health systems today.
How do organizations determine the right balance of centralization and decentralization?
The “right” balance depends on each organization’s strategic priorities, operating model, and performance goals. Leaders should assess factors such as cost, service quality, decision speed, and where value is created. SullivanCotter recommends data-driven diagnostics, benchmarking, and stakeholder interviews to determine which functions to centralize and which to localize.
Which administrative functions are most often centralized in health systems?
According to industry benchmarks, Human Resources is typically the most centralized function, followed by Finance and IT. Marketing and Legal often remain more decentralized, reflecting the need for localized brand management or specialized legal oversight. However, every organization’s mix varies based on its structure and strategic objectives.
How should an organization begin a centralization or redesign initiative?
Start with a current-state assessment that examines spans of control, role duplication, service delivery metrics, and workforce cost. Then develop a phased roadmap that aligns structure changes with broader strategic initiatives. Engaging leaders and employees early helps build support and ensures smoother implementation.
Does centralization always reduce costs?
Not necessarily. While centralization can reduce redundancy and lower administrative expense, it must be thoughtfully executed to avoid service degradation or bottlenecks. True cost optimization balances efficiency with the ability to meet the organization’s operational and clinical priorities effectively.
What factors unique to healthcare systems affect administrative design?
Health systems often manage multiple hospitals, clinics, and physician groups—each with different community needs, governance models, and reimbursement pressures. These complexities require tailored approaches to centralization that preserve local autonomy while supporting enterprise goals such as quality, compliance, and patient experience.
VIDEO | Developing clinical leadership incentives
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While physicians are mission-critical to achieving system-wide performance goals, clinical leadership incentives and enterprise-level metrics are not always in alignment.
Join SullivanCotter’s Mark Ryberg as he discusses how to bridge this gap when developing incentive plans for clinical leadership by:
- Tailoring compensation plans as close to enterprise performance incentive plans as possible
- Implementing effective tools and technology to adequately measure and report performance
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JAAPA | A Blueprint for NP and PA Leadership
It’s time to establish and framework for NP and PA leadership…
Take a health systems science approach with insights from our experts!
As published in the Journal of the American Academy of Physician Assistants
NP and PA leadership plays a critical role in shaping the future of healthcare.
This article highlights how nurse practitioners (NPs) and physician associates (PAs) are stepping into key leadership positions to influence clinical practice, mentor care teams, and improve patient outcomes. Through strong communication, collaboration, and advocacy, NP and PA leaders are driving innovation and elevating standards of care across diverse health care settings.
As health care systems evolve, empowering NPs and PAs with leadership opportunities has become more important than ever. The article examines effective strategies for developing leadership skills, fostering interprofessional respect, and ensuring that advanced practice providers have a voice in decision-making. Readers will gain insights into how NP and PA leadership strengthens organizations, enhances care delivery, and inspires the next generation of health care professionals.
Need more information?
Abstract: Physician associates (PAs) and nurse practitioners (NPs) are vital members of the health care team. Increasing opportunities for leadership roles have emerged for PAs and NPs in the past decade. PAs and NPs often utilize other health professions’ frameworks for leadership, but no framework exists for PAs and NPs specifically. This article examines existing leadership structures and proposes a leadership framework specifically for PAs and NPs through the health systems science lens.
Authors: Will, Kristen PhD, MHPE, PA-C; Marbach, Justine BS; Buckler, Lacey DNP, ACNP-BC, FAANP; Hartsell, Zachary DHA, FACHE, PA-C; Grubb, Bethany PhD, MPH, PA-C; Essary, Alison DHSc, MHPE, PA-C
Looking for a summary?
Between 2010 and 2017, the physician associate (PA) and nurse practitioner (NP) workforce doubled and is projected to grow another 25% to 35% in the next decade. As key providers of patient-centered care, PAs and NPs help address the challenges of an aging population, physician shortages, and issues worsened by COVID-19, such as burnout and care disparities. Increasingly, they also serve in leadership roles within healthcare systems – 65% of organizations now have a PA or NP leader, though they represent only about 2.6% of the total workforce compared with 5% of physicians.
These leaders bring a unique clinical and administrative perspective that can reduce turnover and strengthen team performance, but research and leadership frameworks tailored to their professions remain limited. To keep pace with workforce growth and evolving healthcare demands, PAs and NPs must expand their leadership skills and adopt frameworks designed specifically for their roles, such as those based on health systems science (HSS).
Beckground
The American Academy of Physician Associates (AAPA) and the National Organization for Nurse Practitioner Faculties (NONPF) each define professional competency frameworks for physician associates (PAs) and nurse practitioners (NPs). While both emphasize clinical practice and patient care, the frameworks differ in scope. The AAPA’s PA competencies focus primarily on patient care and education, with leadership only indirectly referenced through attributes like professionalism and collaboration. In contrast, the NONPF’s NP competencies extend beyond clinical practice to include research, systems thinking, and leadership.
Overall, NPs have a clearer foundation for leadership development embedded in their professional standards, while PAs lack a formal leadership framework. This gap highlights the need for PA-specific leadership competencies and structured training pathways that align with their expanding roles in modern healthcare.
Previous Research
Although leadership among physician associates (PAs) and nurse practitioners (NPs) has been studied in various contexts, there is still no agreed-upon framework tailored to these professions. Research on PA leadership has explored areas such as postgraduate and global health training, but studies have not produced a standardized model for leadership development. A 2021 study found that while leadership effectiveness and competency were correlated, neither was linked to lower burnout or influenced by formal leadership training, suggesting that burnout remains a persistent issue regardless of leadership preparation.
For NPs, more research exists on leadership competencies, with studies identifying four key domains—clinical, professional, health systems, and health policy leadership—though no unified framework has been established. Recent insights from healthcare executives indicate that PA and NP leadership roles are becoming increasingly diverse and strategic, extending from daily clinical management to broader system-level responsibilities in areas such as population health and organizational strategy. This growing complexity underscores the need for a standardized, profession-specific leadership framework for both PAs and NPs.
Health Systems Science Leadership Framework
Health systems science (HSS) is the study of how healthcare is delivered, how professionals collaborate, and how systems can improve care, emphasizing systems thinking and continuous learning. Within this framework—recognized as the “third science”—leadership is a core domain encompassing both self-leadership and leading others, offering PAs and NPs a practical, integrated pathway for effective leadership in advanced practice roles. Within this domain, there are two main components:
- Leading Self
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PAs and NPs already demonstrate strong intrapersonal leadership skills—such as professionalism, service to others, and pursuit of excellence—through their clinical work with patients, families, and healthcare teams.
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Leading self involves developing emotional intelligence, self-awareness, and self-control, which are essential for effective leadership and can be applied beyond clinical settings to administrative or managerial roles.
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The character-based leadership model highlights additional key traits for PA and NP leaders, including courage, integrity, selflessness, empathy, collaboration, and reflection.
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Leading Others
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In addition to self-leadership, HSS leaders must develop skills for leading others—including team leadership, communication, influence, systems thinking, and vision execution—often supported by formal training, executive coaching, and mentoring.
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As PAs and NPs progress from leading self to leading others, they leverage their clinical experience to guide teams through mutual respect, clear communication, and role clarity; developing these skills—along with mentoring and coaching others—is essential for building strong, high-performing healthcare teams within the HSS leadership framework.
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As PAs and NPs advance into higher leadership roles, they must develop advanced communication and influence skills—advocating for others, handling difficult conversations, and navigating complex organizational dynamics—since influence is a key form of leadership power within healthcare systems.
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Executing a vision is a key responsibility for system-level PA and NP leaders, involving developing strategy, shaping culture, and sustaining progress; while some may have natural aptitude, mentorship and training are essential to cultivate these skills as more PAs and NPs are called to lead organizational vision and strategy within healthcare systems.
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Conclusion
As PA and NP leadership roles expand, adopting the Health Systems Science (HSS) framework offers a structured approach for developing essential leadership skills and integrating them into professional training and competencies. Continued investment in leadership education, research, and professional development will be crucial to support the growing influence and responsibilities of PAs and NPs in healthcare leadership.
