Budgeting medical practice staff cost-of-living, merit increases for 2025

As inflation cools but competition for healthcare workers remains intense, most medical group practices expect to budget similarly for 2025 cost-of-living and merit-based pay increases.

A Sept. 10, 2024, MGMA Stat poll found about 35% of practice leaders expect to budget more than usual to keep pay competitive in the current labor market, while half (50%) will budget around the usual amount for the annual update and only 15% say they are budgeting less than normal. The poll had 352 applicable responses.

The latest poll’s findings indicate a continued normalization of staff compensation, following years of wage increases driven by rapidly rising consumer prices and heightened competition for workers:

• A similar poll from December 2021 found half of medical practices budgeted more than usual for 2022 cost-of-living increases.
• A summer 2022 MGMA poll found that more than six in 10 practices planned 3% to 5% cost-of-living or merit increases for support staff in their 2023 budgets, lower than some of the bigger increases seen for 2022.

When asked which staff roles are expected to see the largest cost-of-living or merit increases in next year’s budget, practice leaders frequently mentioned billing staff, medical assistants (MAs), front desk staff and, in larger organizations, housekeeping, food service and environmental services workers.

• Among practice leaders offering a set increase to all staff, the median increase planned for 2025 was 3.25%.
• For respondents who noted front desk staff compensation specifically, the median budgeted increase for 2025 is 4.5%.
• For MA and nurse practitioner (NP) roles, the median increase planned was 5.5%.
• The median budgeted increase for other nurse and advanced practice provider (APP) roles was 5%.
• Several respondents noted that their higher than usual budgeted increases were a response to minimum wage hike legislation taking effect this year.

Learn more in MGMA DataDive

Since 2021, MGMA has released annual data reports providing guidance on industry shifts alongside benchmarks from the MGMA DataDive Management and Staff Compensation survey, offering context on how outpatient and ambulatory care leaders have adjusted and innovated in human resources, operations and finance within their practices.

As detailed in the MGMA 2024 summary data report, the latest Management and Staff Compensation survey data set — including data on more than 171,000 management and staff positions — shows:

• Median total compensation for medical assistant (MA) positions grew 3.26% from 2022 to 2023, with five-year median compensation growth for MAs just above $7,400.
• Median total compensation for registered nurses (RNs) hovered just under the $80,000 mark in 2023.
• Management positions — executive, senior and general — had a 6.95% increase in median total compensation in 2023.
• Median hourly rate compensation rose just $0.57 for MAs in 2023, while gains for certified nursing assistants ($1.61), patient care assistants ($2.15), RNs ($1.56) and licensed practical nurses ($1.19) generally kept pace with their respective total compensation increases.
• Benefits such as reimbursement and paid time off (PTO) hours for continuing education can help to support employee growth and assist with retention. In 2023, all staff and general management positions typically received two days (16 PTO hours) for continuing education, while executive positions averaged 3.4 days (28 PTO hours).

Download the full summary report for more benchmarks and insights.

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Do you have any best practices or success stories to share on this topic? Please let us know by emailing us at connection@mgma.com.