Mounting pressures pose navigation challenges for physicians in 2026

Medicare and Medicaid underpayments. The persistent shortage and associated costs of health care professionals. The price paid for preventable medical errors in relentlessly rising nuclear verdicts.

The pressures on health care providers aren’t abating much in 2026, and the sector can expect to see its resiliency further sapped as a result. Implementing longer-term strategies to manage the risks and bolster their positions will be paramount.

Here’s what to keep an eye on.

The increasingly complex financial environment

Even before Medicaid funding cuts in the 2025 federal budget reconciliation bill, Medicare and Medicaid underpayments were growing at a 14% annual pace. Long-suffering rural hospitals will be helped somewhat by the bill’s $50 billion rural health fund, but not enough to offset the broader pain of bill-related revenue losses. Another source of instability: commercial insurers’ three month-plus lag time in paying one in three inpatient claims.

Even as revenues are pressured, providers must contend with fast-growing operational and labor costs. Health care finances are bound to be further destabilized by federal policy shifts, including aggressive immigration enforcement, tariffs, and medical research funding.

There are no easy solutions. Restructuring and cost-cutting will be essential. Mergers, which started to pick up substantially in the latter part of 2025, are another form of rescue. Life sciences and pharmaceuticals dominated volume in the third quarter, and 15 hospital transactions also were announced, presaging a big pickup in dealmaking in 2026.

Also key to balancing risk will be a focus on robust enterprise risk management programs, paired with the right insurance solutions to minimize costs and advance the maturity risk curve.

Labor pains continue to sap health care’s vitality

No break is in sight to alleviate the pressures and risks of the worsening health care workforce shortage that’s creating critical gaps of care. By 2033, 1.6 million new positions will need to be filled, and a strategy of upping pay rates to attract people is not sustainable. By 2024, labor costs accounted for 56% of total hospital expenses as salaries grow 26.6% faster than inflation.

Any number of factors are contributing to this crisis, from burnout and stress, to the gap between high education costs and wage growth, to the aging of the workforce and the populations served.

The situation demands immediate, multi-faceted solutions. Maintaining — restoring — engagement must be a priority across the spectrum as disengaged health care workers are 1.7 times more likely to leave their jobs than those who are fully engaged. Other big risks are the high rate of workplace violence injuries in health care versus other industries and workers’ continuing mental health issues.

Personalized employee benefits that respond to individual needs and underscore employers’ commitment to the physical and emotional health of workers are a big component of the solution. This takes leveraging third-party platforms and tools like persona analysis to improve on benefits that deliver. Moreover, done right, they may also help repair a fraying connection between employees and their leadership, restoring the trust, loyalty and engagement that underly successful recruitment and retention.

The risk management challenge

Providers face mounting challenges related to allegations of negligence, litigation funding and its impact on social inflation’s impact on jury awards. These pressures account for ~10% of the overall Medical Professional Liability (MPL) costs.

In 2024 nearly 50% of the MPL underwriters raised their rates, according to the AMA. While there have been some recent effort at measured tort reform, these measures have been inconsistent across the U.S. With carrier consolidation expected to continue into the near future, proactive risk mitigation efforts are warranted.

The question is whether providers have put enterprise risk management programs in place that are strong enough to meet the formidable challenges threatening their long-term survival.

Preventable medical errors, for example, are a leading cause of death in the U.S., and outsized verdicts that exceed $10 million are keeping pace. The 50 largest verdicts in 2024 averaged $56 million, roughly double the 2019 average. On another front, the cost of a data breach in health care — averaging $7.4 million per incident — remains the highest of any industry.

These risk trends directly shape the insurance landscape. And it’s making underwriters increasingly selective, especially toward insureds with extensive claims histories or elevated risk portfolios.

The upshot: Medical professional liability premiums are likely to rise by as much as 15% in 2026. General liability and umbrella/excess liability, by as much as 20%. Affordable business interruption coverage may be difficult to secure. And cyber insurance for a sector that accounts for almost a quarter of all reported data breaches could rise another 10% in 2026.

But if underwriters are increasingly selective, they also are rewarding institutions that demonstrate strong risk management frameworks and robust governance with more favorable terms and lower rates.

An effective enterprise risk management plan integrates operational, financial and clinical insights to improve the ability to anticipate emerging threats and align strategic decision-making with resilience goals — and make success navigating the rocky road in 2026 that much more achievable.

Pete Reilly is the practice leader and Chief Sales Officer of global insurance brokerage Hub International’s North American healthcare practice. In this role, he directs and coordinates HUB’s healthcare planning, growth and strategic initiatives. He also works with other leaders and experts within HUB to develop and introduce proprietary products that will help healthcare organizations and providers across the care delivery spectrum.