Why 2026 is a reset year for U.S. health care

Patients are growing older, sicker and showing up with more comorbidities than they were before the COVID-19 pandemic. At the same time, hospitals and medical groups are still wrestling with thin margins, rising labor and supply costs, and a physician workforce that is in short supply.

Against that backdrop, artificial intelligence (AI) is moving from hype to daily workflow, and advanced practice providers (APPs) now account for 40% of employed clinicians.

Vizient’s 2026 State of the Industry Report describes this as a “reset” moment for U.S. health care: Old volume-based playbooks are colliding with new realities around access, staffing and technology.

To unpack what that means for physicians on the ground, Medical Economics spoke with Shannon Sims, M.D., Ph.D., FAMIA, chief product officer at Vizient, and Matthew Bates, M.P.H., managing director at Kaufman Hall.

They talk about why access has overtaken staffing as the defining operational challenge, how APPs are changing team-based care, and where AI is already giving physicians meaningful time back.

This interview has been edited for length and clarity.

Vizient’s report frames 2026 as a reset year for U.S. health care. What does that actually mean for how care is delivered? What changes are physicians likely to feel first?

Matthew Bates, M.P.H.: A couple of examples come to mind. First, I think we are moving from an AI hype cycle into AI as an addendum to our tools. Ambient listening and its ability to help generate notes are becoming mainstream. It is moving from a niche to really changing the way we practice, particularly in clinic and office settings.

Another major reset is the use of advanced practice providers (APPs). We have a physician shortage in this country, and we are not going to get out of that shortage anytime soon. APPs are increasingly being leveraged to fill that gap. Figuring out how to do that effectively and efficiently, and provide high-quality team care, is part of the challenge.

Shannon Sims, M.D., Ph.D., FAMIA: I would emphasize that what most physicians will see day to day is the use of AI tools to automate or reduce the burdens they feel. Ambient listening is the most common example. It reduces “pajama time” and evening documentation. That is well described.

There are also other tools around billing and coding, access and medication refills. I think physicians will see substantial improvement in their lives as those tools evolve. But they need to step out of their comfort zone and embrace them. If they do not, they risk falling behind and losing some of the relevance and ability to practice in the way they would like to.

The report notes that patients are sicker now than before the pandemic, yet mortality and hospital-acquired infections are down. What has changed to make this possible?

Sims: At Vizient, we have a tool we call the clinical database. About 1,500 hospitals send us all their inpatient discharges every month, and in that data, we have seen a substantial and real reduction in quality and safety events. That ranges from things like patient falls to surgical infections.

There is not one clinical or operational change behind it. I think two things are happening. First, there has been a lot of attention paid to quality and safety. Many of our hospital customers use our clinical database outputs as their “true north.” They report to the board. I have been at multiple board meetings in the past 12 months explaining how they can use our tools and the internal processes they are developing to support that quality journey.

Second, we are seeing policy incentives and penalties, and that tends to drive behavior too. So a combination of increased mission focus plus a mix of carrots and sticks has really moved the needle in my experience.

Bates: The other factor people need to keep in mind is that the population is aging. Adults 65 and older are the fastest-growing part of the demographics. These patients are older and often come with comorbidities.

We can now take care of many patients in lower-acuity settings, which is good, but the ones left in the hospital are definitely getting sicker. We see that in measures like the case-mix index going higher, meaning the patients who remain inpatient require more complex care.

The report projects that patients 65 and older will drive most of the growth in hospital use by 2035. How should physicians and practice leaders think about scheduling, coverage and service line strategy in light of that?

Bates: First, we need to be thinking about whether we are providing care to the right patients in the right setting. Procedures that used to be hospital-based are increasingly done in ambulatory surgery centers or in the office. We are finding ways to do home and virtual care. That is great.

But for those older patients coming in with comorbidities, I think one of the challenges we have as a health care system is that we have a lot of specialists, and we still have to figure out the “quarterback” model for multiple comorbidities.

If a patient has diabetes, a cardiac problem and now cancer, we have to manage all of those in combination. We cannot treat them as three independent diseases, because the drugs and treatments bump up against each other. That is going to require a new way of coordinating care, and we have to think about who the quarterback of that patient is. That is something we have to grow into.

Sims: There is that old saying in business that culture eats strategy for breakfast. In health care, I think access eats whatever strategy you have.

To meet the surge in the “silver generation,” you have to think about how you are going to get them into your facilities, how you are going to move them through efficiently, and then how you are going to move them on, whether that is to home or other post-acute settings.

Coming out of the pandemic, staffing was the number one issue our customers told us about. Now we are hearing that access is the No. 1 thing they are working on. To solve that, you have to embrace technology, new practice models like APPs and other nontraditional ways to boost access.

Your data show that total direct expense per employed provider is up approximately 6% between the third quarter of 2023 and the third quarter of 2025, yet margins are still thin. How is that showing up for physicians and practices on the ground?

Bates: In the report and in our quarterly Physician Flash Report, we are seeing costs rise faster than revenue.

Physicians and providers are working harder. They are more productive, seeing more patients and doing more. But what they are getting paid per unit of work — which we often think of as a work RVU — is not increasing at the same rate that costs are. So doctors are working harder, but what they make per unit of work is effectively going down.

The net result is that what it costs to support an employed physician — the subsidy or investment, if you will — is growing exponentially year over year.

We also have a physician shortage in this country. There are many specialties and geographies where we simply cannot find enough doctors with the right training to meet patient needs. That ties back to access challenges, but it also drives costs. If you cannot find anesthesiologists who want to work in your market, you are going to have to pay more to attract and retain that talent.

APPs now make up about 40% of employed providers. What does a healthy, well-run team of physicians and APPs look like in practice? What are some common ways that structure goes wrong?

Sims: It is analogous to moving higher acuity procedures out of the hospital when you can. You want to “decant” less complex patient care. You want your surgeons operating and your physicians focused on the most complex cases.

There is no magic ratio, but we see that practices with a good blend tend to get the most productivity from both their APPs and their physicians.

One interesting side note we hear in the field is that practicing at the top of license, which is what you want, does place an increased cognitive load on physicians if they are always seeing the most complex patients. That can be draining in a different way, so you have to be thoughtful about it.

You also have to make sure your APPs are practicing at appropriate levels of complexity. The old “extender” language is no longer appropriate, but you do want to avoid introducing inadvertent risk to them or to your organization.

Bates: The only thing I would add is that if you look ahead over the next five to 10 years, APPs — particularly nurse practitioners — are entering the workforce at about double the rate of doctors.

So not only is it 40% today, it will probably be half the workforce within the next decade. Figuring out effective, efficient models is not a nice-to-do. It is a must-do. Organizations that get there more quickly and build strong teams are going to come out ahead of those that struggle.

The report describes cost pressures around labor, drugs, devices and supplies as “evolving, not easing.” For smaller practices without a big corporate backer, what concrete moves from this analysis can realistically be implemented to stay solvent without simply asking clinicians to work longer or faster?

Sims: At Vizient, we spend a lot of time thinking about the supply side — everything from bandages to drugs to what a practice, ambulatory surgery center or clinic needs to support operations.

We offer software that targets smaller ambulatory practices. It lets you save money on the tools you use to order and manage procurement, and it gives you access to preferential contracting, so you get better pricing.

We also form coalitions. Practices can group themselves with others and get preferential pricing and other benefits like networking and shared expertise. That can help support your mission without putting all of the pressure on clinicians to do more.

The report notes fewer large hospital mergers and more targeted partnerships, such as surgery centers, urgent care and behavioral health deals. How does that change where patients are actually getting sent, and what should physicians pay attention to before joining one of these arrangements?

Bates: At the end of the day, the goal is still the same: to take great care of patients in the right setting.

We went through a divestiture period where Stark and anti-kickback rules pushed many physicians into employment and out of ownership roles inside health systems. Part of what is happening now is that physicians have opportunities to get back into being owners, often through ancillaries like surgery centers, urgent care and other sites.

But you have to understand who is in charge and who is calling the shots. What is the governance structure? If you sell your practice or enter a partnership with a payer or corporate entity, you need to make sure you are still going to be able to make the clinical decisions you feel are appropriate.

Otherwise, you may be ceding that power and control to a corporate entity that is physically far from where you actually provide care.

AI is projected to grow from roughly a $20 billion industry today to about a $100 billion market in health care by 2030. Where are you actually seeing AI reduce waste or give physicians meaningful time back today?

Sims: Ambient listening is the obvious “killer app” right now. We are seeing substantive improvements in physician time from tools that listen to the visit, draft the note and reduce after-hours documentation.

We are also seeing gains in revenue cycle — billing, preauthorization and similar tasks. Those improvements benefit physicians, who spend less time on that work, and they improve economic outcomes for their practices or health systems.

From a clinical care perspective, I am excited about solutions that provide clinical decision support in ways that really meet physicians where they are in their workflows. Increased access to research and best practices, chart summarization and automated responses to certain patient messages can all be powerful in improving day-to-day work.

The flip side is that AI has to be used responsibly. There always has to be a human in the loop. There is a lot of talk about autonomous solutions, and it will be interesting to see how that plays out. There is a part of me that wonders if it will be providers and their AI doing battle with payers and their AI.

For now, it is still health care. Everyone I talk to wants to use these tools, but they want to make sure that at the end of the day, a human is making the clinical decisions.

If you were advising a small physician group, what are the top signals they should watch to know whether they are on solid ground or drifting into risk?

Bates: Great patient care still matters, and it probably matters more than ever. That includes patient experience. We sometimes forget that “great care” is as much in the eye of the patient as it is in the clinical quality metrics.

Patient access is also critical. The data are very clear: if a patient has a new problem, whoever can see them in the next five days is probably going to get that care. Even if you have an established relationship, if you cannot get them in, they are going to go somewhere else.

That is especially true for commercially insured patients, who are critical to financial sustainability, particularly for independent practices. Medicaid patients will go wherever they can get in. We hope the finances will work so physicians can remain viable when treating Medicaid patients, but commercially insured patients really drive the economics.

So I would say: watch your clinical outcomes, your patient experience and your access metrics, especially for new problems and commercially insured patients. Those are key signals of whether you are on solid ground.

If you had to give physicians one practical takeaway from the report, what is the single most important thing they can do inside their own practice this year to stay viable as this reset plays out?

Sims: Embrace digital solutions that make sense. AI is the buzzword of the moment, but if you are not looking at some type of solution to help you document better or handle billing more efficiently, you are already behind.

You should be thinking about tools that can help with that, because they are going to be essential to being viable as we move forward.

Bates: I would combine that with access. I cannot repeat it enough: access, access, access.

We need to remember that, from a patient’s perspective, access means, “I got to talk to somebody who understood my problem and started the process.” If I am a potential surgical candidate for an orthopedic procedure, I may need an X-ray and other diagnostics first. From my perspective as a patient, access begins when those tests are ordered, not when the surgeon makes a final decision.

The same is true in cancer care. It might take a month to get to the specialist, but if you can get diagnostics done first, access is underway from the patient’s point of view. That will make a difference.

Is there anything we missed?

Sims: One thing I always say is that physicians go to medical school to do good, not to do paperwork. I am excited about the potential of these AI tools to return joy to medicine. That is a noble goal in itself, but it also translates into economic benefits.

A happier physician is likely to be more productive, provide better care and maybe extend their career. I would encourage physicians and the organizations that employ them to think not just about the next 12-month profit-and-loss statement, but about the longer-term joys and rewards of practicing health care.