Unpacking 2025 nurse compensation trends in medical groups

Nurse compensation in medical group practices has generally been on an upward trajectory in recent years. However, these practices have faced significant challenges in competing with hospitals and large health systems for nursing talent.

Larger organizations often offer higher wages and more robust benefits packages, which medical groups address through flexible spending, targeted retention bonuses and establishing unique practice cultures. 

A Dec. 17, 2024, MGMA Stat poll finds that 84% of medical group leaders report budgeting a larger increase (34%) or the same increase (50%) in nurse pay for 2025 as compared to compensation gains budgeted for 2024, while 7% say the coming year’s pay increase will be smaller than 2024’s increase, and 10% report no increase relative to last year. The poll had 256 applicable responses. 

• Across all respondents reporting some type of nurse pay increase, the median uptick for 2025 was 4%.
  • Among those reporting the same increase as 2024, the median increase was 3%.
• Among practice leaders who reported no budgeted increase compared to 2024 nurse pay levels, many cited having done larger compensation adjustments two to three years ago or an inability to raise compensation due to higher expenses this year.

Wage pressures in physician practices and outpatient settings are influenced by widespread nursing shortages, increased emphasis on preventive and outpatient care and the ongoing shift of certain healthcare services from hospitals to ambulatory settings. 

While hospitals often lead with higher pay and more comprehensive benefits, ultimately medical group practices are steadily increasing compensation and offering non-monetary benefits to remain competitive.

Why do these conditions exist?

The well-documented nursing shortage  is fueled by several factors: 

• A large cohort of baby boomer RNs retiring or reducing hours after the pandemic disruption
• An insufficient pipeline of newly trained nurses to replace retirees
• Growing patient volumes due to an aging population with more chronic conditions
• Burnout, moral distress and dissatisfaction driving nurses to leave the profession or seek non-traditional nursing roles.

This shortage has driven wages upward across all healthcare settings.

Why hospitals typically pay more

Historically, hospitals have been the primary employers of registered nurses (RNs), setting the wage bar. Outpatient clinics initially lagged in compensation have gradually closed the gap as more healthcare services have transitioned to outpatient settings.

Hospitals and large systems maintain an advantage due to: 

• Deeper financial reserves and diverse revenue streams (e.g., inpatient admissions, surgical procedures, specialty care), allowing for higher wages. In contrast, smaller groups often operate on fee-for-service outpatient visits with tighter margins. Without proportional increases in reimbursement rates, they must balance wage hikes against other costs.
• Economies of scale for more comprehensive benefits: Larger systems can leverage more robust HR infrastructure to negotiate better rates on health benefits, retirement plans and more.
• Greater brand recognition, prestige and institutional stability: Hospitals’ broader brand recognition and higher reimbursement rates allow for greater resource allocation toward staff salaries.
• Clearer career advancement paths: Hospitals often provide formalized tracks for nurses to move into leadership or specialized roles. Smaller and independent medical groups typically operate on narrower margins and have less capital for significant wage increases. To compete, they emphasize non-monetary benefits such as:
• Consistent working hours (e.g., no overnight shifts)
• Lower-stress environments with greater patient continuity
• Personalized work environments with more autonomy and collegiality
• Work-life balance and opportunities for professional development tailored to nurse interests. 

With an increasing focus on preventive medicine and value-based care, rising demand for outpatient staff is pushing medical groups to improve compensation to attract and secure talent.

Root causes and structural underpinnings

Economic and policy context

Policies encouraging outpatient care, preventive medicine and chronic disease management in community-based settings are driving demand for outpatient nurses, increasing competition for talent among medical groups.

Labor market elasticity and recruitment strategies

To retain nurses, medical groups must compete with wage increases at hospitals but often face budget constraints. Instead, they offer perks like early closures on Fridays, educational stipends, supportive leadership, professional development (e.g., advanced procedure training) and more agile organizational cultures.

Cultural/generational shifts in the nursing workforce

Younger nurses may prioritize flexible schedules, mental health support and a work-life balance over the highest pay. This generational shift can benefit practices that emphasize these qualities, which are often harder to achieve in large hospital systems with rigid, high-stress shifts.

Value-based care, regulatory and accreditation considerations

As value-based reimbursement models continue to grow, quality and patient satisfaction metrics become more critical. Well-supported nursing staff contribute directly to these metrics, incentivizing medical groups to improve compensation and work conditions to attract top talent capable of maintaining high standards of care.

Accreditation standards and quality metrics often focus on patient satisfaction and quality of care. Medical groups seeking top-tier performance and patient ratings may invest more in nurse compensation or environmental improvements to attract nurses who can maintain high quality and patient satisfaction.

Economic inflation and cost-of-living adjustments (COLA)

Along with the pressures of cost-of-living adjustments, inflation remains steady (despite the U.S. consumer price index leveling off), eroding the real value of nursing salaries unless raises keep pace. Larger organizations with greater financial cushions can keep up, while smaller practices must adopt more strategic approaches.

Organizational behaviors and trends to watch

The culture of an organization significantly impacts nurse retention and recruitment. Medical group practices often have more control over their internal culture, using it as a competitive edge. This cultural differentiation can partially mitigate any compensation shortfalls.

But anticipating a persistent nursing shortage with a limited pipeline of newly trained nurses, as well as continued competitive pressure from hospitals and large systems, expect modest upward pressure on nurse salaries in medical group practices in the year ahead. While they may never fully match hospital rates, even smaller organizations will feel compelled to offer more attractive compensation packages.

Compensation is not solely about direct pay — it's a composite of the “total rewards” (base salary, benefits and bonuses), growth opportunities, working conditions, cultural fit, work-life balance and professional satisfaction. Outpatient practices are learning to use every lever available because they cannot rely on wage hikes alone.

Expect medical groups to continue experimenting with creative benefits, including:

• Flexible scheduling and guaranteed predictable hours
• Increased contributions to continuing education and professional development
• Wellness initiatives, mental health support and childcare stipends
• Partial student loan repayment or tuition assistance for nurses pursuing advanced degrees.

Technological integration and efficiency gains

By leveraging telehealth, EHR improvements, AI-enabled solutions and other workflow optimizations, practices may free up resources that can be redirected into compensation. Streamlining administrative burdens can also improve nurse job satisfaction, indirectly functioning as a retention tool.

Conclusion

Nurse compensation in physician practices is rising but still trails behind hospitals. These practices are employing various strategies beyond direct wages to remain competitive. Economic, systemic, psychological and organizational factors all play roles. 

Heading into the next year, modest wage increases, enhanced non-wage benefits and more strategic use of resources are expected. The reasons are deeply rooted in supply-demand imbalances, shifts in healthcare delivery, generational workforce preferences and broader economic conditions.