Budget season is here, and 2027 looks different from the last three years. After a long climb back from the pandemic, Fitch Ratings now warns that fiscal 2025 "may ultimately prove to be an operational peak" for nonprofit hospitals, and it expects federal Medicaid changes to begin materially affecting providers in 2027 [Healthcare Dive]. Labor is still the biggest line in that budget.
THE SHORT ANSWER
The five healthcare workforce trends that will shape 2027 labor budgets:
The common thread is visibility. Ringo helps health systems see internal and external labor, rates and vendor performance on one vendor-neutral platform.
We talk with health system CFOs, physician and APP recruitment leaders, and staffing firm executives every week. Here's what we see coming in 2027, the data behind each trend, and what to do about it before the budget is locked.
| Trend | What's driving it | Your 2027 move |
|---|---|---|
| 1. Medicaid cuts | $911B less federal Medicaid spending over ten years; thin margins | Know the fully loaded cost of every contract hour |
| 2. Physician and APP gaps | Up to 86,000 fewer physicians by 2036; NP jobs +41% | Budget locums and APPs as a standing line |
| 3. AI agents | AI use by contingent labor buyers nearly doubled in a year | Clean up program data before adding AI |
| 4. Internal resource pools | 128 of the 150 largest-metro systems run flexibility programs | Route every open shift to internal staff first |
| 5. Staffing transparency | State rate caps, registration laws and FTC noncompete warnings | See bill rates, markups and fees by supplier |
The 2025 federal budget law is the backdrop for every 2027 plan. The Congressional Budget Office estimates it will reduce federal Medicaid spending by $911 billion over ten years, and that its Medicaid changes alone will leave 7.5 million more people uninsured in 2034 [KFF]. Medicaid work requirements for the expansion population start January 1, 2027, and the largest financing changes follow from late 2027 on.
Hospitals are heading into that with thin cushions. Fitch puts the fiscal 2025 median operating margin for the nonprofit hospitals and health systems it rates at 1.5%, below every pre-pandemic year in its 20-year dataset [Healthcare Dive]. Kaufman Hall's calendar year-to-date operating margin index stood at 2.5% through June 2026 [Advisory Board].
THE BUDGET BACKDROP
Medicaid cuts meet thin hospital margins
$911B
Projected cut in federal Medicaid spending over ten years (CBO, via KFF)
7.5M
More people projected to be uninsured in 2034 from the Medicaid changes (CBO, via KFF)
1.5%
Fiscal 2025 median operating margin, Fitch-rated nonprofit hospitals and systems
2.5%
Year-to-date operating margin index through June 2026 (Kaufman Hall)
Sources: KFF (January 2026); Fitch Ratings via Healthcare Dive (August 2026); Kaufman Hall via Advisory Board (August 2026).
What it means for 2027: contract labor will get the same scrutiny as capital. Expect CFOs to ask for the fully loaded cost of every agency hour, by unit and specialty, and a reason it couldn't be filled internally. If that data lives in five places, the conversation goes badly. Our guide to managing healthcare labor spend covers where to start.
The physician shortage isn't going away. The AAMC projects a shortage of up to 86,000 physicians by 2036 [AAMC]. Advanced practice providers are filling more of the gap. The Bureau of Labor Statistics projects nurse practitioner jobs to grow 41% and physician assistant jobs to grow 21% from 2025 to 2035 [BLS, BLS].
WHERE THE PROVIDER GROWTH IS
Projected job growth, 2025 to 2035
Nurse practitioners
Physician assistants
Source: U.S. Bureau of Labor Statistics, Occupational Outlook Handbook.
Locum tenens is following the same path. CHG Healthcare's 2025 State of Locum Tenens report found organizations' actual locums use in 2024 ran 25% higher than they anticipated, and 46% of leaders use locums to prevent revenue loss [CHG Healthcare]. Staffing Industry Analysts expects locum tenens to grow 4% in both 2026 and 2027, the fastest of the healthcare staffing segments it forecasts [Staffing Industry Analysts].
What it means for 2027: budget for locums and APPs as a standing line, not an emergency fund. The cost that hurts most is the time a provider waits to start, so credentialing speed matters as much as bill rate. We break that down in our guides to APP staffing, locum tenens cost and credentialing automation.
AI has moved past pilots in contingent labor. In Staffing Industry Analysts' 2026 buyer research, AI adoption among enterprise buyers nearly doubled, from 18% in 2025 to 34% in 2026 [Staffing Industry Analysts]. The most common use, cited by 48% of buyers, is candidate screening or shortlisting [Staffing Industry Analysts].
AI IS MOVING FAST
Share of contingent workforce buyers using AI
2025
2026
Source: Staffing Industry Analysts, 2026 buyer research.
SIA also found a gap: 59% of high-maturity programs use AI, against 20% of lower-maturity ones [Staffing Industry Analysts]. That fits what we see. AI makes a well-run program faster. It doesn't fix a program with messy data, missing rates and requisitions that live in email.
What it means for 2027: before you buy AI, check what it will learn from. If the system ranking your candidates or suppliers is owned by a staffing agency, ask whose candidates it learned to prefer. Clean, vendor-neutral data is the starting point. See our take on AI in healthcare staffing.
Health systems are building their own flexible workforce. A Nurse.org review of the 150 largest-metro health systems found documented flexibility programs at 128 of them, and eleven run full internal staffing agencies [Nurse.org]. The math explains why. NSI data cited by Nurse.org puts the average annual cost of a travel RN near $190,000, against about $124,000 for a staff RN [Nurse.org].
WHY INTERNAL POOLS WIN
Average annual cost per nurse
Travel RN
Staff RN
Source: NSI Nursing Solutions data, cited by Nurse.org (August 2026).
The results can be large. In its 2024 results, Providence reported agency spending 70% lower than its 2022 peak [HealthLeaders].
What it means for 2027: the internal pool should see every open shift first, and agencies should compete for what's left. That only works when internal and external labor sit in one system with one view of cost. Our guide to running internal float pools and agencies as one program walks through how.
Regulators are paying closer attention to how healthcare staffing is priced and contracted:
What it means for 2027: buyers who can already see bill rates, markups and fees by supplier will adapt easily. Buyers who can't will be asked for that detail by finance, by auditors, and in some states by regulators. It's one more reason the company managing your suppliers shouldn't also be one of them. Our post on comparing MSPs for contract labor cost control lists the questions to ask.
The contingent market isn't collapsing or booming. Staffing Industry Analysts projects U.S. healthcare staffing to grow 1% in 2026 to $39.0 billion and 3% in 2027 to $40.1 billion [Staffing Industry Analysts]. Demand is steady, so the savings in 2027 come from how well you buy, not from the market getting cheaper.
2027 BUDGET CHECKLIST
Five moves to make before the labor budget is locked
STEP 1
Baseline fully loaded cost
Twelve months of internal and external labor cost by unit, specialty and supplier.
STEP 2
Make locums and APPs a line
Plan provider coverage as standing spend, with credentialing time built in.
STEP 3
Fix the data first
Get requisitions, rates and timesheets into one system before adding AI.
STEP 4
Internal first, then compete
Internal pool sees every shift first; approved agencies compete for the rest.
STEP 5
Demand rate transparency
Bill rate, markup and fee visible for every supplier and every invoice.
Each of these trends comes back to the same need: one honest view of your workforce. Ringo's VMS and MSP bring requisitions, credentialing, onboarding, billing and reporting into one platform.
Want a starting number for your 2027 plan? Try Ringo's savings calculator.
2027 will reward health systems that know exactly what their workforce costs and who is filling it. Medicaid cuts will tighten budgets, provider gaps will keep locums and APPs in demand, AI will speed up the programs that are already well run, internal pools will take on more shifts, and regulators will ask harder questions about staffing prices.
None of that requires a perfect forecast. It requires one view of internal and external labor, clear rates, and suppliers who compete on the same terms. Build that before the budget is final, and 2027's surprises get smaller.
Ringo is the leading vendor-neutral workforce management platform purpose-built for healthcare, bringing VMS, MSP, and flexible workforce programs together on one platform with no agency affiliations. Ringo earned a 94.2 overall satisfaction score in the KLAS 2025 First Look Report, with 100% of respondents saying they would buy again.
Five trends stand out: Medicaid cuts putting contract labor budgets under review, physician and APP shortages making locums and advanced practice providers a permanent tier, AI agents entering contingent workforce programs, internal resource pools becoming the first source of coverage, and new state and federal rules pushing staffing agencies toward transparency.
The CBO estimates the 2025 budget law will reduce federal Medicaid spending by $911 billion over ten years, and Fitch expects the changes to begin materially affecting providers in 2027. With margins already thin, hospitals are likely to scrutinize contract labor more closely and favor lower-cost internal coverage where they can.
Staffing Industry Analysts projects the U.S. healthcare staffing market to grow 3% in 2027 to $40.1 billion, with locum tenens growing 4%. Demand is steady rather than spiking, so a health system's costs will depend most on rate discipline, internal fill rates and how well suppliers compete.
The most common use in contingent workforce programs is candidate screening and shortlisting, cited by 48% of buyers in Staffing Industry Analysts' research. AI adoption among those buyers rose from 18% in 2025 to 34% in 2026, with mature programs far more likely to use it.
WHAT 2027 PLANNING LOOKS LIKE WITH RINGO
The CFO wants the 2027 contract labor number by Friday.
In most health systems, that request starts a scramble. Agency invoices sit in accounts payable, float pool hours sit in payroll, locum contracts sit with physician recruitment, and nobody has the same total.
With Ringo, internal and external labor, rates, markups and invoices live in one place. You can see spend by location, department and vendor, check which suppliers fill and how fast, and build the 2027 plan from your own numbers. Because Ringo owns no staffing agency, every supplier competes fairly.
The budget gets built on facts instead of estimates. That's why Ringo earned a 94.2 overall satisfaction score in the KLAS 2025 First Look Report, and 100% of respondents said they'd buy again.
See how Ringo can help you plan 2027 labor spend with one view of your entire workforce.