The physician job market is stabilizing. After years of crisis management focused on shortages, burnout, and staffing chaos, 2026 brings something different: structural solutions. AI tools are finally showing up to work, Congress is taking action on residency funding, and compensation models are evolving. The shortage hasn’t disappeared, but the path forward is clearer.
Updated Shortage Projections
The AAMC’s latest data projects a physician shortage of up to 86,000 by 2036. That’s an improvement from the 124,000 shortage predicted in earlier reports, but the gap remains serious. Primary care and rural medicine face the steepest deficits.
Congress introduced the “Resident Physician Shortage Reduction Act of 2025,” which would add 14,000 Medicare-supported residency positions over seven years. This is the first major legislative push in over a decade to expand physician training capacity.
Rural areas continue to struggle the most. Recruitment challenges that started during the pandemic have never really resolved. Hospitals in these regions are leaning heavily on locum tenens physicians to keep their doors open.
Agentic AI: The Real Game Changer for 2026
Last year, everyone talked about AI scribes and automation. For 2026, the focus shifts to “agentic AI,” which goes far beyond recording notes.
Agentic AI doesn’t just listen. It executes tasks. These systems can populate EHR fields, queue up orders for physician review, verify billing codes, and handle other administrative work that eats up 60% of a physician’s day. Investments in healthcare generative AI are expected to triple by 2026 as these tools move from pilot programs to daily operations.
Innovation in Action: How LADHS Facilities Are Leading
This isn’t just theoretical. Major facilities across Los Angeles are actively deploying these tools to close care gaps and support their workforce.
Los Angeles General Medical Center (LAC+USC): The facility is pioneering AI-assisted interventions for delivering precision screening, specifically for patients at risk for glaucoma. By leveraging machine learning and natural language processing (NLP), they are transforming safety incident reporting to improve equity and efficiency in care delivery.
Harbor-UCLA Medical Center: As part of the broader DHS network, Harbor-UCLA is utilizing expanded telehealth capabilities that were solidified through 2026. They are moving beyond simple video calls to integrated “digital front doors” that triage symptoms and route patients to the right level of care before they even step foot in the hospital.
The impact on burnout could be significant. Physicians consistently rank documentation burden as a top driver of declining mental health. If AI can handle the busywork, doctors can focus on patients.
Compensation Trends and Private Equity Moves
Financial trends for 2026 show two competing forces: modest government support and aggressive private sector consolidation.
The 2026 Medicare Physician Fee Schedule includes a positive payment update of roughly 2.5%, setting the conversion factor at approximately $33.57 for qualifying clinicians. It’s the first real increase in years, though it still trails inflation in most markets.
Private equity firms are buying up independent practices at an accelerating rate, particularly in ophthalmology, orthopedics, and gastroenterology. PE ownership of physician practices reached 6.5% by late 2024 and is expected to climb higher in 2026. Government oversight is increasing as regulators examine how these acquisitions affect patient care and costs.
From Burnout to Moral Injury
Physician burnout rates have dipped slightly from their 2022 peaks, but stress and anxiety remain high. The narrative is shifting from physical exhaustion to “moral injury,” the distress physicians feel when systemic barriers prevent them from delivering quality care.
One positive development: stigma around mental health is decreasing. Seventy-three percent of physicians now acknowledge that mental health stigma exists in medicine, down from over 80% previously. Hospitals are responding with better support systems and more open conversations about physician wellbeing.
Regional Gaps and Telehealth Expansion
The gap between urban and rural healthcare access continues to widen. Rural facilities that can’t recruit permanent physicians are turning to locum tenens coverage to fill gaps. Locum tenens usage is projected to grow 5% in 2026.
Telehealth flexibilities, including audio-only visits, have been extended through the end of 2026. “Hospital-at-Home” programs are becoming standard components of care delivery rather than experimental pilot projects. Remote monitoring technology is making it possible to deliver intensive care in patients’ homes.
What This Means for 2026
The outlook for physician employment in 2026 is cautiously optimistic. The acute shocks of the early 2020s are fading. Technology, policy updates, and new practice models are creating a more resilient healthcare workforce. The shortage remains real, but the tools to address it are finally arriving. For more information about physician employment please visit our job board.