I normally run encounters 1 level above the baseline per tier from the core rules. This also happens to increase damage output from monsters, as well as their durability.
I like Rally as it is, as it pretty much allows to play without a dedicated healer necessarily.
What made a difference for me is when I started using the 'full heal-up' rules as they are written, so completely independent from the daily clock: it's every 4 battles (or when the GM says so) that the party gets a full heal-up, no matter how much they sleep in between. This doesn't make encounters more challenging per se, but it puts pressure on Recoveries management and adds tension to fights.