Match Day

March 20, 2020

Photo by Leslie Walker

Every March, on Match Day, tens of thousands of medical students find out where they will continue their medical education as residents. The U.S. spends billions each year on those residencies, but as the coronavirus pandemic underscores the importance of our physician workforce, why aren’t we getting the doctors we need?

Listen to the full episode below, read the transcript or scroll down for more information.

The Basics: Graduate Medical Education

The federal government spends close to $20 billion a year to fund residency training programs, often referred to as graduate medical education (GME). Most of that comes from Medicare, which has been funding residency programs since its inception. Some, but significantly less, funding comes from other federal sources including Medicaid as well as state governments and private dollars. Medicare GME funding is based on a complex formula established in 1983, which introduced two streams of payment that exist to this day:
  • Pays for the “direct” costs of residency training such as resident salaries and benefits, faculty and staff salaries, and overhead costs of training program
  • Calculation includes: average cost per resident, number of residents, percentage of Medicare patients 
  • Pays for “the higher patient care costs of teaching hospitals relative to non-teaching hospitals”
  • Calculation includes: 5.5% reimbursement payment increases for every 10% increase in a hospital’s resident-to-bed ratio
  • Represents 70% of Medicare GME funding

The Problem

In 1997, Congress froze Medicare support for residency programs, locking in place the number of residencies that could be funded by Medicare. That decision has proven especially problematic for states that had fewer residency programs in the late 1990s but whose populations have since grown. Unable to get more federal support, many states have struggled to expand their residency programs and train a physician workforce that meets the needs of their populations. Data show that most doctors practice in the state they trained in.

States’ inability to produce the physician workforces they need can lead to delays in routine care, especially in rural and underserved communities, as well as long wait times for specialists. Research shows, for instance, that people who live in rural areas die younger from heart disease, cancer and stroke.

By the Numbers

Funding Distribution

$ 0 billion
annual federal GME funding¹
0 %
goes to programs in New York state²
0 %
amount received by 10 states combined²

Resident Distribution

0 %
of physicians practice in the same state where they train³

Physician Distribution

0 million
Americans live in areas with primary care provider shortages⁴
0 million
live in areas without adequate access to mental health providers⁴

The Solutions

In 2014, the Institute of Medicine (now the National Academy of Medicine) published a report stating that federal residency funding is not distributed fairly. To repair the system, the expert panel recommended simplifying the formulas and redistributing about 30% of Medicare funds to focus on primary care and high-need specialties. The experts also recommended greater transparency and accountability in how hospitals spend this money.

Several members of Congress have proposed measures to expand GME funding to address physician shortages and to bring more doctors to rural areas. The Trump administration has suggested simplifying the GME formula and better targeting funding to reflect the needs of different states. But these proposals have not gotten off the ground.

Given this lack of movement, some states have taken matters into their own hands. In addition to beefing up telehealth options and offering loan forgiveness to physicians who practice in rural areas, they are developing state-level strategies to expand and fund new residency programs. Those states and their strategies include:


Since 2013, the state of Georgia has invested about $20 million to build 27 new residency programs with the goal of having more than 600 new residency training slots available each year by 2025.


In 2018, the state of Idaho launched a 10-year plan to invest $124 million to more than double the number of residency programs in the state and almost triple the number of residents trained.


In 2020, the Texas legislature allocated $157 million to fund new residency slots, though the state has been investing tens of millions of dollars to expand residency training since 2013.


Redirecting how and where federal GME residency funding is spent could help many parts of the country close the gap on physician shortages, with data showing that the current system is inequitable and that most doctors practice where they train.

But growing residency programs alone will not solve physician shortage issues, especially in rural and underserved urban communities, and resident retention varies greatly across states. Some, like the Association of American Medical Colleges, argue that redistributing GME funding will reduce the cash flow to academic teaching hospitals and disrupt the training already happening there.

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Episode Resources

Select Research and Reports on Residency Funding:

Training Tomorrow’s Physicians: Recommendations for Expanding Graduate Medical Education Funding in California (Diane Rittenhouse, Alexandra Ament and Kevin Grumbach; California Health Care Foundation, 2020)

Changes and Variation in Medicare Graduate Medical Education Payments (Candice Chen, YoonKyung Chung, Stephen Petterson, et al; JAMA Internal Medicine, 2019)

Medicare Graduate Medical Education Funding is Not Addressing the Primary Care Shortage (Bruce Steinwald, Paul Ginsburg, Caitlin, Brandt, Sobin Lee and Kavita Patel; Brookings Institute, 2018) 

Physician Workforce: Locations and Types of Graduate Training (GAO, 2017)

Graduate Medical Education That Meets the Nation’s Health Needs (National Academies, 2014)

The Redistribution Of Graduate Medical Education Positions In 2005 Failed To Boost Primary Care Or Rural Training (Candice Chen, Imam Xierali, Katie Piwnica-Worms, and Robert Phillips; Health Affairs, 2013) 

The Geography Of Graduate Medical Education: Imbalances Signal Need For New Distribution Policies (Fitzhugh Mullan, Candice Chen, and Erika Steinmetz; Health Affairs, 2013) 

Other Resources:

The GME Initiative

The Role of GME Funding in Addressing the Physician Shortage (Association of American Medical Colleges)

Robert Graham Center

Episode Credits


Candice Chen, MD, MPH, Associate Professor in the Department of Health Policy and Management at George Washington University

Ted Epperly, MD, President and CEO of the Family Medicine Residency of Idaho

Atul Grover, MD, PhD, Executive Vice President of the Association of American Medical Colleges

Music composed by Ty Citerman, with additional music this week from Whitewolf and Blue Dot Sessions

This episode was reported and produced by Ryan Levi and Victoria Stern. It was mixed by Ryan Levi.

Additional thanks to:

Diane Rittenhouse, John O’Shea, LaSharn Hughes, Erin Fraher, Mannat Singh, Debra Weinstein, Vineet Arora, Elaine Batchlor, Gerald Ackerman, Matt Walker, Molly Benedum, Stacey Silverman, Janet Coffman, Dan Burke, Daniel Dorsey, Vishal Khetpal, Natalie Neal, Tara Bair, Randy Longenecker, Graham Ball, Gray Milkowski and Paul Cox, the Tradeoffs Advisory Board…

…and our stellar staff!