Tom Price: Medical residency slots need to expand to combat physician shortages

There have been growing shortages of physicians in the U.S. for years, but the issue became more acute during the COVID-19 pandemic, which exacerbated the situation and led to increasing numbers of doctors retiring or leaving clinical practice. Today, the physician shortage is clearly felt across numerous specialties—especially in primary care and psychiatry—and is even more pronounced in rural areas. 

Radiology, in particular, is experiencing shortages that are leading to longer waits for imaging exams to be interpreted and increasing report turnaround times. Health system recruiting booths at large imaging conferences have more than doubled since 2019, and the need to offer higher pay to stay competitive in attracting radiologists has contributed to rising healthcare costs. These issues are also emerging in other specialties.

While medical school enrollment has grown by 33% since 2002, the number of graduate medical education (GME) opportunities required for those graduates to become licensed physicians has not kept pace, according to the National Conference of State Legislatures (NCSL). The NCSL identifies this as a major issue for most states, citing it as a primary cause of the widening gap in rural access to care. This concern is prompting states to rethink their GME strategies to better meet the needs of communities most affected by physician workforce shortages.

"Right now, if you need an appointment with a neurologist, most any place in this country oftentimes the wait is anywhere from six to 12 months. That's in the United States of America. There are many counties in this country where there are no OB/GYN doctors, so there is nobody available to deliver babies. In many states, there are large areas where there are no neurosurgeons practicing," Price said. "We don't have the numbers of physicians that we must have to be able to provide the high quality care that's so necessary for our population. So I believe we need to expand the number of graduate medical education slots so that we can train the numbers of folks that can care for our population."

How medical residency programs are funded

Medicare is the largest funding source for graduate medical education (GME), accounting for $16.2 billion in GME payments in 2020. Medicare has provided GME funding to hospitals since its inception in 1965. When Congress authorizes new residency slots, hospitals starting their GME programs are given five years before a cap is set on the maximum number of residents eligible for Medicare GME funding. Once established, these Medicare resident caps are permanent unless changed by Congress or voluntarily relinquished by the hospital.

Medicaid is the second-largest source of GME funding, contributing $5.58 billion in 2018. According to the National Conference of State Legislatures (NCSL), states can fund GME through either Medicaid fee-for-service or managed care models. Medicaid GME offers greater flexibility than Medicare, allowing states to make payments to teaching entities beyond hospitals and for training in health professions other than physician education.

Other funding sources for residency positions include private payers, the Health Resources and Services Administration (HRSA)—which supports GME in children’s hospitals and community health centers—the Veterans Health Administration, and the Department of Defense. In response to growing demand, some health systems have opted to fund additional residency positions independently.

“In an effort from policymakers to not put greater cost liability on Medicare, they limit the graduate medical education slots. So there are so many ways that we could address this in a positive way to say we ought not just use Medicare for financing for these residency slots," Price explained.

Private funding for new residency positions

"There are ways that you can marry the public and the private sector to come together to fund new residency slots. You could find other sources of revenue to fund those residency slots so that we can increase the number of physicians that are able to get training so that we can answer and respond to these workforce challenges that we have," Price explained.

Medicare caps on the number of residents health systems can support have driven some institutions to create and fund their own residency positions. As healthcare systems increasingly compete for a shrinking pool of physicians, privately funding residency slots has become an attractive strategy for staffing and long-term workforce planning. Many hospitals rely on residents as a critical part of their workforce, and as patient volumes and demand for healthcare services grow, so does the need for residents.

With staffing shortages intensifying across the U.S., more hospitals are choosing to retain residents upon completion of their programs by hiring them as full-time attending physicians. This provides an incentive for health systems to fund additional slots, allowing them to maintain a pipeline of qualified talent—and to selectively hire physicians whose skills and capabilities they already know firsthand.

However, these privately funded GME slots may not align with broader national efforts to address physician shortages in critically underserved populations or rural areas. Rural communities are often far removed from the large academic medical centers that offer these additional residency positions, limiting the benefit to those regions most in need.

Increasing the number of residency slots

In November 2024, the Centers for Medicare and Medicaid Services (CMS) awarded 200 additional GME residency positions to teaching hospitals to help expand the physician workforce. CMS is using this new allotment as a tool to guide public health policy and ensure more physicians are trained in areas of greatest need. Approximately 70% of the newly awarded positions will support primary care and psychiatry residency programs.

“These new residency positions will have a tangible, positive impact on a diverse mix of communities across the nation, including traditionally underserved areas,” AAMC President and CEO David J. Skorton, MD, said in a statement about the new slots last fall. “Medical school enrollment has continued to grow, but a commensurate increase in residency positions is necessary to help ensure that there are enough opportunities for medical school graduates to complete their training and practice independently.”

However, medical societies—and Tom Price—argue that many more residency positions will be needed to prevent severe physician shortages in the coming decade.