The Buzz This Week
The application period has opened for the latest allocation of Medicare-funded graduate medical education (GME) residency slots under the Consolidated Appropriations Act of 2021. The provision authorized 1,000 additional residency positions over 5 years to address the nation’s growing physician shortage. Hospital applications for this fifth allocation are due by March 31.
In December, the Centers for Medicare & Medicaid Services (CMS) announced the previous distribution of 400 Medicare-supported residency positions. To date, the residencies have been granted to 235 hospitals in 42 states plus the District of Columbia and Puerto Rico. Primary care accounted for 45% of new residencies. Non-primary care slots included Psychiatry (17%), Surgery (7%), and OB/GYN (5%), among others.
While the American Hospital Association (AHA) and other advocacy groups have welcomed the additional residency slots, the groups also point to the substantial costs to train residents beyond federally supported levels that academic health systems must absorb. These unfunded training costs can limit hospitals’ ability to expand residency programs, even when workforce needs are growing.
In response, the groups are pushing for passage of the Resident Physician Shortage Reduction Act to increase the number of residency positions eligible for Medicare GME payments and reduce the share of training costs hospitals must finance themselves. Introduced in July, the legislation proposes adding 14,000 Medicare-funded residency positions over 7 years, an increase of 2,000 positions per fiscal year through 2031.
If passed, the bill would increase the number of residency positions eligible for Medicare GME payments for qualifying hospitals, including hospitals in rural and health professional shortage areas. Additionally, one-third of the positions would be allocated to hospitals that are already operating above applicable resident limits.
It would also require reports on diversifying the healthcare workforce, including representation from rural, low-income, and minority communities. While the bill has bipartisan and broad professional support, it is still early in the process, with both US House of Representatives (H.R. 4731) and US Senate (S.2439) versions referred to committee for further discussion.
Why It Matters
The aim of the GME residency expansion is to address the nation’s physician shortfall, but the supply of primary care physicians in particular is inadequate to meet growing demand. Over the next decade, projections show a US shortage of 141,160 physicians—70,610 of which is primary care physicians.
Primary care shortages are particularly acute in rural and underserved areas. As of 2023, 92% of rural counties are designated primary-care health professional shortage areas. However, only 5% of hospitals in the first three GME distributions were rural. Without stronger incentives or structural changes, residency expansion alone is unlikely to meaningfully improve access where the need is greatest.
Primary care has moved well beyond the traditional office-based model. New entrants and alternative care models have increased utilization and patient expectations, often with mixed results. Recent contractions by Optum and CVS Health highlight the margin pressure and operational complexity of delivering primary care at scale—even within well-capitalized, vertically integrated organizations.
Meanwhile, concierge and direct primary care models continue to grow. These models are improving physician and patient satisfaction for select patient populations but reducing panel sizes and tightening physician supply in already constrained markets.
Health systems are increasingly redesigning care delivery to compensate for physician shortages. Team-based care models, with expanded roles for advanced practice providers (APPs) and digital and AI-enabled workflows, are becoming central to primary care operations. Leading health systems are building transitional and proactive care models to support patients who lack access to primary care.
For example, some health systems have established post-discharge continuing care clinics that provide short-term follow-up across a broad geography. This is helping reduce readmissions while connecting patients to preventative services, community resources, and longer-term primary care relationships.
Other health systems are leveraging value-based care strategies and technology to manage rising demand with limited physician supply. Common approaches include predictive analytics, remote monitoring, home-based care, and intelligent triage. These approaches can better manage high-risk populations and ensure specialty care is reserved for patients who need it most. While these models can improve outcomes and access, they also introduce new coordination, oversight, and workforce demands.
As health systems advance proactive care delivery, they will continue to confront primary care physician shortages. Reimagining primary care delivery is essential to sustaining and improving access and health outcomes. But it must be paired with growth in the primary care physician workforce and better geographic distribution as delivery innovation alone is unlikely to close the access gap.
Related Links
Government Accountability Office (GAO): Graduate Medical Education: Information on Initial Distributions of New Medicare-Funded Physician Residency Positions
The Commonwealth Fund:
The State of Rural Primary Care in the United States
Becker’s ASC Review:
Why these physician specialties are drawing the most investor interest
Health Affairs:|
Growth In Number Of Practices And Clinicians Participating In Concierge And Direct Primary Care, 2018–23
