News – IOM Recommends Long-Term Restructuring of GME Financing and Governance

An Institute of Medicine (IOM) committee has studied the system for governance and public funding of graduate medical education (GME) and finds that it suffers from a “striking absence of transparency and accountability” (IOM, 2014, p. S-13) and provides a physician workforce that is out of sync with the nation’s current needs. In a report released in July 2014, the committee recommends beginning immediately to evaluate and improve the GME system, which will take more than a decade to accomplish.

The Committee was formed after the Josiah Macy Jr. Foundation asked the IOM in 2012 to study the governance and financing of GME. The 21-member committee was co-chaired by Don Berwick and Gail Wilensky. The report, Graduate Medical Education That Meets the Nation’s Health Needs, can be accessed for free at Eleven private foundations, including the American Board of Internal Medicine, The Commonwealth Fund, and Robert Wood Johnson Foundation, as well as the Dept. of Veterans Affairs and the Health Resources and Services Administration provided support for the study.

According to the report, public funding of the current GME system totaled about $15 billion in 2012, $9.7 billion of which came from Medicare and $3.9 billion from state-based Medicaid programs. Because it is GME’s primary funder, Medicare was the focus of the Committee’s study and recommendations. The committee found that the current system, which primarily funds teaching hospitals, does not provide data that would allow analysis of demographic trends, the effectiveness of training, or efficiency of funding. 

The committee questions whether the current system is the best match for a rapidly changing healthcare system:

To what extent is the current GME system producing an appropriately balanced physician workforce ready to provide high-quality, patient-centered, and affordable health care? (p.S-2)

Organizations such as the American Hospital Association and the Association of American Medical Colleges were critical of the report on numerous counts, including its analysis of the future need for physicians. In the report, the committee questions current projections for a shortage of physicians and a related need for increased funding of the current, hospital-based system:

Further increasing the number of physicians is unlikely to resolve workforce shortages in the regions of the country where shortages are most acute, and is also unlikely to ensure a sufficient number of providers in all specialties and care settings. Although the GME system has been producing more physicians, it has not produced an increasing proportion of physicians who choose to practice primary care, to provide care to underserved populations, or to locate in rural or other underserved areas. In addition, nearly all GME training occurs in hospitals—even for primary care residencies—in spite of the fact that most physicians will ultimately spend much of their careers in ambulatory, community-based settings. (p. S-4)

The committee recognizes that the changes it recommends cannot be made hastily. The current GME financing system is governed by federal statues and regulations established in 1965, which can be changed only by Congress. Also, changes should be implemented with care, to mitigate disruption for the institutions involved. One of the committee’s recommendations is to establish federal oversight of GME reforms, with a policy center in the Dept. of Health and Human Services and an operations center in the Centers for Medicare and Medicaid. The committee suggests that a new approach to GME funding and governance will take at least 10 years to develop and implement.


IOM. (2014). Graduate medical education that meets the nation’s health needs. Eden, J., Berwick, D., & Wilensky, G. (Eds.). Washington, DC: The National Academies Press.