IOM: GME System Needs Major Overhaul

A new report by the Institute of Medicine (IOM), entitled Graduate Medical Education That Meets the Nation’s Health Needs, found that the system of public funding of graduate medical education (GME) does not serve the goals of preparing the health care workforce, or even future physicians, to meet the needs of patients. Although Medicare and Medicaid contribute billions of dollars to GME each year, there is no reporting, or even collection, of data that would show how money is spent or whether the programs are effective. The IOM report stated, “[T]here is a striking absence of transparency and accountability for producing the types of physicians that today’s health care system requires.” Because Medicare funding of GME is controlled by statute, Congress would have to amend the Social Security Act in order to solve the problems.

The Needs for Physicians and Practitioners

The IOM focused on the relationship between physician education and the goals of the health care system: access to care, quality of care, and minimizing cost. America’s aging and increasingly diverse population requires physicians who know how to coordinate care and manage chronic conditions. Most physicians, especially primary care physicians, spend much more time in ambulatory settings or offices in the community than they do in hospitals. The work of physicians and other professionals increasingly involves preventive care, treatment of chronic illness, and the use of new information technology outside the hospital setting; yet, nearly all GME occurs in hospitals. As a result, when they enter practice, they do not know how to perform simple procedures and are unprepared to address the needs of patients with typical medical problems. GME programs also do not prepare physicians to meet the needs of patients who are members of minority groups or live in underserved areas.

Maldistribution of Physicians

The IOM noted that the number of medical schools, medical students, and medical residents has grown substantially, but the number of physicians who practice in rural areas continues to drop. Primary care is considered a low-status specialty, and the compensation of primary care physicians is significantly below that of other specialists. For that reason and others, the growing number of specialties and subspecialties attract more new doctors. Even among internal medicine residents, the percentage planning to practice general medicine physicians dropped from 54 percent in 1998 to 21.5 percent in academic years 2009-2011.


The IOM posits that public funding of GME be tied to performance and quality and to developing the workforce that the public needs. To reach that goal, it recommends that GME funds be directed to the sponsoring organizations rather than the hospitals. The federal government should establish an entity to oversee the use of GME funds and establish a coherent policy for financing GME that fosters attainment of these goals. The distinction between direct GME costs, i.e., residents’ salary and benefits, and indirect costs, should be eliminated. Instead, the GME funding should be divided between an operational fund, to finance the education of residents, and a transformation fund, which would develop the new infrastructure and innovations that are needed.

The use of GME funds should be tracked; the GME oversight agency should require standardized reports from every program using standardized data sets. Each program should be evaluated, and payment should be tied to performance and achievement of goals. In order to facilitate a smooth restructuring, the IOM recommends a ten-year transition period.