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Expanded Medical Training Could Help Hospitals in Rural, Underserved Areas

Research shows that creating more graduate medical education opportunities might address physician shortages in these areas.

By Rachel Woolworth  |  July 17, 2023

Clinical training is a key component of the health care workforce pipeline, preparing medical school graduates for the workforce, cultivating interest in specialties facing shortages, and providing exposure to rural and underserved areas.

Graduate medical education, or GME, is a formal clinical training program for students who have completed medical school and earned a doctor of medicine or doctor of osteopathic medicine degree. Clinical training is required to become a licensed physician and may include residencies, internships, fellowships and specialty and subspecialty programs. Most GME programs are affiliated with hospitals, but some take place in accredited non-hospital settings, such as rural health clinics or community health centers.

Medical school graduation rates in the United States are outpacing the number of available GME opportunities. In 2019, 44% of medical schools reported concern over the availability of GME positions for medical graduates. GME opportunities are also few and far between in rural and underserved areas, largely due to the limited availability of funding and preceptors to supervise.

GME placement locations are a direct predictor of future work locations for medical school graduates. From 2012 to 2021, 55% of physicians ended up practicing medicine in the same state where they completed clinical training. Research shows that creating more GME opportunities in rural and underserved areas might address physician shortages in these areas.

GME positions across the country are primarily funded through Medicare and Medicaid, with federal funding exceeding $15 billion annually. Medicare, the largest funder of GME, prioritizes funding to hospitals and other training sites with large numbers of Medicare enrollees. States decide how Medicaid GME dollars are allocated.

Many states are acting to ensure adequate access to clinical training for medical graduates through statewide collaboration, appropriations, Medicaid payments and other incentives.

Statewide Collaboration

Beyond regional coordination through regional hubs, such as, states can facilitate partnerships that support new and existing residency programs. These networks, such as the ones found in Oregon (Oregon Residency Collaborative Alliance for Family Medicine) and Colorado (Colorado Family Medicine Residencies), provide ongoing support to rural program directors and new programs.

State Appropriations

Some states appropriate funds directly to GME training sites. Cost is one of the top challenges to creating new GME training positions, and funding to support startup expenses could be especially beneficial to rural programs.

Florida’s GME Statewide Medicaid Residency Program includes a state-funded startup bonus program providing $100,000 to qualifying training sites that create new resident positions for specialties experiencing shortages.

The New Mexico GME Expansion Grant Program was established in 2019 to fund new and expand existing GME programs across the state, focusing on primary care and psychiatry positions. The program is part of the state’s five-year strategic plan for GME expansion, made possible by an annual $1.1 million appropriation from the state’s general fund.

The Iowa Medical Residency Training State Matching Grants Program plans to distribute $5.5 million in funding over three years to establish, expand or support clinical training programs. Priority is given to applicants working to establish or expand psychiatry, gynecology and emergency medicine residency programs.

Medicaid Payments

Medicaid is the primary form of state financial support for GME. While data on Medicaid GME funding is limited and varies across states, the Association of American Medical Colleges reports that at least 42 states and the District of Columbia made payments in 2018.

States have flexibility in how they can use Medicaid dollars to fund GME positions. Some states fund GME through supplemental payments, and some include it in the base rate for teaching hospitals. Though hospitals are the leading recipient of Medicaid GME funding, states may choose to fund GME positions at other types of training sites or facilities and incentivize training in rural areas.

According to the medical colleges association, ambulatory care centers in two states (Florida, Idaho), medical schools in three states (Florida, Minnesota, Tennessee), and individual teaching physicians in at least four states (Florida, Iowa, Nevada, South Carolina) received Medicaid GME payments in 2018. Broadening Medicaid GME funding to a variety of training sites might support clinical training for specialties and geographical areas facing GME shortages.

New Mexico received approval in 2020 to provide Medicaid GME funding to federally qualified health centers and rural health clinics as training sites to increase rural access to care. New Mexico’s Medicaid GME program also includes a rural training track that allows residents to complete most of their residency in a rural area, with necessary rotations in urban areas.

Incentives for Rural Clinical Training

States are incentivizing GME opportunities in rural areas through tax credits to preceptors, loan forgiveness and repayment programs, and partnerships with medical schools.

States commonly offer income tax credits for physicians who provide uncompensated preceptorship training to medical students. Colorado offers an annual $1,000 tax credit to preceptors working in federally designated health professional shortage areas.

As of this year, at least 30 states and Washington, D.C., sponsored loan forgiveness and/or repayment programs to encourage physicians to practice in rural and underserved areas. Programs in Louisiana and Oregon, for example, aim to recruit and retain physicians by offering loan repayment in exchange for a minimum two-year service commitment in a health professional shortage area. Oklahoma funds medical residency and loan repayment programs for physicians practicing in underserved areas through its Tobacco Settlement Endowment Trust.

States may also partner with medical schools. North Dakota collaborated with the University of North Dakota to establish the state’s Health Care Workforce Initiative in 2011. The initiative aims to increase medical student enrollment, prioritize acceptance of rural medical students, create rural-focused residencies and establish tuition forgiveness for students who commit to practice in a rural community.

State legislatures play an important role in expanding access to clinical training for medical school graduates across the country. States’ investments and attention to GME may help address physician shortages in rural and underserved areas.

For more information on Medicaid’s role in GME, watch NCSL’s webinar on the topic.

Rachel Woolworth was an intern with NCSL’s Health Program.

This article is supported by the Health Resources and Services Administration of the U.S. Department of Health and Human Services as part of an award totaling $813,543, with 100% funded by HRSA/HHS. The contents are those of the author(s) and do not necessarily represent the official views of, nor an endorsement by, HRSA, HHS or the U.S. government. 

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