Residency Bottleneck Limits New Doctors, Not Medical School Enrollment

Private investment, not government action, is the key to expanding residency programs and addressing physician shortages.

Mar. 29, 2026 at 10:00am

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Despite thousands of medical school graduates each year, many are unable to secure residency positions due to a bottleneck in the number of available residency slots. This shortage is largely the result of a 1997 federal policy that capped Medicare-funded residency positions, which has not been significantly increased since. To address the growing physician shortage, the author argues that hospitals, health systems, and philanthropists should directly invest in expanding residency programs, particularly in underserved rural areas where new doctors are most needed.

Why it matters

The United States is facing a growing doctor shortage, with projections of a shortfall of up to 86,000 physicians by 2036. However, the problem is not a lack of medical school graduates, but rather a bottleneck in the number of available residency positions that new doctors need to complete their training. Expanding residency programs, especially in rural and underserved areas, is a more immediate and effective solution to the physician shortage than simply increasing medical school enrollment.

The details

Each year, thousands of medical school graduates compete for a limited number of residency positions. In 2022, around 53,000 applicants vied for roughly 44,000 residency slots. The residency bottleneck is largely the result of the Balanced Budget Act of 1997, which capped the number of Medicare-funded residency positions. Congress has only modestly increased that cap twice in nearly three decades. To address the physician shortage, the author argues that hospitals, health systems, and philanthropists should directly invest in creating new residency programs, particularly in rural areas where primary care shortages are most acute. Studies show that doctors tend to practice where they complete their residency training.

  • The Balanced Budget Act of 1997 capped the number of Medicare-funded residency positions.
  • Congress has only modestly increased the residency position cap twice since 1997.

The players

Sally C. Pipes

President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Author of "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy—and How to Keep It".

Association of American Medical Colleges

A non-profit organization that represents medical schools, teaching hospitals, and academic and scientific societies in the United States and Canada.

Alice L. Walton

Walmart heiress who recently opened a medical school in Bentonville, Arkansas.

Robert Wood Johnson Foundation

A philanthropic organization that provided a $1.75 million grant to establish a new medical school at Morgan State University in Baltimore.

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What they’re saying

“For too many, the answer is nowhere.”

— Sally Pipes, President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute

What’s next

Hospitals, health systems, and philanthropists should invest directly in expanding residency programs, particularly in underserved rural areas, to immediately address the physician shortage.

The takeaway

Increasing medical school enrollment alone will not solve the physician shortage in the United States. The key is to expand the number of available residency positions, which can be done more quickly through private investment in new residency programs, especially in rural and underserved communities.