Nine Arizona Hospitals Receive Federal Funding for New Residency Positions

Nine Arizona hospitals and health systems — including several in rural areas of the state — will add approximately 30 new Medicare-funded residency positions across multiple specialties following recent federal funding awards announced by the Centers for Medicare & Medicaid Services.

National Program Overview

CMS distributed 400 new residency slots to more than 130 teaching hospitals nationwide through two federal programs designed to expand physician training capacity. The funding prioritizes hospitals in rural areas, health professional shortage areas, states with new medical schools, and institutions training residents beyond their current Medicare-supported caps. 

Arizona Residency Funding Awards

Institutions across Arizona, including several rural areas, received slots in primary care, surgical, behavioral health, and other specialties:

Total Arizona Slots: Approximately 30 new residency positions

Note: Yuma Regional Medical Center received funding under both Section 126 and Section 4122 for psychiatry residency slots.

Two Funding Streams

The awards came through separate appropriations legislation:

• Section 126 (Consolidated Appropriations Act of 2021): A five-year initiative distributing 1,000 new residency slots nationwide, with awards phased in over multiple years as programs expand.
  
• Section 4122 (Consolidated Appropriations Act of 2023): Provides 200 additional slots beginning in fiscal year 2026, with at least half designated for psychiatry and psychiatry subspecialty training.

Both programs increase hospitals' Medicare-supported residency training caps, allowing institutions to receive federal graduate medical education funding for additional resident physicians.

National Workforce Concerns Drive Expansion

The federal expansion responds to projected physician workforce shortages. The Association of American Medical Colleges estimates a shortage of up to 86,000 physicians by 2036. Federal policymakers view residency pipeline expansion as a key strategy for addressing anticipated workforce gaps, particularly in underserved communities and shortage specialties.

Arizona's Rural Workforce Challenges

While all of Arizona faces a dire physician shortage, the state's rural communities face even greater challenges, which is reflected in national data. According to reports, approximately 92% of rural counties designated as Health Professional Shortage Areas. Primary care physician supply in rural areas is projected to meet only 68% of demand by 2037, below the national average of 73%. Research indicates that the loss of a single rural family physician can increase annual health spending by more than $1,300 per patient.

Recent GME Funding Wins in Arizona

The Arizona Medical Association continues to work alongside state leaders and healthcare organizations to secure additional graduate medical education funding to address physician workforce shortages.

In 2025, ArMA successfully passed state legislation that secured $4 million in federally matched GME funding for Arizona. The association also contributed to the state's Rural Health Transformation Fund application, which outlined workforce development as a strategic priority. The proposal called for increased residency slots, education subsidies for clinicians committing to underserved communities, and retention incentives for current healthcare professionals. Arizona will receive $167 million from the RHTP in FY2026.

ArMA Continues to Fight for Residency Slots

ArMA continues to advocate for increased GME funding and residency expansion as critical strategies to strengthen Arizona's physician workforce. The association remains committed to working with state and federal policymakers to secure resources that address rural health challenges and expand training opportunities for the next generation of physicians serving Arizona communities.