The Important Economic Role of Medical Residencies 

Retaining highly skilled workers has been a challenge for the heartland, but new findings from Heartland Forward’s research team highlight an often overlooked strategy to strengthen local economies while incentivizing skilled professionals to stay in heartland states. The solution? Medical residencies. 

Arkansas Maps a Remedy for Medical Residencies 

The release of The Economic Impact of Medical Residencies in Arkansas highlights the broader influence of health professionals beyond the practice of medicine, demonstrating their transformational effects on their local economies as well. 

The economic impact of medical residents is as surprising as it is profound:

• High ROI: The economic impact of medical residents in Arkansas is large—for every one dollar invested in the medical education of a resident, there is a 400% return on investment in the local community.
• Economic activity: Medical residents are an efficient economic investment. Adding 275 new medical residents to Arkansas’ workforce over the next six years could generate $465 million in economic activity, an impact that would require more than twice as many average-output workers to match. 
• Ripple effects of care: Aside from the economic benefits, states with high levels of graduate medical education have better community health outcomes. More medical residents in a community means greater access to care for that community. The healthier a community is, the more economically productive it is capable of being. 

Dave Shideler, Heartland Forward’s Chief Research Officer, underscores the power of investing in local talent: “At Heartland Forward, we advocate for “grow your own” workforce solutions, helping communities build and retain their own local talent. Data shows doctors practice medicine near their medical residency program, leading to top-talent retention and resulting economic benefits. Not only do these state and federal investments have a four-fold return, but they also lower barriers to health care access for all residents.”

This research highlights an ongoing conversation in Arkansas among policymakers and stakeholders. In 2021, medical school graduation rates began to outpace medical residency slots in the state, forcing graduates from Arkansas medical schools to pursue a residency outside the state. In response, efforts are underway to expand residency programs and strengthen the state’s medical training capacity. 

On March 5, the Washington Regional Medical Center in Fayetteville, and the University of Arkansas for Medical Sciences (UAMS) received $4.5 million to add 26 residency slots to their joint Graduate Medical Education program, bringing them nearly 30% of the way toward their ultimate goal of 90 new slots by 2030.

Two weeks later, on March 19, UAMS received $2.5 million to expand residency programs in south Arkansas, funding new slots in El Dorado and Crossett. With these additions, more than 50% of the 90-slot goal has now been met.

With these efforts by UAMS and Washington Regional Medical Center, Arkansas has surpassed one sixth of the recommended 275 additional residency slots needed to generate $465 million in economic impact.

Iowa Charts a Cure for Physician Retention 

Arkansas is not the only state investing in the economic asset of medical residencies—efforts to increase medical residencies are also underway in Iowa. The Iowa Medical Society held a summit in January of 2024 to craft solutions to the state’s physician shortage. The convening resulted in Operation Innovative Opportunities for Workforce Action (I.O.W.A.), which advocates for pipeline solutions for early-career, mid-career and late-career physicians, including: 

• Increasing medical residency slots at teaching hospitals.
• Bolstering financial support to educators at teaching hospitals.
• Expanding partnerships with Iowa government agencies and external employers on the basis that access to better care in Iowa is attractive for business expansion in the state.

Operation I.O.W.A. inspired House Study Bill 191, which was unanimously passed by the Iowa House Health and Human Services Committee on February 25, 2025. This bill, which is geared toward creating accessible and attractive medical residencies, established a health care professional incentive program, to bring more residents to Iowa, and allows for a Medicaid funding model for Graduate Medical Education, which will expand access.

D.C. Diagnoses the Doctor Drought

With the U.S. facing a physician shortage, worsened by COVID-19, the Senate Graduate Medical Education Working Group is taking action. Senators Cassidy of Louisiana, Cortez Masto of Nevada, Cornyn of Texas and Bennet of Colorado, are advancing legislation to expand Medicare-supported residency positions, strengthen rural medical infrastructure and improve federal data collection on Graduate Medical Education funding allocation. 

While federal funding plays a key role in expanding Graduate Medical Education, the pandemic underscored the greater impact of state-specific health care policies in addressing local health care needs. State-specific policies that create medical residencies and prioritize physician retention are a critical tool heartland policy makers can harness to strengthen their economies while simultaneously increasing access to health care.

As we reflect on the five years since COVID-19 first exposed and deepened workforce gaps, the need for skilled medical professionals in every U.S. community remains clear. Policies in Iowa addressing physician shortages and medical infrastructure investments in Arkansas demonstrate how strategic investments in medical residencies can yield significant returns. By expanding residency programs, heartland states can not only improve health care access but also generate a four-to-one return on investment, driving economic growth while strengthening community health.