I never understood why residency programs need to be funded to begin with.

I dont think this is how it works elsewhere and I struggle to believe that a hospital bill enough to cover employment and training of a resident.

Not all residency programs are funded by Medicare. And even among those that are funded by Medicare, many have additional slots that are unfunded but exist anyway because a resident provides cheap labor. If a physician decides to change specialties and do a second residency, these unfunded programs and slots are their only options because Medicare won't pay for second residencies.

It's not clear whether graduate medical education programs operate at a profit or loss. The accounting is complex, and the results depend on how revenues and expenses are allocated internally.

https://www.fiercehealthcare.com/finance/do-teaching-hospita...

It's not clear because medical finance and insurance is so Twisted that even the hospitals operating them don't understand it.

I still find a dubious that residents can't build enough hours at a high enough rate to cover their cost of employment.