Presented is the report made by the Financing Panel of the Graduate Medical Education National Advisory Committee (GMENAC) on the impact of financing issues on graduate medical education medical practice, especially those related to the geographical and specialty distribution of physicians. After an introduction to the study, the following are examined: undergraduate medical education, graduate medical education, compensation for physicians' services, and the role of state and local governments. Twenty-four recommendations are presented, such as: in view of an oversupply of physicians by the year 2000, any increase in medical school enrollment beyond current aggregate levels should be discouraged; family practice programs, at least for a short term should be given special attention; improvement is needed in the government loan program; adequate financial support must be provided for programs directed towards the development of future medical faculty, administrators, and researchers; and public and private reimbursement policies should be adjusted and mechanisms identified to provide incentives for physicians. This report is part of a seven-volume series. References are provided. (LC)