Graduate medical education has been criticized for failing to adequately prepare young physicians to enter the workforce upon completion of their training. In addressing this criticism, the author makes arguments both for and against this assertion. Broad qualitative changes (graduate medical education training position allocation, subspecialists' role in health care delivery, educational quality, faculty development, and faculty promotion) that graduate medical education has undergone and is undergoing are discussed. Population health management, clinical resource management, teamwork, continuous quality improvement, ethics, and evidence-based medicine are addressed as important curricular elements for residency training. Innovations in graduate medical education that are being introduced as well as those that should be tried are discussed. Finally, the author asserts that although residency education should not be vocationally driven by the needs of managed care organizations, a powerful opportunity exists for collaborative educational research between academic medicine and managed care organizations. In a health care environment undergoing rapid changes, the primary goals of graduate medical education have not significantly changed: to produce compassionate physicians with a passion for lifelong learning who have leadership skills, are critical thinkers, skilled at self-assessment, and able to adapt to the needs of the health care marketplace.