['There is considerable variation in the costs of training residents across hospitals. Previous studies have reported training costs that ranged for $7,500 to $200,000 per resident, with means in the $50,000 to $60,000 range. This paper examines the factors associated with the variation in the direct costs of residency education across hospitals.', 'Hospital costs, hospital payment rates, various cost-of-living indices, and hospital characteristics for all hospitals in the United States receiving Medicare funds for residency education in fiscal year 1991 were obtained from various public sources. Bivariate and multivariate analyses were performed to determine whether organizational structure of residency training, specialty mix of residents, quality of training, cost of living in the geographic area, patient mix of the hospital, or other factors could explain some or all of the cost variation.', 'Only a small proportion of the variation in the costs of training residents or payments for residency education could be explained by the factors analyzed.'] Does what explain the variation in the direct costs of graduate medical education?