State budget tightening has pulled the plug on a new program aimed at placing more family physicians on the Neighbor Islands.

Gov. Linda Lingle has decided not to release $2.5 million for the current fiscal year for a rural family medicine residency program established by the University of Hawai'i's John A. Burns School of Medicine because of worsening revenue projections, said Finance Director Georgina Kawamura in a letter last month to UH President David McClain.

"It is critical that the state conserve its financial resources," Kawamura said.

Medical school graduates typically are required to undergo three years of on-the-job residency training at hospitals. Officials said research shows that at least 80 percent of doctors stay and work where where they complete their residency.

Act 277, passed in 2007, appropriated funds to expand the UH medical school's family medicine residency program to create training opportunities on the Neighbor Islands, where there is a shortage of physicians in all fields.

Supporters noted the Hilo area is served by only 24 primary-care physicians, most of whom are age 50 and older.

A Big Island training site was developed last year to rotate family medicine graduates through Hilo Medical Center, with plans to later expand the program to Maui, Kaua'i and Moloka'i. UH officials hoped to start the program next year, but that now appears unlikely.

"The support we had hoped for and the Legislature had promised is not available at the moment because of cutbacks the governor and her staff have had to make," said Dr. Jerris Hedges, dean of the John A. Burns School of Medicine.

He said the medical school is hoping to come up with "some creative solutions" to the funding shortfall.

Lingle already withheld $1.5 million in first-year funding appropriated by the Legislature for the fiscal year 2007-08, citing the same economic concerns. At the time, the administration had hinted of the possibility of releasing a portion of the second-year funding to pay for clinical space, faculty and staff costs, and operating expenses at Hilo Medical Center.

With the state's fiscal position and the economic outlook continuing to deteriorate, the partial release is no longer feasible, Kawamura said.

The HMSA Foundation had agreed to provide $535,000 in matching startup funds over three years and the Centers for Medicaid & Medicare also was to provide funding. Some of the startup money was used to set up space in Hilo for the program and to hire a medical director.

Hedges said to encourage young doctors to work on the Neighbor Islands, it's important that medical students train on location so they can become comfortable in the community and understand the challenges of working in areas where there are fewer specialists.

"One needs different skill sets and to prepare differently. Yet, there is room for a very rewarding practice if one is prepared for that setting," Hedges said.

"We are in kind of a Catch 22: Until we can really establish more training opportunities on the Big Island, we will be limited in how well we can prepare and target our students for practice on the Big Island."

Hilo Medical Center spokeswoman Elena Cabatu said the withholding of state funds for the rural residency program is a disappointment for those hoping to ease the physician shortage.

"If it succeeds here, it will succeed in other locations in our state and supply physicians to other rural areas," she said.