In July 1989, New York State adopted new rules that limit the hours worked by residents and mandate continuous, on-site supervision of junior residents. In addition, all New York hospitals must provide 24-hour coverage for intravenous, phlebotomy, and messenger/transporter services. This article examines the impact of New York's landmark changes on hospital staffing, graduate medical education, the demand for ancillary personnel, and hospital expenditures. Based on a statewide survey, the results indicate that implementation of these rules would require hospitals to hire an additional 5358 full-time equivalent personnel at a yearly cost that would exceed $358 million. The broader implications of these rules on financing graduate training are also explored. (JAMA. 1990;263:3177-3181)