BACKGROUND: Internal medicine training programs must adapt to health care systems faced with balancing the competitive priorities of patient-care responsibilities and educational needs. OBJECTIVE: To evaluate the effects of a major organizational change on the inpatient service of an internal medicine residency program in a vertically integrated health system. METHODS: We changed the structure of our program from a system in which the hospitalized patients' primary physicians were responsible for daily inpatient management, while teaching was assigned to a defined teaching rounder, to a method in which the rounding attending was responsible for both teaching end patient care. Measurements before and after the change in the rounding system included: the McGill University clinical tutor evaluations, time-motion observations of house staff, patient satisfaction surveys, average length of stay data, and physician focus groups to assess physician satisfaction. RESULTS: The rounding attendings consistently received excellent to superior ratings by the house staff both before and after the implemented change. Compared to time-motion observations performed before the change, observations recorded after the change suggested that a greater percent of house staff time was spent on educational activities. The responses of patient satisfaction surveys indicated that the perception of quality of care remained high after the system change. Lastly, the average length of stay for patients on the general internal medicine and subspecialty services was reduced from 7.6 days before the change to 6.6 days after the change, a difference of 0.92 day (95% confidence interval 1.3 to 0.6, P <0.001). CONCLUSIONS: Through organizational restructuring, it is possible to improve the quality of resident education while maintaining the quality of patient care and improving the efficiency of patient-care management.