Costs were determined for a teaching program in general pediatrics and general internal medicine for advanced residents in a prepaid group practice, the Medical Care Group of Washington University. A time and motion study was conducted to measure the productivity of faculty physicians before and after the establishment of the teaching program. There was a statistically significant loss in productivity for internists and an apparent loss, though not significant, for pediatricians as a result of their teaching effort, but the productivity of the residents more than compensated for the loss. The residual positive value of a full time equivalent (FTE) pediatric resident after reimbursement of all possible lost productivity by faculty pediatricians represented 43.9 per cent of a FTE pediatrician. For a FTE resident in internal medicine the residual positive value was 49.7 per cent of a FTE internist.