High computation costs and latency of large language models such as GPT-4 have limited their deployment in clinical settings. Small language models (SLMs) offer a cost-effective alternative, but their limited capacity requires biomedical domain adaptation, which remains challenging. An additional bottleneck is the unavailability and high sensitivity of clinical data. To address these challenges, we propose a novel framework for adapting SLMs into high-performing clinical models. We introduce the MediPhi collection of 3.8B-parameter SLMs developed with our novel framework: pre-instruction tuning of experts on relevant medical and clinical corpora (PMC, Medical Guideline, MedWiki, etc.), model merging, and clinical-tasks alignment. To cover most clinical tasks, we extended the CLUE benchmark to CLUE+, doubling its size. Our expert models deliver relative improvements on this benchmark over the base model without any task-specific fine-tuning: 64.3% on medical entities, 49.5% on radiology reports, and 44% on ICD-10 coding (outperforming GPT-4-0125 by 14%). We unify the expert models into MediPhi via model merging, preserving gains across benchmarks. Furthermore, we built the MediFlow collection, a synthetic dataset of 2.5 million high-quality instructions on 14 medical NLP tasks, 98 fine-grained document types, and JSON format support. Alignment of MediPhi using supervised fine-tuning and direct preference optimization achieves further gains of 18.9% on average.

Large language models (LLMs) such as GPT-4o and o1 have demonstrated strong performance on clinical natural language processing (NLP) tasks across multiple medical benchmarks. Nonetheless, two high-impact NLP tasks — structured tabular reporting from nurse dictations and medical order extraction from doctor-patient consultations — remain underexplored due to data scarcity and sensitivity, despite active industry efforts. Practical solutions to these real-world clinical tasks can significantly reduce the documentation burden on healthcare providers, allowing greater focus on patient care. In this paper, we investigate these two challenging tasks using private and open-source clinical datasets, evaluating the performance of both open- and closed-weight LLMs, and analyzing their respective strengths and limitations. Furthermore, we propose an agentic pipeline for generating realistic, non-sensitive nurse dictations, enabling structured extraction of clinical observations. To support further research in both areas, we release SYNUR and SIMORD, the first open-source datasets for nurse observation extraction and medical order extraction.