Strengthening medical education has been a key priority area for the government. There’s a need for several strategic changes to the nature of government spending, with focus more on scaling and improving the quality of existing medical colleges, and outcome-based financing. Also, thrust must be given to targeted vouchers for merit-cum-need based students instead of input-based financing, viability gap funding (VGF) in districts with higher supply of teachers, and enhancing funding of biomedical research at quality medical colleges, both government and private.

In December 2023, the government disclosed in the Rajya Sabha that 157 new medical colleges had been approved under the Centrally sponsored scheme. The announcement in the Interim Budget is expected to translate into further increases in the outlay towards this scheme, though the actual implementation of the scheme varies across States.

Existing medical colleges are distributed unequally among States, with Tamil Nadu, Uttar Pradesh, Maharashtra, Karnataka and West Bengal accounting for nearly half of all government medical colleges. Central sector schemes like the PM Swasthya Suraksha Yojana (PMSSY) have been used by the government to establish new AIIMS-like institutions in underserved areas and small-towns. However, the new medical colleges in remote areas struggle to attract teachers and patients, leading to inefficiencies.

Not detrimental to equality

Our research has shown that investments in scaling existing medical colleges or starting new ones in existing districts are not detrimental to equality, as there is continued mobility of graduates across States enabled by bonds and employment opportunities. This is akin to a few pharma hubs cost effectively producing sufficient drugs for the entire country, and for the world.

An analysis of expenditures of government medical colleges in Maharashtra found that older, higher-ranked colleges spend more than the newer colleges per medical graduate. Suggesting that continued investments are necessary for maintaining the quality of medical education. In addition to sustained investments to enhance quality, there is a need to review the current input-based budgetary allocations. The current allocations are not geared towards efficiency and/or quality output, nor do they allow targeting of government spending for addressing inequities. Outcome-based financing along with vouchers for targeted incentives will enable more meritorious medical students from rural areas to finance their education.

The government had announced a VGF scheme in June 2020 to incentivise private sector participation in setting up medical educational institutions in underserved districts by utilising existing district hospitals. Data from the website of the Ministry of Economic Affairs on PPPs reveal that Uttar Pradesh alone has six such proposals along with others from Madhya Pradesh, Odisha, and Karnataka.

However, our analysis of the revenue models of private hospitals of various sizes found that the economics may not support the participation of higher-quality private medical colleges. Instead, VGF schemes in remote areas may be creating perverse incentives for participation largely by smaller, poorer-quality private players. The government should reconsider VGF focus, towards existing districts with high teacher potential.

In addition to funding infrastructure, human resources also need attention. Increased government spending on biomedical research, training and global collaborations at medical colleges (both government and private) will incentivise highly trained medical practitioners to participate in teaching. Budgets for the incorporation of technology, AI, simulations and innovative teaching methods are necessary to mitigate at least some of the effects of faculty shortage and meet the demand for trained medical professionals.

Neethi is Fellow, and Amrita is Visiting Fellow, Centre for Social and Economic Progress. Views expressed are personal

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