Privately funded education vs.

publicly funded
education: Elimination of myths needed

Two issues raised by readers

Monday, 17 July 2017

Several readers of the last weeks article in this series (available at:
http://www.ft.lk/article/627020/SAITM--A-war-unto-a-finish-to-protect-their-
interests-by-monopolies-and-oligopolies) on the SAITM impasse had raised two
issues with this writer.

One is how monopolies and oligopolies, grouping themselves into two warring
factions bent on safeguarding their own interests, could be controlled in a
democracy without compromising the democratic rights of the people.

The other is, though it is obvious that those who receive publicly funded
education are debtors of the community, how those who finance education out of
their own funds could be treated as communitys creditors.
Monopolies and natural monopolies at war

The article under reference had categorised the group against private medical
schools as either monopolies or oligopolies. The list had three specific groups,
namely the Inter-University Students Federation or IUSF and the Government
Medical OfficersAssociation or GMOA which are monopolies, while the eight
medical faculties functioning under the countrys state-funded universities as a
collusive oligopoly.

On the other side of the war, the Medical College of the Kotalawela
Defence University, known as KDUMC, is a natural monopoly; the controversial
South Asian Institute of Technology and Medicine or SAITM is also a natural
monopoly in the making. Both sides have presented themselves to the
community as a group fighting for the wellbeing of the community.
But the real reason is private interest

However, the real reason behind the declared war by each party is personal
interest. The IUSF has cited that its objective has been to protect the free
education system that would ensure equity in education delivery. But, the free
education system in Sri Lanka is funded by taxpayers collectively.

They can raise funds for this purpose by paying taxes today. If todays tax revenue
is not sufficient, they can borrow money and spend on education, but it is
tantamount to promising to pay taxes tomorrow. The latter is the usual situation
in Sri Lanka.
Hence, recipients of free education today carry a future tax payment liability as
well. Hence, it is the students themselves, their parents and those who are to be
born in the future who are the people who provide funds for running the system.
As such, to call it a free education system is a misnomer.
GMOAs campaign for quality

The GMOA has cited that it is opposed to SAITM because it lacks, according to
GMOAs assessment, the quality and standards which are expected of a medical
college. The quality and standards are necessary, says the GMOA, to protect the
interests of patients and it is the duty and the obligation of the GMOA to ensure
its delivery. Hence, it sees nothing unethical when it chooses to resort to
indefinite strike action for protecting the rights of patients. Obviously, the GMOA
appears to be of the belief that if the ends are noble, they need not worry about
the means.
Competition will generate excellence

The leading medical faculties of state universities have done a good job in the
past in producing medical professionals within the limited facilities available to
them. Those who have passed out of these medical faculties have made their
mark in both Sri Lanka and abroad.

Their superior intellectual capacity has been demonstrated amply in the

postgraduate research work they have done at reputed foreign medical schools
and clinical work done at hospitals abroad. That performance by any standard is
impressive.
 However, the ability to move to greater
heights in medical education through these state-owned medical faculties will
depend on the healthy competition which they have with each other, having
adopted global best practices and benchmarks. However, at present, they
function as a collusive oligopoly barring their ability to move forward in a
competitive environment.

Obstacles for private medical schools

On the supply side, KDUMC is already a natural monopoly, while SAITM, if
approved for granting medical degrees, will emerge as a monopoly. Given the
high capital investment requirements needed for setting up a privately-owned
teaching hospital, it is unlikely that these two institutions will have effective
competition from a newcomer to medical education. This is a dangerous
development and has to be avoided.
Ensure quality if the country wants to become an education hub

Sri Lanka has all the ground requirements to become a hub for medical education.
Its talent pool in academia in the medical field could be used productively to
establish such a hub in the country. However, to gain recognition from foreign
students and foreign health authorities, it is absolutely necessary to upgrade the
quality of education and maintain the required quality standards.

Benchmarking Sri Lankas medical education with good universities abroad, as

was done by Singapore in the 1960s and 1970s, is a must if Sri Lanka is to become
a recognised medical education hub. For that, it is necessary to break the current
monopoly power being enjoyed by state-owned medical faculties and KDUMC,
which already holds a licence to operate a medical school and SAITM which, if
approved, will emerge as the second private medical school in the country.
Allow private medical colleges to use state hospitals upon payment of a fee

State-owned medical faculties have a distinctive advantage because they have

readymade teaching hospitals, upgraded to that position from the existing
hospital network of the Government. Hence, the Government could set up
additional State-owned medical faculties depending on the availability of funds.
The obstacle to set up medical colleges is therefore experienced only by the
private entrants to the field.

That could be sorted by allowing them to use Government hospitals as teaching

hospitals after upgrading them to the status of teaching hospitals and by paying
an annual user fee. The cost of the upgrading could be done either by private
entrants or by the Government. If the Government does so, the additional
expenditure it has incurred could be recovered from private medical schools by
increasing the user fee appropriately.
This is a true public-private partnership to be undertaken by the Government for
the benefit of the country. The upgrading of the hospitals will improve the quality
of healthcare delivery system of the Government, on the one hand, and facilitate
patients to receive high quality medical services, on the other.
Competition is a must

Thus, competition should be promoted among both the state sector medical
faculties and private medical colleges to facilitate them to do the best for the
country, medical education and students aspiring to become medical
professionals.

It is only through competition that the country can attain excellence in education
and knowledge building. Such excellence should help the country to develop itself
as a medical education hub in the region. It improves the quality, value and
earning power of all the medical sector professionals in the country. It in turn will
give incentives for them to add more value to what they do right now in the
education field.
Quality assurance bodies should be independent

What is necessary in this respect is the quality assurance among both the state
sector and private medical colleges. It should be done through an independent
quality assurance body, similar to those functioning in the UK or Australia, and
not through politically inspired organisations. Such quality assurance should be
equally applied to both the state medical faculties and the private medical
schools.

In the case of the private higher learning institutions which are affiliated to
foreign universities, there are audit teams that visit them at least twice a year to
assess the quality standards and certify that they conform to the quality
standards prescribed by the foreign universities concerned and the quality
assurance authorities in their home countries.

Such a system should be developed and established in Sri Lanka too if it plans to
gain recognition from foreign healthcare authorities and thereby attract foreign
students to the country.
Both public and private medical colleges should be subject to quality controls

In summary, in order to break the monopoly in medical education, competition

should be promoted, private medical schools should be encouraged, upgraded
state sector hospitals should be made available to any private medical school
upon payment of an appropriate fee and all medical schools should be subject to
the same quality assurance as prescribed by an independent quality assurance
body.

If any state sector or private medical college does not conform to prescribed
quality standards, adequate time should be given for them to comply with the
requirements. If they still fail to do so they should be closed down without favour
or discrimination.

The second issue raised by readers relates to how those students who pay for
their education would become creditors of the community.
Government can provide education free of charge or charging a fee

For any civilisation to progress its members should acquire skills, talents and
competencies on a regular basis. The role of education should be to help
community members to equip themselves with such skills, talents and
competencies. It could be done in two ways.

One is that the community funds the educational expenditure of the members
collectively through taxes raised or by borrowing money. Then, the educational
expenditure could be recovered by charging a fee from students as is being done
in countries like Singapore or Thailand or provided freely as is being done in Sri
Lanka. If the first method is adopted, then, the members, having paid for their
education, will become creditors of the community.

If the second method is adopted, then, it is tantamount to members borrowing

funds from the community and undertaking education to acquire the required
skills. Then they become the debtors of the community. In both cases, education
is produced and provided by the state but it adopts two different methods of
making it available to members of the community. In the first case, the
community is indebted, while in the second case, the students are indebted. Thus,
in the first case, the community has to pay back to the students. In the second
case, the students have to pay back to the community.
Private sector too could provide education free of charge or charging a fee

Now suppose that education is produced by the private sector and provided to
students either by charging a fee or free of charge as is being done in the state
sector education system in Sri Lanka. In the first case, members of the community
undertake education by spending their private funds.

In the second case, for students to receive education without paying a fee, the
community has to pool resources through taxes raised and offer scholarship to
students. The only difference in this model is that instead of the state producing
and supplying education, the private sector produces and supplies education.
Hence, the same debtor-creditor relationship prevails in the use of education by
members of the community.

Accordingly, if the students pay for their education out of their funds, they
become creditors of the community. If on the other hand, if the community pays
for education, the students will become debtors of the community.
A fee charging private education to supplement free education of the
Government

Now suppose that education is provided by the private sector by charging a fee
from the students. By doing so, they help community members acquire the
required skills. This is the model which is being objected to by IUSF and GMOA.

However, there is no difference in this model and the model in which the state
sector supplies education by charging a fee. Hence, in this model, as in the case of
the model where the Government supplies education by charging a fee, students
become creditors of the community.

What is prevalent in countries where the state provides education on a

community basis is the existence of fee-charging private education side by side
with free education provided by the state.
A payment mechanism

Hence, in order to encourage members to acquire education by paying a fee, on

one side, and dissuading others from misusing free education, on the other, there
should be a payment mechanism for education. It is in this respect that, further
developing a method suggested by Prof. Rohan Samarajiva, the article in the
previous week proposed that a hypothetical student account should be
maintained by the State for each student.

In the case of students receiving free education, it was proposed to debit the
account since they are debtors of the community. In the reverse, the account of
the students who pay for their education out of their own funds, the account
should be credited since they are creditors of the community.

Then, the payment should be done by the students in the first case and by the
community in the second case. Students can pay back, again hypothetically, in the
first case by providing their services to the community for a prescribed period.

In the case of the medical profession, the system could be used to encourage
them to serve in difficult areas by allowing them an accelerated payment system.
In the case of students who have met the education expenditure out of their
funds, the community could pay back by engaging them in productive
employment.
KDUMC has already introduced a fee collection system

One might think that this is a pipedream of an intellectual. But as Prof. Sujeewa
Amarasena, the first Dean of KDUMC and presently a professor at Ruhuna
University, had clarified to this writer, a similar method has been in use in the
case of service personnel following medical education at KDUMC.

In KDU students are enrolled to tri-forces as second lieutenants or cadets. When

they graduate they become Captains in Army and get relevant ranks from Navy
and AF. They get paid by these forces a salary. The cost of education is free but
they have to pay for meals, uniforms (allowance is given), books, computers.
These are bought by the KDU but money is deducted from the monthly salary.
They are bonded to the respective force for 17 years, 5 years in the medical
school and 12 years after graduation, says Prof. Amarasena.

This is an instance of actually implementing the account system proposed in this

article. Amarasena has suggested that this model should be extended to State-
owned medical faculties as well.

If this method is employed, there is no incentive for students to boycott classes

and engage in activities which are not directly relevant to their acquisition of
skills.

(W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka,
could be reached at waw1949@gmail.com)
Posted by Thavam