Tomorrow's doctors trained on a shoestring . . . and altruism

By Emeritus Professor Kim Oates and Emeritus Professor Kerry Goulston
Published in the Australian Financial Review on 3 June 2013

Opinion If we value medical education, we should make sure it is more securely funded.

So, what does it cost to educate a medical student in Australia?
The answer depends on who you ask.

If you consider only the 2012 subsidy the Commonwealth government gives to universities for each Australian medical student ($19,235 per student for each year of the course) and the annual fee paid by students ($9792 per year, deferrable under the Commonwealth Supported Place Scheme), the cost of
medical education looks like a little over $29,000 per year – a substantial amount.

However, this is only half of what it costs the university to educate a medical student. In our recent study of that cost at Sydney University, with the help of PricewaterhouseCoopers, it was found to be $56,250 for each year of the four-year course, including indirect and infrastructure costs.

This figure is consistent with international estimates and is comparable to costs for other Australian medical schools.

So, if it costs $56,000 per year to educate a medical student, with Commonwealth subsidies and domestic student fees contributing just half of this amount, where does the rest of the money come from?

A small amount (1 per cent) is from returns on medical school-invested funds. A further amount comes from international fee-paying medical students who pay almost $63,000 per year – not a great deal more than the amount it actually costs the university to provide medical education. The greatest amount comes from within the university by cross-subsidisation.

But wait, there's more. The cost of $56,000 per student per year does not take into account any of the teaching which medical students receive from people who are not employed by the university.

Most are paid by the state health department, such as staff specialists, visiting medical officers, nurses and allied health professionals. Others are general practitioners or honorary teachers. These people often teach for altruistic reasons. Many consider it to be part of their ethical obligation to teach the next generation; something Hippocrates espoused 2500 years ago.

When we looked at the value of this teaching, we found that in the final two years of our four-year medical course, which is spent in off-campus clinical settings, 92 per cent of teaching was provided by professionals who were not on the university payroll. We calculated the value of this teaching to be just over $34,000 per year for each student.

This is a previously "hidden" cost of medical education, one which was not costed in the Higher Education Base Funding Review, a report on university funding which went to the federal government in 2011.

So what is the answer to the question about the cost to educate a medical student? The answer is the value of the Commonwealth subsidy, domestic student fees and additional university costs ($56,000) plus the hidden costs ($34,000) for which the university does not pay – a total of $90,000 for each student for each of the four years of the Sydney Medical School course. Other Australian medical schools would have similar

Medical education in Australia is of a high standard. It is clearly expensive – more so than most realise. Commonwealth funding and local student fees together meet less than one-third of this cost.

We are currently in a situation where medical schools are only sustainable because of the goodwill which exists between their universities, government-funded teaching hospitals, state health departments, general practitioners who teach, and honorary teachers.

These relationships need to be fostered and nurtured. But they can't be taken for granted. In times of economic stringency, as organisations seek to trim their budgets, goodwill may only go so far. One Australian state has already started charging universities to place medical students in its hospitals, although it could be argued that state governments benefit from subsidising medical education as it is these graduates who provide their junior medical workforce.

The Base Funding Review found that current funding for medical schools was inadequate (even without taking into account the hidden costs) and recommended that medical courses receive a 25 per cent funding boost. This recommendation has not been implemented.

We realise that governments have financial constraints, particularly at present. We also know that if we really value the quality of medical education in Australia, it should be more securely funded.