Privately funded education vs. publicly funded education: Elimination of myths needed

Monday, 17 July 2017 00:09 -     - {{hitsCtrl.values.hits}}

1Two issues raised by readers

Several readers of the last week’s article in this series (available at: 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 community’s 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 Officers’ 2Association or GMOA which are monopolies, while the eight medical faculties functioning under the country’s 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 today’s 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. 

GMOA’s campaign for quality

The GMOA has cited that it is opposed to SAITM because it lacks, according to GMOA’s 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 Lanka’s 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 

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