Posts Tagged‘economics’

“Once you start letting a government monopoly instrument – the income tax system with an income-contingent loan – be used by private interest groups like the universities, then you can very likely end up with a situation where the instrument itself becomes a [means] to seek rent from students.” And there would be “questions about the ethics” of that, he said.

Bruce Chapman

The education bubble

by reestheskin on 15/09/2014

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It’s tough agreeing with Bill Gates

by reestheskin on 30/07/2014

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“We have to deliver value, and we’ve got to measure that value, and really adjusting the resources so we’re doing that well is a mission for you, the business officers of the colleges and universities. You’re the ones charged with fiscal management, and that has huge impact on every aspect of the student’s experience. On the quality of instruction, the availability of financial aid, the physical plant, the support systems. All of those are trade-offs that the financial model drives. My key message today is that that model will be under challenge. And so, instead of tuning it to find 3 percent here or 4 percent there, which has been the story in the past, there will be dramatic changes. … The role of the business officer won’t be just finding that last little tuning, or getting the reports done. It will be to get in the center of the strategy, working with the educational leaders, the effectiveness measures, and figuring out how those goals and the financial numbers come together.”

It’s tough agreeing with Bill Gates.

Who pays for medical education?

by reestheskin on 04/04/2014

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As far as I can tell most medical students do not know much about how undergraduate medical teaching is funded. This is not all together surprising, because it is complicated, and owes much to historical norms and structures that are now been swept away (at least in England). Everything about student finance appears confusing, even the 9K fees in England are not straightforward. How can increasing fees from 3K to 9K end up costing the government more? Hardly intuitive. (For more on tuition fees see ‘Explained: how is it possible to triple tuition fees and raise no extra cash?’ or have a look at Andrew McGettigan’s book.)
Funding of undergraduate medicine appears complex because more than one funding stream is used, and there is likely lots more cross-subsidy. So, whereas for a course in Modern Languages, the student pays fees (or at least the government does on the student’s behalf, and then the government of government proxy levies additional tax on the student when they graduate), there is no other significant stream of funding. Other monies may be involved —capital costs, endowments or even research funds— but the bulk of the cost of the course has to be met from what students pay. If not, there has to be cross subsidy from elsewhere. This financial architecture seems relatively straightforward in comparison with the situation in medicine.

In medicine the student may pay 9K (not in Scotland, of course) and in addition the Higher education funding council puts in another ~10-12K. So, a total of ~20K per student per year, for 5 years. All well and good. However, clinical teaching in hospitals and GP practices is also supported by a funding stream that comes via Health Boards—independently of the University. This money appears to exist at the aggregated level, but is much harder to locate at a lower unit level. It is called ACT in Scotland, and SIFT in England. The sums of money are very large, and are designed to reimburse the local NHS for all the staff time and facilities that are used my medical students. I do not know exact figures, but most clinical teaching is probably delivered by NHS rather than university staff (the ratio may vary with the type of teaching). For instance, a Health board or series of health boards with 840 students (280 for each ‘clinical’ year) might receive ~20K per student/year. Facilities will obviously include capital costs, but the bulk of money one would have thought would be accounted for by doctor time.
I do not know of any high quality empirical studies of where this money goes, but it is generally accepted by those on the ground that most of this money is not used to actually deliver teaching. I have heard senior NHS figures accept it is hard to justify the bulk of this funding in terms of its apparent intended purpose (the story of how those amounts were arrived at, I will leave for another day, save to say they were not very sound). However, whatever the original rationale or justification for the scale of the funds, this is what the tax payer is contributing, and what they are being told is being used for training future doctors (‘we paid for their training!’). The reality is that some of us think most of this money is not actually being used for this purpose; and the suspicion is that an ever increasing bureaucracy eats into it. Hard data would resolve this issue.

There are however other movements of money between universities and the NHS. Clinical academics deliver NHS work, but the universities are not generally reimbursed for this work. Individuals might however receive clinical excellence payments, which are in addition to their university salaries. In terms of the ‘direction of travel’ I suspect such payments may not enhance student teaching very much, but rather focus academics minds on research and on taking on NHS wide tasks. Just to add more complexity, a significant proportion of clinical academics receive their salary from the NHS, although this may come via the university payroll (the NHS gives the money to the university, who then pay the individual academics). I do not know what proportion of clinical academics are funded this way—people used to quote up to 40%– but I have tended to assume this percentage may have dropped over recent years. Overall, academics comprise less than 5% of consultants, but in larger teaching centres the figure will be higher. They are of course to varying degrees, part time clinicians.

The headline figures in summary for fees are that 20K a year is coming from the student and government direct to the university, and for clinical students the government is paying perhaps another 20K via NHS health boards. This makes quite an annual figure of 40K, but the headline figure takes little account of hidden cross subsidies. In the NHS, some of this money is diverted to treat patients; and in the universities, if the data from the US that Rich DeMillo quotes is correct, it is likely diverted into research.

A lot of money. How things could usefully change, I will leave for another day. If you can correct any of these figures, please let me know.