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Paying for Higher Education Reform in Health

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  • 337
    CHAPTER 18
    Paying for Higher Education Reform
    in Health
    Alexander Preker, Hortenzia Beciu, Paul Jacob
    Robyn, Seth Ayettey, and James Antwi
    This chapter reviews the economics of scaling up education for health
    workers in Sub-Saharan Africa. It considers four interlinked issues. First,
    the chapter examines the varying costs, both initial and recurrent, of
    increasing the number of health workers trained. Second, it explores
    potential sources for the additional financing needed to scale up training,
    including the amounts required under alternative scenarios. Third, the
    chapter evaluates whether it is possible for countries to get better value
    for their money in health worker production through different financing
    and aid mechanisms. Fourth, it reviews some of the regulatory constraints
    on improved financing of health education. The chapter lays out some
    policy options for reform and scenarios for future spending and financing
    trends. It provides regional estimates for Africa and relies on specific
    examples from Ghana while drawing on relevant examples from the
    United States and other countries.
    The delivery of health care is labor intensive (Mandel and Weber
    2006), and the production of a qualified health workforce is capital inten-
    sive. With major health worker shortages in both developing and devel-
    oped countries, policy makers everywhere are trying to determine how to
    scale up the production of health workers (Scheffler 2008; Scheffler and
    others 2009). There is a considerable body of work on estimating health
  • 338 Preker, Beciu, Robyn, Ayettey, and Antwi
    worker labor market targets (Scheffler and others 2010; Soucat and
    Scheffler, forthcoming; WHO 2006), but few analyses examine the recur-
    rent and capital cost implications for training institutions and partnering
    This chapter addresses that omission by examining the cost
    implications of scaled-up health education.
    The Cost of Training Health Workers
    Several factors are relevant to estimating the cost of scaling up health
    worker education. These include the training institution’s recurrent oper-
    ating costs and the associated investment costs before and during the
    scale-up. The number of students trained and the time required to gradu-
    ate additional health workers also affect training costs (Preker and others
    The total recurrent operating costs of scaling up health worker educa-
    tion are based on the average cost of training existing students, the mar-
    ginal cost of training additional students, and the total number of students
    trained. Total capital investment costs are based on initial investment, the
    depreciation of assets over time, the investment cost of increased intake,
    and the shadow cost of access to free or highly subsidized capital. The
    total number of students depends on enrollment, the dropout rate, stu-
    dent transfers, course repeaters, and the output of students. The time
    frame required for scaling up health worker production will vary accord-
    ing to the time needed to invest in improved standards or grow produc-
    tion capacity, and the time to train a student in a specific program.
    This section examines two variables that determine total health
    worker training costs: recurrent expenditures and total investment. For
    both analyses, Ghana is a useful case study.
    Recurrent Expenditures in Training Health Workers
    In many countries the cost of training is only a small part of overall
    health care spending (Association of American Medical Colleges 2011).
    Among U.S. schools, public and private, an average of 3.5 percent of
    schools’ revenues come from tuition (Association of American Medical
    Colleges 2011). In Organisation for Economic Co-operation and
    Development countries, only 2 percent of total health expenditures is
    spent on the recurrent cost of educating health workers (Simoens and
    Hurst 2006). African countries follow a similar pattern, with one consid-
    erable difference: the cost of undergraduate education is often borne by
    at least one ministry (the ministry of health or education), with support
  • Paying for Higher Education Reform in Health 339
    from development partners and nongovernmental organizations. These
    contributions are rarely captured in subsequent cost analyses.
    Because medical education straddles both the education and health
    sectors, quantifying the overall recurrent expenditure is complex. The
    analysis should consider how the costs of laboratories, utilities, infrastruc-
    ture maintenance, teacher salaries, administrative and fixed overhead, and
    educational and reference material are divided between the two sectors
    (Beciu and others 2009; GHWA 2010). In preservice settings, some infra-
    structure facilities used for training or housing health students are shared
    with other university students. Similarly, the infrastructure for in-service
    training is typically shared with service delivery programs. As a result, it
    is difficult to separate the costs of training health workers from the costs
    of training other university students, or of providing health care services.
    In most developing countries there is no clear picture of the cost ele-
    ments and figures associated with undergraduate and postgraduate edu-
    cation. The authors of this chapter, in their study of Ghana, analyzed the
    cost of scaling up health worker education at a national level with data
    on capital and recurrent expenditures from a sample of training organiza-
    tions, supplemented with data from Ministry of Health and Ministry of
    Education. The information gleaned may be useful to other countries in
    the region that are exploring ways to increase their output of health
    Recurrent expenditures in context: The Ghana case. Estimated train-
    ing costs for health workers in Ghana vary according to their cadre
    (table 18.1). With the exception of professional training for doctors
    and dentists, and bachelor-level training for nurses, the estimated train-
    ing costs include only the direct cost of preservice training. The costs
    for training doctors, dentists, and bachelor-level nurses also include the
    indirect overhead and operating costs shared with the institutions that
    provide tertiary education during the preclinical phase of the training.
    Lack of detailed data on indirect costs at the university level for all
    cadres makes it difficult to reliably attribute the indirect costs of uni-
    versities’ fixed overhead. To facilitate the analysis, the authors assumed
    a 25 percent overhead cost for each institution.
    Many of the professional training institutions surveyed said that expen-
    ditures were considerably below the level needed for quality teaching. For
    medical schools the respondents felt that current spending was about
    50 percent below necessary spending (Beciu and others 2009). When
    calculating training costs it is important to note that following their

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Paying for Higher Education Reform in Health

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