Beyond Expansion: Rethinking Policy and Scale in India’s Medical Education System

Executive Summary

India possesses the world’s largest number of medical colleges, yet it continues to face a significant shortage of healthcare professionals. As the country’s population has surged, becoming the most populous nation, the number and distribution of trained MBBS and specialist doctors have lagged behind. Despite India’s rapid expansion of medical seat capacity, a significant gap persists between the need for qualified doctors and their supply. This inability of supply to respond to the need for qualified doctors has implications for the affordability of medical education, as well as the choice of practice, location, and eventually, the types of values—such as the delivery of public good versus the provision of services as an economic transaction— embedded within health service provision.

In recent years, the government has expanded the number of medical colleges, particularly in remote and rural areas, by augmenting existing district medical hospitals into medical colleges under its “One District, One Medical College” policy. However, private sector participation in the expansion of medical education has been relatively muted and narrowly concentrated geographically, despite relaxations in regulatory requirements and viability gap schemes to incentivise Public-Private Partnership (PPP) projects in setting up medical colleges. Using financial data from public and private medical colleges, we analyse whether this current policy pathway of establishing new medical colleges in underserved areas is likely to be effective in addressing the gaps in the availability of medical seats and arrive at the following findings:

1. The expenditure incurred for medical education is substantial and increasing. Moreover, ensuring high-quality medical education is not a one-time investment; it necessitates ongoing expenditure, as evidenced by our finding that older government colleges in Maharashtra had higher budgetary expenditures than newer ones.
2. The fiscal strain of establishing and operating new Government Medical Colleges (GMCs) remains significant over time, given the high levels of subsidisation of medical fees in government colleges.
3. Leading private hospitals in the country have been reluctant to invest in medical education, partly because the revenue generated from medical education constitutes a very small proportion of their total revenue.
4. Current regulatory and market incentives result in a low-level equilibrium trap driven by the self-selection of smaller private sector players who lack the capacity necessary to consistently deliver high-quality medical education over the long term.

Based on these findings, we explore alternative policy approaches to the expansion of quality medical education through the scaling-up of existing medical educational institutions. Drawing from international experience, where educational institutions tend to be much larger than Indian ones, we use bed-to-seat ratios as a proxy indicator to test whether current medical colleges in India have room to scale. We find that as many as 50% of the medical colleges in the country already have sufficient beds to further expand their seat capacity. This is true for both public and private sector hospitals that are currently operational. However, current regulatory structures disincentivise scaling by ensuring that there are no increasing economies of scale for the expansion of medical colleges.

We posit that public investment is better spent on strengthening the capacity of existing large medical institutions to produce more and better-trained medical graduates than on developing new educational infrastructure in underdeveloped or remote areas. This can be achieved while also addressing any quality concerns by undertaking the following:

1. Increasing investment in existing large hospitals, both government and private sector, including through Viability Gap Funding (VGF) where there is potential for scale, rather than in remote locations with limited scale potential, is recommended. The government should invest in enhancing the capacity of existing colleges to support their growth in both size and quality. Large, established medical colleges, where significant resources have already been invested, including government subsidies, should maximise economies of scale and improve productivity.
2. Increasing investment in medical research across all medical colleges, both government and private, is crucial to attract teachers and students. Substantially increasing investment in high-quality medical research can potentially serve three important purposes. Firstly, it generates incentives for the private sector to invest in establishing medical education institutions to attract research funding and the associated reputational benefits. This will also improve the quality of medical education and, consequently, the quality of care provided by these institutions. World-class faculty are more likely to be attracted to medical institutions that offer protected time and space for medical research. Finally, investing in medical research is a way to anticipate future healthcare needs and provide Indian institutions with a competitive edge, especially during this time of accelerated biomedical discovery and innovation.
3. Reorienting regulation to be outcome-based and focused on quality, making it less cumbersome for existing large medical colleges to scale, is essential. Current regulatory norms for setting up or scaling-up medical colleges continue to focus on inputs, particularly infrastructural inputs. An outcomes-based regulation focuses on demonstrating the competencies of medical graduates with an assessment of the performance of education programmes and institutions. Such an approach is more likely to foster innovation and quality improvement by providing flexibility to medical institutions.
4. Amplifying focus on quality through a stronger accreditation system and technology, rather than fixed input norms, is necessary. Increasing the number of medical graduates without simultaneously ensuring quality will not address the workforce challenges of the country. Adequate policy attention and budgetary allocation must also go towards building up the regulatory capacity and oversight mechanisms for ensuring the quality of medical education. This implies measuring the quality of medical graduates as well as the quality of medical educational institutions.
5. Directing government subsidies to be means- and merit-based, instead of supply-side subsidies which are not targeted, is advisable. Given the high cost of medical education and the proportional investment required, governments in India may consider merit- and need-based subsidies to rationalise their fiscal burden over time. Scholarships, vouchers, or other forms of financial support can be considered across public and private medical colleges to support diversity among medical students.

Once the supply of trained doctors surpasses local demand, market forces are likely to incentivise doctors to practise in underserved areas, addressing distributional concerns over the long term. Since medical professionals are known to migrate both within the country and abroad, policy incentives to encourage graduates to prefer rural practice, such as increased living or travel allowances, may be additionally deployed to address geographical disparities.