Appraising Commercial Expenditure Efficiency of General Medical Education and Residency Programmes in Nigeria

Purpose: The purpose of the research is to establish the standard period taken in full recovery of cost outlays, rate of returns for general physicians and marginal returns to consultants, and appropriate profitability indices. Mixed ex-post “facto” data and primary data-sets pertaining medical education expenditure across levels and lifecycle career earnings of Nigerian physicians in public service were employed. The longitudinal secondary and primary da-ta-set were obtained from cohorts of physicians that participated in the two stages of medical education, published programmes charges posted in bro-chures of some public universities’ medical schools and gazette consolidated medical salaries scheme of scale for medical workers in the public service. Method of Analysis: Break-even analysis was applied to determine minimum number of years required to fully invested capital; “elaborate (full cash flows) discounting” with internal rate of return method was used for calculation of the private and marginal rate of returns. Then, profitability ratio approach was applied to determine the level of viability of medical education across levels. Cost construction indicates that about N30 million and N69.5 million are committed as investments on general medical education and residency training of the licensed general physicians and consultant-physicians respectively. The lifecycle career earnings estimates of the general practice physicians and consultant-physicians employed in the public service worth N356 million and 814 million. Results: The break-even period for full recovery of investments in general practice physicians is 5.25 around the thirteenth years of medical education and 6.33 years for residency-trained consultants, occurring in the 21st period of this layer of vocational training respectively. Individual rate of returns ings premium of consultant-physicians). This combined rate of returns of consultant-doctors (general medicine plus residency training) is 64 percent. Net present value of cash-flows of the average general physician and consul-tant-doctors in Nigeria is worth N326 million and N744 million respectively. Whilst the profitability index derived from the present value of net cash-flows is 1.32 for general physicians and 1.69 for the specialist. Conclusion: The paper concludes that investments to medical education in Nigeria are worth-while; but more rewarding for residency training. Timing of education (age-range when doctors get certified) influences the earnings and rate returns to investments and value of one’s intellectual capital and net-worth (statistical financial value of life). Contribution to Knowledge: The results of assessment of individual’s expenditure efficiency in medical/higher education confirm that investment in medical education is worthwhile. The findings enhance rational decision for individuals, private sector and government organizations respectively and veritable information for policy formulation. Originality: This research is an exploratory assessment of individual participants’ spending efficiency in medical education in Nigeria and other developing country establishes tentative pay-back period of such investments, unit rates of returns across levels and profitability indices. in policy formulation; governments, institutions, household units and participants in medical training in financing medical education in Nigeria.


Introduction
The paper considered medical education as units of human capital investment asset that generates cash-flows after licensure and form the basis of assessing the feasibility, viability of medical education in the economy. Whilst attainment of higher education enhances individual's chances to secure employment, offering international labour mobility for physicians; higher education paves way to attaining leadership and self-actualization [1]. Individual's investment in medical education is necessary in health manpower development, increased productivity and economic growth. Contextually, it is expedient to perform cash in-flows/out-flows analysis in ascertaining commercial feasibility and viability of human capital investments in physicians' education.
Medical education at undergraduate and residency is capital intensive with long gestation period to generate cash-flows. Consequently, physicians-in-training lacking adequate funds to finance medical education particularly those without free scholarship often resort to borrow funds from commercial banks at market lending rates to complete their programmes. Government organizations on their part also source fund for providing relevant intervention projects/facilities in medical education from development finance institutions. These education loans attract rates of interests ranging from 24 to 30 percent in commercial banks. Nigeria's monetary authority in fixed monetary policy lending rates (MPLR) is also trea-sury bills (TBs) interest rate in the range of 17.5 to 20 percent. This represents the effective discount rates in the Nigerian economy. In the same vein, the international development institutions charge five percent concessionary interest rates on credit facilities extended to public entities [2] [3] and adopted as interest rate for social capital projects in the context of this study.
Investment Participants in medical education that collected medical education loans bear huge debt burden that repayment linger almost throughout their careers. Lack of information pertaining total upfront expenditure outlays for medical education, projection of lifecycle career earnings and pay-back (break-even) period apparently compelled many trainee-physicians in incurring huge medical education loans with prolonged repayments. It was argued in Chen (2012) [3] that the affected individuals repay the loans for several years after graduation; and Roth [4] corroborated the fact that physicians accumulate debt worth US$156,000 or equivalent of N30 million on the average. The situation in Nigeria is even worse because there study loan scheme is not quite effective. In effect, lack of information on spending efficiency in medical education in Nigeria makes it difficult for the participants in medical education and health policy-makers to capture reliable estimates of cost of training physicians in fiscal budgeting. Healey and Gunby [5] explained that availability of information on expenditures on educating clinicians, labour wages and returns on investment to medical education in the UK's is critical to demand for physicians. Participants in medical education or sponsors-financiers as prudent investors expected to utilize funds invested in medical education to purchase government bond which is tax-free is investment securities issued by government. Treasury bills interest rate which is fixed by Central Bank of Nigeria represents effective discounting rate in the economy [3] [6]. This risk-free rate of return is used as a benchmark for rate of return in the economy. Based on these premises, this paper adopted seven years and 14 years as the minimum pay-back periods for each of the two tiers of medical training.
Then, it applied 18% as discounting factor and minimum acceptance criterion for private rate of returns; 15 percent as idealized minimum marginal return on residency training over baseline (first tier) medical education and profitability ratio of 1.2 as parameter for test statistic for viability.
The production and availability of suitable mix of high level medical workforce is essential in health service delivery but expensive. But there is dearth of data/information on cost, benefit and returns on investment in developing countries including Nigeria [7]. Lack of data originates partly from inadequate funding of medical schools for medical research activities; insufficient institutional spending and financial grants to undergraduate medical students and residents. Budgetary allocation and fund disbursement to health sector in Nigeria seem insufficient and Osotimehin [8] affirmed that paucity of reliable information relating to public expenditures of both undergraduate, medical residency programmes in Nigeria. This result in poor remunerations of physicians in the public health services coupled with inadequate facilities and incessant strike actions.
Break-even period analysis with relevant years of full recovery of capital, rate of returns, marginal rate of return and net present value-linked profitability index are mathematical finance method employed to measure feasibility of investments in medical education in this paper. These four species of investment efficiency measurement are often used in higher education to gauge and select

Conceptual Literature
Human capital concept in economics has been consistently used in describing both the time, financial resources committed on acquisition of education [11] [1]. Other skill development activities and healthcare raise productivity in the economy, especially where such factors are increased [12]. Lawanson further argued that education and human health services are two closely related to human capital working together to make individual more productive. Human capital is commonly taken to include peoples' knowledge and skills acquired partly through education, but can also include their strength and vitality, which are dependent on their health and nutrition [13]. Arrow argues that whilst high in-  [13]. For this reason, education is compulsory for certain minimum length of time in many countries. Investment in human capital is embedded with the principle of allocative efficiency in educational spending [13]. Maani [10] opined that the concept of allocative efficiency and viability were drawn the economics of production, economies of scales and optimal utilization of scarce resources within educational sector [14]; and more specifically on medical education and health care delivery system [4].
Human capital is defined as expenditures incurred in the education, training, human health-care systems and medical services are investments in human capital [4] [7]. Resources committed into human capital development are not simply costs, but they are worth much more than that, but investments with valuable returns that can be calculated and measurable [1]. Health economics is the branch of economics concerned with the formal analysis of costs, physicians' career earnings, returns, and management of health services and consequences of population on the economy [13]. Roth [4] argued that expenditures and activities on education and medical care contribute to improve health conditions of the society, raise persons income and or earnings, and also add to a person's appreciation in knowledge, expertise, and literacy over a life-time.
Investment in education is considered similar to other types of short, medium and long term capital investment in financial assets, acquisition of physical assets or projects. These investments in education involve initial expenditure outlays with or without immediate cash-inflow streams, with expectation of generation revenues or cost-savings and other benefits in the future. Roth submitted that expenditure on health systems and medical services form part of investment in human development.
Fiamholtz [15] [14]. Becker [1] and Psacharoupolus [14] explained that people who attained higher education receive higher salary than those with lower or non-formal training. Becker [1] posited that, in certain cases, earnings of people who attained tertiary education vary from profession to profession. Mincer [16] provides a review of large number of studies on human capital formation through training and learning on-the-job. One of the major contributions of human capital theory was its explanation of how much firms choose to invest in on-the-job training and who pays for it under different market conditions [11] [17] (Mincer 1977). Mincer also reported that the considerable empirical results on these issues from both early and more recent studies. His work converges with the results reported in Murphy and Welch [18] indicates that market demand for human capital increases with changing technology.
Labour market studies relate wage rates of labour prices of people that attained post-basic school education with the demand for skilled labour and productivity. This leads to the conceptual framework and signaling theory in labour economics as we shall see later under in sub-section 2.3.3. In essence, the concept of acquisition of tertiary education and skills holds that, the higher education persons acquire, the higher the salary income they receive. Individual's earnings increase with age, attaining its peak at some point but decrease upon reaching but in the case of doctors may peak at the age of about 60 in Nigeria; extending up to the age 70 years consultants as in other countries.
Earning differential between with college degrees and persons without, that is, by not working for four years, university student incurs an indirect (opportunity) cost in terms of forgone earnings equal to what secondary school graduates of the same age are earning in the labour market. This concept also relates the difference between earnings of master's degree holder above bachelor's degree holders but more often, the earnings of doctorate degrees above master's degrees; general practice physicians and consultant-physicians etcetera. In the same vein, university student incurs a direct cost (private costs) representing any tuition and incidental expenses he or she is paying for his or her studies. After graduation at around the age of 22, the university graduate will start earning more than secondary school graduates of the same age are earning in the labour market, and the earnings advantage of the university graduate will continue over a lifetime. Furthermore, the concept of "wage premium for university graduates over secondary school graduates; 2) human or intellectual capital, the labour market and corporate productivity or performance"; 3) entrepreneurial human

Human Capital Investment, Earnings and Commercial Efficiency Evaluation
Human capital investment and human development theory is rooted in macroeconomics, economics of development and microeconomic (profitability and economic growth) theory. Becker [11]  [20]. Human capital theory suggest that education and training raises productivity of employees, but more specifically the skilled workers by imparting useful knowledge and skills, hence raising workers' future income and lifetime earnings  Spencer (1973) [21] originally developed the job market signalling model and it states that that potential employee sends signal about the ability level to the employer by acquiring education credentials. Swati (2016) [22] notes that whilst human capital theory claims that education raises wages of employees; the signalling theory modifies the claims that education raise wages because education level is simply a signal of the workers ability unobserved by the employer. The signaling theory in economics is the labour market model being applied in the analysis employment contract which credibly explains the perception of information characteristics of potential employees' ability level to the principal or contracting authority [22]. Murphy and Welch [18] contended that wage premium for college graduates and earnings premium in the medicine is at the heart of assessment of profitability of investments in higher education. Murphy and Welch further explained that internal rate of return method is frequently employed in estimating rate of returns on educational investment. However, marginal benefit relates earnings differential from higher university degree education over high school diploma is normally represented by higher earnings (premium) received over a lifetime.

Signalling Theory, Earnings Premium of Residency and General Medical Education
The additional earnings and expenditures are core variables utilized in assessment of profitability, representing the justification of acquisition of higher level of education over lower levels by discounting future earnings to present values. Participation in residency training and other specialized training programmes is a common phenomenon of medical education. Normally, it involves substantial additional educational expenditures, time and intellectual rigour and attracts exceptionally higher earnings, being referred to as earnings premium. Earnings differential and marginal return on additional investment in education act as screening indicator used in assessing private financial gains and incremental profit under signalling theory. The traditional theory of supply and demand implies that the more skilled individuals there are; the higher education; higher the earnings premium and rate of return.

Technical Specifications of Medical Education
There are two broad dimensions of the technical specifications of medical education in different countries and economic jurisdictions globally that impact on supply, density and skill-mix of medical doctors. These are broadly subdivided into the basic medical training and out-turn of general practice physicians and residency programmes. Residency training is the process where the consultant/highly skilled medical experts are produced. This mixture of skills from the two layers of medical education is the source producing general physicians and specialists which is necessary condition for health systems development and sustenance of effective health care delivery.

Baseline (Undergraduate-MBBS) Medical Education Programme
The basic general medical training in Nigeria and in some other countries runs However, for those that obtained medical training in foreign medical schools, it is mandatory for such foreign Nigerian physicians to undergo medical registration course and examination of the MDCN before they can receive the license to practice in Nigeria. The medical regulatory body requires that graduates of the foreign medical schools must attend a joint four month remedial course at a Nigerian teaching hospital, after which he or she will be assessed by MDCN for eligibility to practice medicine in Nigeria [23] (Olukadiya, 2016).

Residency Training Programme
Residency training programme is the post-graduate medical education in which the MBBS holders pursue additional specialist course which leads to professional fellowship examination of the Nigeria's National College of Physicians (FNCP), West African College or Royal College of Physicians/Surgeons (UK) equivalence. This programme runs for minimum of five or 6 years and it is substantial supported by government, with residents paid some moderated and graduated monthly residency stipends as salary throughout the prograame. Prospective medical officers are enrolled into the scheme through series of highly competitive selection examination to fill the limited slots in residency programme of the medical schools duly approved to run the training in designated teaching hospitals. This means that to become a specialist doctor, the participants are likely to commit between 12 and 17 years of training, counting from your first year in the university.

Review of Empirical Studies
Engelage and Hadjar [24] studied earnings differentials between the Masters' degree and Ph.D degree holders for Switzerland. They use survey of Masters and Ph.D graduates from 1983 to 2001. In their career earnings regressions the authors control for period effects, sex, interaction terms between gender and Ph.D graduation, and age. The paper found positive returns across all field of study in two years after graduation. This positive return rages from 11 percent in the humanities/social sciences to 35 percent for engineering. Mertens, Röbken and Merteins [25] examined differences in salaries and working time of doctorate holders in comparison to graduates with a master or equivalent degree (in Germany, first university degree is called a "diploma" or "state examination" depending on the field of study. The diploma degree and the state examination are equivalent to a Master's degree as they typically require a 5 year full time study programme. The authors noted that it was only after the implementation of the so-called Bologna reform in 1998, that the universities in Germany introduce the Bachelor and Master's degrees programmes and awards; distinguishing between different fields of study. Data used in the empirical analysis were drawn from micro-census (2006)

Methodology
The

Materials and Methods of Collection
Primary and secondary data were generated from primary and secondary  Costs of education comprised of individual or private costs and institutional or public costs [35]. Private costs of education are those incurred by a learner  ical practitioners in the federal health service earn between N195,000 -N220,000 per month [37]. This is equivalent to N2.4 million -N2.7 million per annum before personal income tax and other reductions. The entry level salary for physicians in the state service varies, depending on the pay scheme in a state. Prior to the recent new minimum wage adjustment in Nigeria, mint medical officers in federal public service are granted a minimum monthly salary of N3,500,000 or N4.2 million per annum. In government-owned hospitals, many attempts have been made to regulate salaries of doctors is the Consolidated Medical Salary Scale (CONMESS) [34]. Physicians could earn higher if they specialize and become consultants in the medical line; specialists, including obstetricians, cardiologists, gynecologists, dentists and surgeons were the highest earners. According to the reports, consultant physicians working in reputable hospitals in Nigeria earn about N750,000 and above per month. There are disparities in the remuneration packages of physicians in federal hospitals compared to some state-owned hospitals. Obviously, doctors in private hospitals may not earn the same as those in public hospitals. Physicians' earnings increase considerably with time, experience and specialty; whilst the medical practitioners that enjoy the highest patronage, salaries or professional fees are the senior doctors, consultants and specialists.

Human Capital Measurement Models and Methodology Development
Human capital investment theory, signalling (earnings premium) theory alongside resource allocation efficiency in education are eclectics' of theoretical foundation on which the cost benefit analysis, break-even point, incremental rate of returns and profitability indexing in this paper are erected [10]. Patrinos and Psacharopolous [20] identified the "elaborate" or full cost and earnings discounting cash-flows method and Mincer's "earnings" methods developed by Mincer [16] as appropriate and reliable approaches to appraise investment to education and measuring of returns. For instance, Mincer's earnings regression method does not incorporate total costs of education (direct and indirect costs of education) which is the main weakness of the earnings approach; hence, it is not used in this study. Flowing from the salient defects and inconsistency frequently encountered by human capital evaluator, the elaborate method is preferred and adoption in this study.
The internal rate of return of the "elaborate method" takes into account age-income profiles in its framework in earnings estimation [14]. The IRR mod- The paper conclude that break-even period which determines number of years it takes streams of cash inflow of investments to fully recoup its outflows [38] gives investors idea of minimum time such capital can be available for reinvest-  Definition of the variables to be used in the study is presented in Table 1 below. 2) B (Career Earnings = 1|x) = Φ (β0 + β1 MBBS earnings in (t) 7 ,n + β2 MBBS+FNCP earnings (t) 5 +7 , n + β3 EMPCh aracteristics + δ + X + u)

Data Estimation and Evaluation Procedure
The

Data Analysis and Results
Results of data screening, evaluation and tested hypotheses is presented in four capsules, beginning with break-even period analysis, measures of returns and profitability index.

Results of Unit Root
Augmented Dickey-Fuller (ADF) statistics were obtained for time series and results as presented in Table 2, show that the series were integrated of order zero 1(0).

Co-Integration Results
Co-integration test were undertaken to assess behaviour of variables in the models in long run and short run and where two or more non stationary time series exhibit some degree of instability in time series when a linear combination of them is formed [39] [40]. Results of the screening test performances of the model variables are segregated and presented Table 3 for the rank test statistics and maximum Eigen value in Table 4 respectively.
Screening results from trace and maximum Eigen statistics respectively (Table   3 and Table 4) indicate that the co-integrating equations fitted well between the regressand and the regressors at 5% level in the model [39].

Analysis Results
Results of data analyses and tests are rendered in Table 5.
1) Result of break-even period for full recovery of investments in general practice physicians is 5.25 and 6 1/3 years for residency-trained consultants respectively. Payback timeframe is shorter that the seven years minimum duration of MBBS medical education is shorter than seven years duration and 6.333 full recovery periods is equally less than 50 percent (half) of 13 consecutive years spent to acquire combined MBBS plus FNCP certifications in Nigeria.
2) Individual rate of returns on investments in general medical education of average licensed general physicians is 32 percent. The returns to medical education across level exceed the prevailing the risk-free investment income accruing to government treasury bills and even the higher commercial banks' lending rates of 24 -30 percent in the economy.
3) Marginal rate of returns to additional investment expenditures on residency training (earnings premium of consultant-physicians) is 32 percent. The incremental returns to residency training surpasses prior global or regional 12 -15 percent rate of returns to higher education as reported in Psacharopoulous [14] and 15 percent reported in Nigeria by [42] [43]. The combined rate of returns of consultant-doctors (general medicine plus residency training) gives 64 percent on the aggregate.

Discussion
Cost construction show that about N30 million and N69.5 million are commit-

Summary, Conclusion and Recommendation
Pre-implementation and post-investment cost-benefit analysis and assessment of viability of medical education and individual spending efficiency provide useful guide to prior participants in medical schools and currently in practice in managing their earnings prudently. It also guides prospective medical trainees in selection of course programmes and future careers. between age-profile, experience and aggregate career income. The major set-back in the post graduate medical residency in Nigeria is that many of the participants or residents do not normally complete the training and obtain the desired award within the standard duration. From the results of the break-even analysis, it is apparent that medical education deserves increased funding of subvention spending, and payment of full salaries during residency and enhanced wages in order to make the career more financially rewarding and reduce debt burden [45].

Conclusions and Policy Implications
The paper concludes that an investment to education and training of doctors in Nigeria is financially and economically viable. Highly educated persons/skilled professionals should endeavour to recognise their career earnings not only as core factor determining their market value (worth of lifecycle career cash-flows).