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Opinions of Monday, 10 April 2006

Columnist: Amegashie, J. Atsu

The Brain Drain of Doctors is not a Problem: Part 2

My article titled ?The brain drain of doctors is not a problem? which was published in the April 3, 2006 issue of the Ghanaian Daily Graphic and also available at ghanaweb.com and http://www.uoguelph.ca/~jamegash/braindrain.htm was deliberately written to be provocative. The brain drain of doctors is not a problem if we can reallocate resources to solve it. If there is a solution, the problem ought to be non-existent. Herein lies the logic behind my argument that ?the brain drain of doctors is not a problem.?

Any problem could be decomposed into internal causes and external causes. My goal was to draw attention to the internal causes. Until we remove the internal waste and misallocation of resources, we cannot continue to blame the external pull factor of better wages that draws our doctors to foreign countries. Our doctors leave for countries like Britain, the USA, and Canada. But do you know that some of them (including our professionals like engineers, accountants, lawyers, etc) also go to Botswana? Are we saying that we cannot compete with Botswana as well? How many doctors or professionals from Botswana practice in Ghana? Surely, Botswana is doing better than Ghana. But if our professionals are also leaving for Botswana, an African country that was also colonized like us, then that should tell us that there are internal problems that need to be addressed.

As of July 6, 2005, the Agona Swedru Government Hospital had no refrigerator for storing blood. They had to use a household fridge to preserve blood for a short period. This had been the situation for four years and it is not clear that this problem has been fixed. (see http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=85195). My search at http://www.medicalmart.com revealed the following prices for medical blood bank refrigerators:

Allegiance Cryo-Fridge Blood Bank Refrigerator (23.3 cu. ft): $7955.00

Jewett Blood Bank Refrigerator (24.8 cu. ft): $7655.00

Harris Blood Bank Refrigerator (23.3 cu. ft): $6910.00

Are blood bank refrigerators also leaving for greener pastures in Britain, Canada and the USA? Let us do our best internally by eliminating economic waste and inefficient allocation of resources before blaming external factors.

We have a public sector with professionals, bureaucrats, ministers, etc who have different skills and different outside options. An efficient salary structure in the public sector would require that those with the best outside options should be paid the most. So if the doctors have better outside options than the ministers, then they should be paid more than the ministers. Of course, if it is harder to monitor a minister's performance than a doctor's performance, then that will weaken my argument since a higher pay - what economists call an efficiency wage - is required to induce the minister to put in a high effort. But I find it difficult to believe that the performance of ministers is harder to monitor than the performance of doctors. One may also argue the relative values of what doctors and ministers produce must also be taken into account. But in the absence of any further information, we would have to place equal values on these jobs and base our decision on what we can easily observe (i.e., the superior outside options of the doctors). The reason we do not obtain the efficient salary structure that I have advocated above is because it is the ministers who make the decisions regarding these issues.

Of course, like our politicians, our doctors are educated with the tax payers? money. When a country trains its citizens, it must obtain a social return on them. It is an obvious fact that the higher cost of training must be reflected in a higher return to make the higher investment worthwhile. But what return justifies this investment? Should we use the social return or the private return (i.e., the return to the doctors)? If doctors were inanimate objects like bridges, roads, we would only care about the social return. But because doctors are human beings who explicitly respond to incentives, we have to FIRST meet their private return in order to reap the social return. Therefore, the private return acts as a necessary but not sufficient condition in the evaluation of our investment in doctors. We have to evaluate the social return of this investment, anticipating that the doctors have the incentive to leave. That is, we would have to evaluate the investment (i.e., medical training) subject to an incentive-compatible payment scheme for the doctors.

In anticipation of lucrative salaries in the private sector or in foreign countries, some have suggested that medical students should pay their own tuition fees without any help from the government. This policy is defeatist because it does not address the problem of the exodus of doctors. Having said that, this would probably be a sensible policy, if we had well-developed credit markets and the ability to be a medical doctor was perfectly correlated with wealth. However, the reality is that not every one who has the ability to be a doctor comes from a wealthy family. But more importantly, a prospective medical student cannot easily obtain a loan in Ghana using his higher future income as collateral nor can he easily obtain a loan, after medical school, to set up a private clinic or be employed by the very few private clinics in the country. Therefore, there is market failure in the credit market. When the market fails, there is usually a strong case for government intervention. This is why the government must continue to play a significant role in training doctors in a less developed country like Ghana.

Let me propose a solution to the brain drain, assuming that the present internal conditions remained unchanged. Others have also suggested variants of this solution. I shall focus on doctors. We should let all doctors post a bond to serve for a minimum number of years after graduation. Those who do not serve their bonds, we could track them with the help of their host countries and tax their earnings. This should be easy to do. First, after medical school every doctor is posted to a given region for service. If they desert their post, we can easily detect that. Typically, they go to the USA, Canada, or Britain. Our high commissions and embassy in these countries can easily track the names of these doctors from the directory of the Canadian, British, and American medical associations. When we track them we then contact the medical association and government of the host country to report that the said doctor has broken the terms of his/her bond under which s/he agreed to pay a tax on his income for a given number of years at a given tax rate. Our lawyers can work out the fine details. Of course, our doctors are not considered as final products by western countries. They have to write some exams again and be retrained in certain aspects before they can become full-fledged doctors in their host countries. But this should not be a problem because they would have become full-fledged doctors by the time we track them in the directories of their respective medical associations.

It is very likely that this bond will not deter doctors from leaving because they are likely to believe that they will be better off even if they have to pay a tax for breaking the bond. For the sake of argument, suppose we produce 100 doctors each year and 90% of them leave. The 10 doctors who did not leave may not meet our domestic needs. However, over time, we can use the revenue from taxing the 90 who left to sufficiently increase the salaries of existing doctors. This will lead to a reduction in the rate of exodus. Suppose this rate falls from 90% to 70%. Then we now have a net annual addition of 30 doctors instead of the previous 10 doctors per year. We can also use the earnings from taxing our doctors to increase our production of doctors from 100 to say 110. Therefore, under this scheme the rate of exodus will fall over time and the number of doctors produced will also increase. Eventually, there will be a steady-state (stable) exodus rate and production level, which simultaneously satisfy our annual domestic need for doctors and exports enough doctors to make this program self-sustaining. This system could work if we can trust our politicians and bureaucrats to implement it and give the doctors their due.

Of course, the doctors who break the terms of their bond will find ways of making it difficult to track them. They might change their last names after becoming full-fledged doctors in the host country or request their medical associations not to list their names in their directories. In the latter case, the authorities can contact the medical associations directly.

To be sure, my proposed solution hinges crucially on the co-operation of the host countries (e.g., USA, UK, Canada). But since these countries benefit from the exodus of our doctors, they have no incentive to participate in a program that will be inimical to their welfare. This necessarily brings me back to my original and obvious solution: let us pay our doctors very well, more than we pay our ministers. This includes salary, fringe benefits and official perks. As argued in my earlier article, we have the resources to do so. Let us reallocate our resources to reflect our national needs and reduce economic inefficiency. If after doing that, our doctors continue to leave, we can, at least, take consolation in the fact that we did our best.

*The author, J. Atsu Amegashie, teaches economics at the University of Guelph, Canada.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.