Commercialisation of Medical Education in India: The Union Government and National Medical Commission (NMC) is doing a large scale expansion of medical education. With more than 800 medical colleges and over 1,30,000 MBBS seats, the country is rapidly increasing its capacity to make doctors. India also has most number of medical colleges in world. The COVID pandemic had also brought focus on healthcare capacity building.
However, as medical education expands, an important question arises among students, parents, and general public:
Are parents, through high MBBS fees, funding not just education, but also the operational and financial burden of private hospitals?
The link between medical colleges and their hospital wings is inseparable. This report examines the financial structure of private medical colleges, the rising cost of MBBS degrees, the economic realities of private hospitals, and the underlying question of whether commercialisation is exploiting students and parents.
Rapid Increase of Private Medical Education
Before 2000, medical education in India was a largely controlled by government. That changed dramatically in the early 2000s when policy reforms encouraged private trusts, societies, and universities to open medical colleges.
Join NEET News 2025 Need was simple: the demand for doctors was skyrocketing, government budgets were limited, and private investment was essential to meet required healthcare needs.
As a result, number of private colleges exploded in India. Large-scale campuses emerged in rural districts.
Promoters argue that these investments require massive capital, ranging from several hundred crores to build and even more to sustain.
While that is partly true, it also overshadows a reality most never see: the financial model of private medical education depends not only on tuition fees but also on revenue from the attached hospital, which often underperforms financially.
This financial mis-match sets the stage for a unique form of cross-subsidisation.
Cross-subsidization is a pricing strategy in which profits earned from one product or customer segment are used to reduce the price for another, less profitable segment. Businesses use it to make certain products more competitive, expand market share, or offer lower costs to targeted groups. Critics view it as a form of price discrimination, supporters argue that it helps improve affordability and access.
Read Also: Monopoly in Medical Education in India: Ownership, Costs & Reforms 2025
Why MBBS Fees Became So Expensive
Over the last decade, MBBS fees in private medical colleges jumped heavily. Annual tuition in many colleges now ranges between 20-35 lakh rupees. For the entire five-and-a-half-year program, the cost frequently crosses 1 crore rupees and in several institutions exceeds 1.5 crore. NRI and management seats push this even higher.
Families end up taking long-term loans, selling property, or spending life savings for a chance to secure a medical degree for their children. With lakhs of students competing every year and only a small fraction securing government seats, private colleges capitalise on this hunger for MBBS seat.
This demand-supply mismatch allows them to justify higher fees without necessarily improving educational quality.
Yet, despite these massive charges, families mostly find that the facilities, academic support, and clinical exposure are far below expectations. The mismatch between cost and value raises suspicion about where the money actually goes.
Read Also: NMC Fee Guidelines: 50% Private Medical Seats at Govt College Fees
How Teaching Hospitals Depend on Student Fees
A private medical college cannot exist without an attached hospital. Regulations require them to have a functioning, well-equipped hospital with hundreds of beds, significant outpatient numbers, and a full range of clinical departments.
Hospitals in private medical colleges are designed to serve two purposes:
- Provide real clinical exposure to students
- Meet the accreditation standards of the National Medical Commission.
However, running such hospitals is very expensive. Critical care units, ICUs, operating theatres, and diagnostic services require constant investment.
Teaching hospitals have to be staffed round-the-clock with qualified faculty, residents, nurses, technicians, and non-clinical staff. The recurring operational cost of such a setup easily touches hundreds of crores each year.
To maintain patient load for regulatory compliance, some hospitals even lower their charges. Surgeries and procedures are heavily subsidised or even offered free during inspection periods. All this ensures high occupancy, but drastically restricts the hospital’s revenue stream.
Recent CBI exposed medical college inspection fraud involving NMC officials and probe found that some private hospital hire fake patients during MARB inspections.
And since the hospital must remain fully functional for the college to keep its accreditation, the deficit is quietly filled using student tuition fees.
This is where the cross-subsidy becomes most apparent.
Read Also: NMC MARB Guidelines 2024: How to Start a New Medical College & Increase MBBS Seats in India
Where Student Fees Are Actually Used
In many colleges, MBBS fees are not exclusively used for academic expenses. They flow into the hospital’s operational budget as well.
A significant portion is spent on faculty salaries. Professors, associate professors, and assistant professors draw substantial pay. Medical, nursing, paramedical, and administrative staff add to the salary burden.
Consumables for hospitals, medicines, surgical equipment, oxygen supply, biomedical waste management, radiological materials, all require continuous expenditure.
Electricity bills for large hospitals, especially during peak summer and winter, run into crores annually.
When hospital income remains far below these requirements, colleges transfer funds internally. There is no clear financial demarcation between “education revenue” and “hospital revenue” in many private medical institutions.
Families paying hefty fees assume that the money directly supports their child’s education, better labs, better classrooms, better hostels, and better learning experiences. In reality, a considerable share is used to maintain patient services that are intentionally kept affordable to sustain regulatory norms.
The financial statements of private colleges are rarely made public, and the regulatory framework does not require them to distinguish hospital expenditure from educational expenditure.
Read Also: NMC-MARB Vacancies Raise Questions on Medical College Ratings
Why Regulations Remains Weak
The National Medical Commission (NMC) focuses heavily on academic standards, faculty availability, hospital infrastructure, and patient volume. But it does not ask colleges to reveal how fees are utilised.
State-level fee regulatory committees exist, but their influence is weak. Fee fixation becomes a prolonged legal battle. Colleges appeal against caps, seek exemptions, or manipulate their ownership structures to bypass regulations.
The NRI and management quota categories remain largely unregulated, allowing institutions to charge any amount they consider reasonable.
Courts have repeatedly commented on arbitrary fee structures and the absence of transparency, but the regulatory machinery has not evolved to enforce financial accountability. This vacuum enables private colleges to operate with minimal financial scrutiny.
Read Also: NMC New Regulations 2025: Practical Guide for Medical Colleges and Students
The Student and Parent Experience
Students and parents describe a range of frustrations that reflect the deeper structural issues of privatised medical education. Most private medical colleges and deemed university in India charge premium fees but offer inadequate learning environments. Skill labs may contain outdated mannequins, libraries lack updated materials, and hostels suffer from overcrowding or poor maintenance.
Clinical exposure is worst. While hospitals attract low numbers of patients, students often struggle to get meaningful hands-on experience and even cases are managed predominantly by senior residents or faculty members focused on service delivery rather than academics.
| The FAIMA–RMS Survey 2025 finds serious gaps in India’s medical training system. Most MBBS students reported poor infrastructure (89.4%), excessive clerical workload (73.9%), and staff shortages (55.2%), with 40.8% describing their work environment as “toxic.” Only half received stipends on time, and just 29.5% had fixed working hours. While many noted adequate patient exposure (71.5%) and regular teaching sessions (54.3%), limited access to functional skills labs (44.1%) means only 57.4% feel ready for independent practice. |
The result is a paradox: families invest extraordinary amounts of money for a medical degree but often encounter academic environments that do not match the cost.
Loan burdens have become common. Students graduate with massive financial responsibilities and must still prepare for postgraduate entrance exams, which require additional time and investment. For many families, the financial strain extends well beyond the MBBS years.
Read Also: NMC vs Private Colleges on Fee Guidelines 2025: Rising Medical Education Cost Crisis
Why Indian Private MBBS Costs More Than Many Foreign Programs
Medical education abroad offers an interesting contrast. Countries such as Georgia, Russia, China, and the Philippines provide English-medium MBBS-equivalent programs at significantly lower costs. These programs range between twenty-five lakh to forty-five lakh rupees for the entire course, despite strong infrastructure, robust patient load, and transparent fee systems.
India, ironically, has one of the highest MBBS fee brackets in the world, even though the cost of human resources, infrastructure procurement, and service delivery is lower compared to Western or East Asian nations.
The difference lies largely in the financial dependence of Indian private colleges on student fees to maintain compulsory attached hospitals, something not seen in many countries where hospitals and universities operate as financially separate entities.
Read Also: MBBS Abroad vs Private Colleges in India: Best Option for NEET 2025 Low Rankers
Stakeholders’ Opinion
College administrators argue that without student fees, it is impossible to maintain teaching hospitals, especially in semi-urban or rural locations where patient-paying capacity is low. They view cross-subsidization as a necessity rather than a choice.
Many agree that hospitals struggle with financial sustainability, but also point out that better administrative management, efficient billing systems, and rational service pricing could significantly reduce dependence on student fees.
They also emphasise that academic quality often suffers when institutions prioritize revenue over investment in faculty development and research.
Parents, on the other hand, often feel misled. They pay for a premium educational experience but rarely receive detailed explanations of how fees are utilized. Their concerns often go unanswered because grievance redressal mechanisms are weak or symbolic.
Government officials focus on increasing the number of medical colleges and seats, hoping that higher supply will eventually reduce costs. But without strong regulatory controls, the private sector continues to set its own pricing.
How India Can Fix the System
Financial transparency is the most urgent reform needed in medical education. Colleges should be required to publish audited financial statements and a clear breakdown of how student fees are allocated. Hospital revenue and expenditure should be listed separately from educational accounts.
Dual-accounting structures, treating hospitals and colleges as distinct financial entities, would help prevent misuse and allow regulators to assess whether colleges are overcharging students.
Fee regulation needs to be strengthened. Committees should have more authority, faster decision-making processes, and reduced legal loopholes. NRI and management quotas also require stricter oversight to prevent unlimited charging.
Public-private partnerships could reduce pressure on colleges by providing operational subsidies for hospitals in underserved areas. For the long term, the government must continue expanding public medical colleges to decrease dependency on private institutions.
Read Also: PPP in Medical Education: Models, Funding, & How Poor Will Suffer Most?
Digital audits of hospitals, tracking patient load, bed occupancy, and diagnostic service utilization, can also limit manipulation during regulatory inspections.
The evidence reveals a clear and persistent trend: in many private medical colleges across India, the high MBBS fees paid by parents help sustain not only the educational activities but also the daily operations of attached teaching hospitals.
This arrangement is not always illegal or intentionally exploitative, but it thrives in an environment where transparency is limited and regulatory oversight is inadequate.
The commercialization of medical education in India has grown silently, driven by high demand, limited government capacity, and the financial complexity of running teaching hospitals. Families continue to bear the hidden burden of subsidizing healthcare delivery, often without knowing that hospital maintenance forms a significant share of what they pay as “tuition.”
If India truly wants to strengthen its medical workforce and ensure equitable access to medical careers, the financial architecture of private medical education needs urgent reform. Until that happens, parents will keep paying for far more than a medical degree, supporting an entire healthcare ecosystem that relies on student fees to survive.
