Teaching Hospitals Buckle Under Budget Strain

Nov 15 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Teaching hospitals are under strain as an arcane funding formula leaves them without the resources to provide critical care or pay their doctors. In Jimma, a physician describes a daily reality shaped by broken X-ray and CT machines, persistent medicine shortages, and the heartache of turning away patients who arrive with little more than hope or a community-based health insurance card.

Teaching hospitals, once bastions of clinical training and community care, are now operating under binding financial distress, threatening their core mandates of education, treatment, and research.

The crisis has exposed the inadequacies of a funding architecture that classifies hospitals under the “community service” budget line of universities, a model increasingly derided as outdated and insufficient.

The current financing model ties teaching hospitals to university budgets, allocating a small percentage under the “community service” rubric. Hospitals such as Jimma University’s Teaching Hospital and Tibebe Ghion Specialised Hospital are operating under constraints so tight that basic equipment, including CT scans and X-rays, remains broken for months, medicines run short, and emergency referrals are made not out of clinical protocol but out of necessity.

Doctors, speaking anonymously, report burnout, irregular overtime payments, and emotional fatigue from turning away patients who cannot pay or receive timely care. The budgetary squeeze has led to compromised service delivery and eroded morale among healthcare staff. Even life-saving essentials like anaesthesia are scarce. The result is a knock-on effect on compromised care, reduced training efficacy for medical students, and a widening gap between healthcare demand and capacity.

For years, these institutions have been financed through a complex arrangement in which the Ministry of Finance allocates a sliver of university budgets. This system, critics say, has left teaching hospitals struggling to deliver basic services, pay their staff, and maintain critical equipment.

For a doctor from Jimma Teaching Hospital, who requested anonymity to speak candidly about the challenges, most of the patients visit her Hospital with little money due to an emergency or to use the Community-Based Health Insurance. She described how budget shortages have resulted in broken CT-scan and X-ray machines going unrepaired, forcing staff to refer patients to smaller health centres or turn them away altogether. She observed that, in recent months, shortages of medicine have led to complications for many patients and even deaths.

“The situation of the patients is heartbreaking,” she said. “Most of them have no money to pay for themselves.”

Teaching hospitals sit at the intersection of crucial missions of training the next generation of medical professionals, conducting research, and providing healthcare to the broader community. But their finances are stretched to the breaking point. At Jimma, as at other hospitals, staff report going months without overtime pay. Essential medications, including anaesthesia, are often hard to find.

“Duty overtime payment has also been lagging for the past two years and only started six months ago," said the Doctor. "The backlogs are being paid irregularly, leading the doctors to frustration and burnout.”

Part of the problem, according to education officials, is that regulations prevent teaching hospitals from generating additional income by charging for services, even as costs and demand for care rise. The Ministry of Health has issued rules that bar hospitals from adjusting their fees or running services as revenue centres. Hospitals should operate within the limits of the University’s community service budget, a figure that rarely covers the actual costs of running large and complex health facilities.

Minister of Education Berhanu Nega (Prof.) told Parliament last week that the current funding mechanism is unsustainable and called for a different approach.

“The hospitals need a different financing mechanism to enforce a better learning environment and service delivery,” he said.

He acknowledged that the existing system fails to recognise the unique needs and functions of teaching hospitals. The Minister argued that the hospitals, which serve as training grounds for medical schools, as research hubs, and as providers of community health services, should not have to fight for funding within a single and generalised university budget.

His view is shared by Solomon Abreha (PhD), CEO of Governance & Infrastructure at the Ministry of Education.

“The hospitals are under great budget constraints,” Solomon conceded. “They need a new budget segmentation and have to be budgeted independently.”

According to Solomon, teaching hospitals are funded under the community service budget segment, which is set at two percent of the total university budget. That arrangement, he argued, leaves the hospitals with too little to operate effectively and does not reflect their role in the health system.

There are 50 public and 90 private higher education institutions, including 28 public and seven private medical schools, as well as 22 regional health science colleges. In the 2021/22 fiscal year, 21,071 health professionals graduated across all universities. Yet, the World Health Organisation’s (WHO) most recent trend analysis shows that the country’s Universal Health Service Coverage (UHC) index, after steadily improving between 2000 and 2015, slowed until 2019 and then stalled through 2021.

Projections show Ethiopia will reach a UHC index of 64.7pc by 2030, well below the 80pc target, which may not be met until after 2040, despite increased inputs into the health system.

Some of the largest hospitals are now speaking openly about the pressures they face.

Tibebe Ghion Specialised Hospital, run under Bahir Dar University and led by Mengesha Ayene (PhD), its president, has seven main wards, more than 500 inpatient beds (including 20 ICU beds and high dependency units), 126 clinical service rooms, and 14 fully equipped operating theatres. The Hospital has the capacity to train around 500 medical professionals annually and provides hospital services to a million patients each year.

Bahir Dar University received a budget of 2.7 billion Br this year, of which 350 million Br is earmarked for community service and consultancy.

“The Hospital is particularly challenged to cover all the expenses,” Mengesha said. “Due to the regulations by the Ministry of Health, the hospital can't adjust the price of service and is now serving at the minimum fee or for free.”

He argued that the Hospital, which is focused on specialisation and subspecialisation, should be structured to be semi-autonomous, with its own budget, like other hospitals in the public system.

“The hospital needs 35pc to 40pc of the University’s budget in this city,” he said.

Dilla University’s teaching hospital faces a similar squeeze. The University has a budget of 1.73 billion Br this year, of which 29 million Br is set aside for consultancy and community service.

“Dilla University Referral & Teaching Hospital (DURTH) is getting a small percentage of the University’s budget under the same circumstances,” said its President, Eliyas Alemu (PhD). "The Hospital’s running costs and medicine purchases are the main burdens."

The Hospital receives at most 50 million Br to cover all its expenses. The salary cost and overtime cost have become a burden for the Hospital as the budget becomes tighter.

“There should be an alternative mechanism for it,” said Eliyas.

University leaders and Ministry officials are not only concerned about hospital budgets. They are also moving to suspend new capital projects that have no direct bearing on education quality. According to Solomon, universities will discontinue projects that are under 50pc completion and not directly tied to education. He disclosed, no new projects will begin this year, except those that support core educational priorities.

The Education Ministry has already collected data on 820 ongoing projects as part of a larger review. In the new hierarchy, buildings will fall to third on the priority list.

According to some experts, while funding is critical, leadership and governance are as important. According to Asayehegn Tekeste, a public health expert with two decades of experience working with NGOs, financial challenges are exacerbated by structural problems in the way hospitals are run.

“Across all the regions and universities, similar problems like inability to pay their doctors, lack of medicines, and lack of ability to motivate workers are seen because of leadership problems,” he said.

No university presidents were born and work in the same place, a deliberate policy, the Minister told MPs, to encourage diversity. However, federal lawmakers have pressed the Ministry's officials on why so many university presidents remain in acting roles, rather than permanent appointments. Tadesse Getu, member of the Standing Committee of Human Resource Management & Technology Affairs, pressed the Ministry on the issue.

Solomon blamed the previous practices of appointing university presidents as "overly rigid and even discriminatory." He disclosed that a new directive is being reviewed by the Ministry of Justice and is expected to be finalised soon.

However, Asayehegn argued that policymakers need to look beyond surface-level fixes and address the underlying governance issues. He warned that regulations issued in recent years have failed to address the root causes, and he fears new directives will miss the mark if key stakeholders are not consulted.

PUBLISHED ON Nov 15,2025 [ VOL 26 , NO 1333]