Review of Australian Government Health Workforce Programs

6.3 Achieving workforce distribution aims through return of service obligations

Page last updated: 24 May 2013

The imposition of conditions upon individuals receiving Commonwealth support is one of the mechanisms available to the Commonwealth to achieve certain outcomes, for example, increasing the supply of medical practitioners in underserviced areas. The Department administers two programs that impose a return of service obligation (RSO) on participants. The Medical Rural Bonded Scholarships (MRBS) scheme, which provides a scholarship to medical students in return for working in a rural or remote area for up to six years, is dealt with in Chapter 3 as part of the discussion on scholarship support offered by the Department. The operation of the more controversial Bonded Medical Places (BMP) scheme is explored below.

The Bonded Medical Places scheme

The BMP scheme commenced in 2004 to address the shortage of doctors in outer metropolitan, rural and remote areas of Australia. Twenty five per cent of all first year Commonwealth-supported medical school places are allocated to the scheme. BMP scheme participants are contracted by means of a Deed of Agreement with the Commonwealth, managed by DoHA together with the Department of Human Services (DHS), the Australian College of Rural and Remote Medicine (ACRRM), the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE), and universities.

The BMP scheme has over 4,500 participants managed through individual Deeds of Agreement for periods of up to 25 years, with a further 700 participants commencing in the 2013 academic year. In 2009 the program was modified to enable participants to reduce their RSO more quickly by working in more remote areas. This was known as the scaling initiative. Any changes that affect current participants will require agreement by both parties to proceed.

Students who accept a BMP scheme position are required to work in a DWS of their choice (under the current definition, outer metropolitan, rural and remote areas for GPs and including inner metropolitan areas for other specialists) for a period of time equal to the length of their medical degree less eligible pre-vocational and vocational training and any credit obtained through Scaling.

The RSO only becomes compulsory once a participant gains fellowship of a specialist college. If a BMP participant completes their medical training but does not undertake their RSO they may be required to repay 75% of the total sum of the Commonwealth contribution amount of their medical degree.

Effectiveness of the scheme

Originally the BMP scheme aimed to deliver a specific number of additional first year medical school places. Currently the scheme is meeting this target, with all places filled. However, the effectiveness of the scheme will be measured by determining the number of bonded doctors who meet their obligations under their agreement with the Commonwealth. The period of medical training for doctors from commencement of their medical undergraduate course until achievement of fellowship in their chosen specialist field is a minimum of eight years so it is too early to be able to determine its success. BMP participants are obliged to commence their RSO within one year of attaining completion of their specialist training and the award of fellowship to the relevant medical college.

The BMP scheme has not yet been formally reviewed or evaluated. However, there are some early signs that the program may not meet its objectives. As at February 2013 only one participant has commenced his/her RSO and three participants have bought out of the scheme. Given that the scheme has been running for almost a decade, there has clearly been limited impact to date on the distribution of medical practitioners from this activity, although as indicated, due to the length of undergraduate and postgraduate training very few practitioners as yet would be eligible to commence.

The Department is not currently able to adequately monitor and report on completion of RSO requirements while graduates are undertaking vocational training. Such monitoring would give a better indication of bonded students who are seeking out return-of-service credit during this time, and by extension might be expected to fulfil their obligation post fellowship.

The impact of the introduction of scaling on the BMP scheme is also not yet known given that as already stated only one participant has commenced his/her RSO. Scaling is being promoted to BMP participants through the Bonded Support Program (BSP).

The administrators of the BSP, ACCRM, undertake an annual survey of BMP participants. In their most recent survey for 2012 approximately 74% of respondents indicated a commitment to undertake the full RSO with 26% indicating that they are considering withdrawing from the scheme once they become fully qualified.

The unintended consequence of the scheme could be that for a substantial minority of participants it becomes an alternative to a full-fee-paying medical course. Since the cost of ‘buying out’ represents approximately 75% of the total cost of the medical school placement, it may be perceived by participants as a low cost or interest free loan that can relatively easily be repaid once fully qualified.

Surveyed participants who expressed intentions to withdraw also said that they believed that the current geographical requirements did not allow them to follow their career ambitions and limited options for their families in terms of employment and education.

Impact of Districts of Workforce Shortage

BMP participants must undertake their RSO in a DWS for either general practice or other specialties. As outlined above, under the current scheme, DWS for general practice is updated every three months, which has made it difficult for BMP participants to make long-term plans. As DWS for general practice currently excludes inner metropolitan areas and also substantial parts of rural and regional Australia, BMP participants report that they are confused by the system, and do not fully understand how it works. (Once they commence their employment in a DWS, bonded doctors can remain there for the full term of their RSO even if the area is no longer a DWS.)

It is reported that a substantial number of BMP doctors in training may consider a specialty other than general practice, as many specialties have DWS status within metropolitan areas, allowing BMP participants to fulfil their RSO in cities.

The revised arrangements for determining DWS proposed above may alleviate a number of these concerns.

Stakeholder views

Universities, ACRRM and Australian Medical Students’ Association (AMSA) have provided feedback that there is in some quarters a stigmatising perception of BMP participants as ‘second rate’ students who failed to meet the requirements for a non-bonded Commonwealth Supported Place (CSP). This stigma could have a detrimental effect on students and also on their future offers of employment, or provision of access to specialist training in a competitive environment.

An alternate perspective is that some specialist colleges have indicated an interest in developing opportunities specifically targeting bonded students/trainees in order to build a long-term rural workforce with strong connections to the local community by prioritising training opportunities within the rural health sector.

All stakeholders consulted raised concerns and noted that the BMP scheme requires significant modification in order to achieve the desired outcome of improving the distribution of the medical workforce. The main issues included:

  • The need for a commitment from a young person often 18 years of age, who is (arguably) ill equipped to make such a decision which will affect their life for up to 22 years (critics of this argument point out that young people over 18 are legally capable of voting, joining the armed forces and signing other enforceable contracts, including mortgages);
  • The complexity of the scheme, particularly relating to the DWS;
  • The perception that this is a coercive program that stigmatises rural practice;
  • The implication that participants are in some sense “second class” with the use of the term ‘bonded’ having specifically negative connotations;
  • Perceived lack of personal support and mentoring, compared to participants in scholarship schemes;
  • Lack of communication with participants due to limited resources for support;
  • The lack of priority entry into the rural generalist pathway; and
  • Inequity between the penalties applicable to BMP and MRBS scheme participants. While BMP scheme participants can withdraw from the Scheme and pay a proportion of the Commonwealth’s contribution for their medical school place, MRBS scheme participants who breach their contract face a Medicare ban of up to 12 years. This therefore is one element under which the BMP may be seen as more favourable than the MRBS.

AMSA expressed concern during the consultation process that there is insufficient evidence to indicate that the BMP scheme will produce a long-term increase in numbers of doctors practising in rural areas. AMSA supports abolition of the bonding schemes, or at minimum modifications including removal of the Medicare Provider Number penalties, changing the MRBS RSO to be commensurate with the length of medical degrees and enabling participants to complete their RSO at any stage of postgraduate training.

The Australian Medical Association (AMA) does not support the BMP scheme and would prefer expansion of the MRBS and HECS Reimbursement Scheme in its place.

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Reform or abolition of the Bonded Medical Places scheme?

This review has given careful consideration to the strong reservations about the BMP scheme expressed by many stakeholders and has considered a number of options, including abolition of the scheme, or its replacement with a more equitable scheme of universal RSO for all medical graduates (discussed below).There is international evidence, some of which is discussed later, that coercive schemes are ultimately counterproductive in terms of securing the employment of a medical workforce in difficult locations in the longer term. Some of this evidence has been taken into account in formulating the recommendation discussed in Chapter 4 to phase out the MRBS and replace it with non-bonded scholarships.

However, on balance, it would be premature to abandon the scheme given the depth of need in some locations, the lack of effective alternate policy levers, and the (at least) indicative evidence from the ACCRM survey of participant intentions that nearly three quarters of BMP participants intend to undertake the full RSO.

What is clear however, is that some immediate reforms should be undertaken to ameliorate some of the inequities of the current scheme, and to provide BMP participants with more support and opportunities for engagement with the communities in which they will be undertaking RSO. The aim is to reduce the impact of the stigmatising and coercive elements currently associated with the scheme. Whilst various stakeholders who made submissions to the review discussed termination of the BMP, others made useful suggestions on ways to redesign the scheme to better meet the needs of the participants and also the communities in which they will be employed. Priority areas for change include the duration and location of the RSO together with the penalties applied to participants wishing to withdraw from the scheme.

Options for reform

There are a number of reform options that could be pursued to reduce the complexity of the BMP scheme for participants and the cost to the taxpayer of in administering it.

Broadening the settings for return of service

Allowing a broader range of areas or settings that a BMP participant can complete his or her RSO should be considered. RSO should not be a stigmatising process, but the opportunity to learn generalist skills and provide medical care to communities with demonstrable need. This could include allowing employment within:

  • Rural and remote communities;
  • Some difficult to recruit settings such as GP superclinics and Aboriginal Medical Services;
  • The Australian Defence Force; and
  • Organisations headquartered in metropolitan areas providing outreach service to rural and remote communities.

Increasing the number of eligible areas or settings would make it easier for participants to complete their RSO and may reduce the number of participants contemplating ‘buying out’ of the scheme.

Reducing the period of the Return of Service Obligation

Currently the RSO is equal to the length of the medical degree so can range from four to six years. Scaling allows for this obligation to be worked off more quickly by working in a rural or remote area. However, it is still considered to be onerous and the option to buy out is considered to be very attractive at this time. If the obligations were reduced (possibly by one half), and – possibly – the sanctions increased it is anticipated that participants would be more likely to complete their RSO in full. Other things being equal BMP scholars may also be more attracted to practising in remote areas with the potential for completion of their RSO in the shortest time possible (one to two years).

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Changing the point of commencement for the RSO

BMP participants are able to apply to have part of their prevocational or vocational training (if they work in a DWS) considered as part of their RSO (for up to one half of the length of their degree). The processing of these applications relies upon a manual data collection based on direct contact with each student, which is resource intensive, unreliable and not sustainable without significant extra administrative costs once the number of graduates increases. AHPRA is unwilling to track BMP participants through this period because of the significant administrative burden it would involve, and DHS cannot track all levels of training, as not all trainees are able to bill Medicare.

Most BMP participants who are eligible to reduce their RSO through their prevocational or vocational training do not inform the administrators at the commencement of the employment, although such notification is required by their agreement. Due to (potentially) frequent changes in the DWS status of a particular location there is presently no administrative means of retrospectively crediting these periods of training (within current program resources) and this period of time is therefore not recorded. This aggravates eligible BMP participants who perceive that they have ‘done the right thing’ but will not be rewarded for it. Ultimately, the value of this RSO option is questionable.

The most straightforward way to proceed would be to alter the RSO requirement so that it commenced only once fellowship of a specialist college had been achieved. The RSO would then be undertaken in a single block over a set period of time. MRBS participants have identified this as one of the positive aspects of the scheme as they are very clear about the point at which their obligation commences.

The majority of BMP participants undertaking their RSO could then be monitored through their Medicare billing which will reduce the cost of the program administration significantly and simplify the process for participants. For those BMP participants working within the public health sector alternative monitoring would still be required.

Clearly, however, some current BMP participants may feel aggrieved by such a change. It would be useful to seek to quantify the likely future cost of administration of the current provision as well as any options for automating administrative options which have been proposed (recognising that capital costs of information technology are likely to be high).

Buying out of the Bonded Medical Places Scheme

If the scheme were to be reformed in other ways, the ease with which participants are currently able to buy out of the scheme would need to be reconsidered.

Preferably, although existing participants would be reluctant to give up the ability to buy out of the scheme, it would be more efficient for existing participants to be transitioned to a new funding agreement in order to reduce administrative overhead and avoid the inequity (and administrative burden) of multiple levels of participants.

Inducements for existing BMP participants to accept more stringent buy-out conditions could take the form of:

  • A reduction in the overall RSO to two to three years (half of the length of medical degree) following the award of fellowship; and/or
  • Broader geographical areas from which to choose their RSO location.

It is suggested that if comprehensive changes are to be made to the BMP scheme, these changes should be introduced quickly to limit the impact on those participants who have commenced or are about to commence their RSO. Currently the numbers are very low but it is anticipated that in the near future significant numbers would become eligible to commence their RSO.

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The role of the Bonded Support Program

The Bonded Support Program (BSP) was established to ensure that all bonded students and doctors can access support, networking and communication activities that will help prepare MRBS and BMP scholars for their future work. The Support Program is delivered by ACRRM which undertakes a range of activities including networking functions, the use of various media, and the provision of a conference program. The level of support offered under the BSP is the same for MRBS and BMP participants.

Many bonded participants comment on the lack of information provided by the Department and demonstrate a limited knowledge of the BSP. Participants and some senior educational administrators consulted in the course of the review appeared to believe that only MRBS participants were eligible for BSP support – when in fact BMP participants are eligible for the same level of support under the BSP as MRBS participants.

The overall value of the BSP has been questioned by some stakeholders. While some BMP participants and stakeholders consider the conference support opportunities that are available through the BSP to be excellent it should be noted that a relatively small percentage of bonded participants apply each year to attend such conferences. In 2012, 366 bonded participants (BMP and MRBS) attended conferences supported by the BSP, equating to about 6% of the total pool of bonded participants (applications to attend the conferences were in almost identical numbers). It is suggested that the focus of the BSP should be moved away from resource intensive activities targeting a small number of participants to broader tools to engage and assist all bonded scholars on the pathway from student to rural practitioner.

Alternative models of support should be developed through consultation with key stakeholders to ensure that the needs of the BMP participants are appropriately met. Models need to include active and positive strategies aimed at all levels of participants to ensure they understand their options under the BMP, are well equipped to potentially work in non-metropolitan settings and fully understand the positive opportunities that working outside the city centre presents. This could include establishing opportunities for building positive experiences in rural communities and building linkages with employer groups. A broad spectrum of organisations involved in medical education, including the medical specialist colleges should be consulted regarding the provision of training support opportunities. Both the colleges and RWAs currently provide support and mentoring to medical practitioners, particularly OTDs and these models should be explored for possible application to BMP medical students and trainees at the various stages of education and employment.

The support models need also to work towards changing the perception of BMP participants as being in some way “second rate” and providing participants with opportunities that may not be available to non-bonded participants. While this could be achieved via the BSP, delivered through ACRRM with further involvement from the universities, funding for the current program should only continue until options for alternative, broader models of BMP student support are fully developed and a subsequent competitive funding process to implement and manage these services is undertaken.

Following a different path – considering universal Return of Service Obligation requirements for medical graduates

A more radical alternative to bonding medical students using the current schemes (BMP and MRBS) would be to consider requiring all new medical graduates (CSP and international medical students) to undertake a community service period, similar to RSO arrangements operating in a number of other countries. This potentially addresses the perceived inequity of requiring only 25% of graduates (plus MRBS recipients) to complete an RSO period while the majority are able to work wherever they choose. Conceptually, this approach could also have benefits for the delivery of health services in under-serviced areas, particularly more rural and remote locations.

Consideration of this type of system offers an alternative to continuing with the current approach of enhancing rural training initiatives and providing financial incentives to support the relocation and retention of doctors in under-serviced areas. While the earlier chapters of this review outline proposed enhancements to existing Commonwealth interventions in order to improve the outcomes of existing programs, it is sensible to recognise that other options may be available to the Government to ensure new doctors are directed to those parts of the country where community need is the greatest. However, it is recognised that there are substantial risks involved in attempts to translate international RSO systems into the Australian context. These issues are discussed further below.

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Analysis of International RSO Initiatives

The World Health Organisation (WHO) has completed a country-by-country inventory of all Member States regarding compulsory service programs for recruiting health workers in remote and rural areas. A literature search and formal interviews were conducted by the WHO as well as informal questioning of relevant informants to identify countries with compulsory service programmes and their details in each of the WHO regions.145 More than 70 countries were identified with current and past compulsory service programmes. The WHO study identified that both compulsory service with and without incentives and/or with financial or other penalties for breach of contract are in use. Without discussing the findings of this study in detail, it is clear that establishing RSO requirements for medical graduates is not uncommon internationally and that aligning where new graduates are able to work with community health needs is not a completely radical concept.

While a variety of international programs have been identified by the WHO, the outcomes of the different approaches appear to be variable and are likely to be highly dependent on conditions in each country. However, results from the available data generated by the WHO project appear to indicate that statistically (less than one in five in Norway) most practitioners do not remain in their bonded location after the conclusion of the RSO period. Even when the bonding period occurred prior to specialisation such as in South Africa, retention was poor. Thirty four per cent of compulsory service doctors intended to leave South Africa after completing their obligation, and an additional 13% planned to go into private practice.146

Box 6.4: Case study of the Canadian approach to RSO

Canada, which faces similar challenges of a rurally distributed population to Australia, has a long history of providing financial incentives in exchange for return-for-service (RFS) by medical practitioners. Scholarship type programs (or bursaries as they are known locally) have existed there in some form since 1969. Although conditions and level of financial support varies across provinces, all except the Yukon require a service commitment in return for medical training funding support. In accordance with previous US studies, Neufield and Mathews found that trainees who had concerns about their finances were more likely to opt for an RFS bursary, with 93% of respondents indicating that their need for financial assistance had at least a moderate to major influence in their decision to apply for the program. Further, 80% of trainees who opt for a bursary already planned to work in the province after their service commitment supporting the hypothesis that the RFS bursary largely rewards physicians who had already intended to remain and practise in the relevant location.147

The Canadian approach has more similarities to Australia’s MRBS scheme than to the BMP in that direct financial support is provided to students during their training to offset the RSO requirement.

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The Community Service system operating in South Africa appears to have the greatest similarity to the concept of requiring all Australian medical graduates to complete a RSO period.

Box 6.5: Case study of the South African approach to RSO

The South African model requires medical practitioners to complete an intern period (at present 2 years) and then a Community Service year prior to achieving full registration. During the Community Service year, trainees are sent to an area of medical need to provide services to communities who might otherwise not have access to a doctor full time, or whose primary care is usually provided by nurses or other health workers.

However, there are reports that this scheme is undermining the rural health system in South Africa with qualified doctors replaced with students fresh out of medical school providing only a basic level of health service. In particular, those who had completed their internships in academic (tertiary teaching hospitals) were at a distinct disadvantage in rural hospitals, whereas those who had been interns at regional hospitals had confidence and necessary skill levels.148

An unintended consequence of the community service requirement is that doctors who left South Africa before completing the registration process (internship + community service) are indefinitely lost to the local health system. At present, even if they wish to return and/or are more qualified than is necessary to achieve registration, the legislation which underpins the scheme prevents them from practising without completing the community service year. For many practitioners who are based overseas, personal commitments and professional preference act as strong disincentive to comply with the new requirements, despite the desire to return to South Africa.

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In examining whether a universal RSO requirement should be introduced for medical graduates, it may also be pertinent to consider the outcomes of a similar approach that was adopted for Australian teachers in previous decades. While medical workforce development is clearly different in many major respects to the salaried staff of the public education sector, there are parallels in terms of the success of government intervention to address workforce shortages in rural and remote areas.

Box 6.6: Case study – bonding from the education perspective

Up until the mid-1970s the Department of Education in New South Wales awarded scholarships to encourage teacher training, usually benefiting students from rural communities.149 These scholarships were bonded with the consequence that schools in rural and remote areas were staffed by teachers in their first few years of service. Rural service was also used as a vehicle for promotion, with rural teachers given preference for popular locations elsewhere in the state after a suitable period of service. Teachers therefore remained in rural areas after the bonding period in the firm expectation that when they requested a transfer the Department would provide a position in their preferred location. As teachers’ scholarships were phased out, an oversupply of non-bonded teachers began to emerge, exacerbated by a lack of quotas on teacher training courses in the 1980s and decreasing student numbers. As such, filling rural positions was not a challenge for the Department and the preferred transfer system (which had by this point progressed to a points based system) was no longer policy. Coupled with devolution of teacher selection and recruitment to the individual schools and principals, rural teachers feared that opportunities for transfer would be shut off, effectively locking them in to rural and remote posts.

“Teacher perceptions and reactions to the reforms led long-staying rural teachers to re-appraise their decision to remain in rural schools. They feared entrapment in the rural situations with little or no prospect of a transfer to their preferred location later on in their career.”150

Consequently, the rate of rural teacher turnover through transfer, promotional or promoted appointment over the 1989-1990 period exceeded the figure for the state as a whole. More damagingly, the turnover rates at that time for rural long-staying teachers were far in excess of the rates for all teachers.

Later work on rural retention demonstrated that connections to a rural community had the most impact on the likelihood of teachers staying long term rurally. In one cohort of 1,100 long staying teachers, 73% had lived in rural communities for some part of their own upbringing and 46% had attended the local regional rural teacher education institute for their teacher training.151

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Potential Barriers in Australia

In the Australian context the constitutional prohibition on medical conscription may require consideration. The Commonwealth of Australia Constitution Act – Section 51(xxiiiA) states that:

“The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect… to the provision of medical and dental services (but not so as to authorize any form of civil conscription)” (emphasis added).

This civil conscription clause is likely to be the most significant barrier to the creation of a compulsory community service year for medical practitioners. It may be that there are contractual methods which could be devised which would facilitate some sort of universal RSO provision for medical graduates that would survive a potential High Court challenge on the basis of section 51(xxiiiA), but this requires further, more detailed, legal advice.

More pertinently, it is likely that even if a universal service requirement could be lawfully devised, the adminstrative and other costs may outweigh the potential benefits. For example,if implemented in Australia, the South African approach (RSO without financial inducement, commencing from medical registration) would result in around 3,000 postgraduate year (PGY) 2 doctors undertaking a Community Service year annually in an area of medical need. The financial implications (in terms of salary cost) of this are not known, since state and territory governments are the usual employers of PGY2 doctors at present. Commonwealth financing, either via provision of a Medicare provider number or as direct salary during this period would need to be derived from arrangements which are currently in place, taking into account the differences in salary rates between jurisdictions.

More significantly, junior doctors require a level of supervision that is unlikely to be available consistently across rural and remote Australia. Given the current challenges in expanding prevocational training places in rural and regional areas (as discussed in Chapter 4) the ability to meet accreditation requirements and provide appropriate supervision capacity appear to present significant barriers to the adoption of a large scale RSO requirement at any stage doctors have completed their full postgraduate training pathway and are able to work across all settings without supervision.

For this model to be considered extensive consultation with stakeholders, agencies and governments to identify the infrastructure changes that would be needed to support the adoption of such a scheme. It is not recommended that the Commonwealth should investigate this option further at the present time, given the current barriers identified. However, if the recommended approaches to improving medical workforce distribution (involving a combination of investment in training and incentives) prove to be unsuccessful the potential adoption of a universal RSO requirement may need to be reconsidered.

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Recommendation numberRecommendationAffected programsTimeframe
Recommendation 6.8Major reform to the operation of the Bonded Medical Places (BMP) scheme should be considered to address stakeholder concerns and escalating administrative challenges.

The return of service obligation (RSO) required of medical students should be substantially altered to help make the scheme fairer and more certain for students as well as more efficient to administer. This should involve:

  • Making designated rural areas permanently eligible for completion of the RSO period, removing the use of the districts of workforce shortage (DWS) system in these areas;
  • Aligning eligible metropolitan areas for RSO with the reforms to the DWS system outlined elsewhere in this review, as well as allowing flexibility for graduates to work in high need metropolitan areas, such as community health settings like Aboriginal Medical Services; and
  • Changing the RSO period to commence from attainment of fellowship to make the scheme administratively sustainable through basing it around access to Medicare provider numbers. To offset this change the Commonwealth should halve the maximum RSO period and retain the use of ‘scaling’ to encourage graduates to work in more remote areas.
BMPMedium term – changes to the operation of the program could commence for new entrants from 2014, subject to consultation with universities and other stakeholders.

145 Frehywot et al, “Compulsory service programmes for recruiting health workers in remote and rural areas: do they work?” Bulletin of the World Health Organisation (88),2010, pp. 364-370

146 ibid.

147 Neufield and Mathews, “Canadian Return-for-Service Bursary Programs for Medical Trainees” Healthcare Policy Vol 7. No.4, 2012

148 Reid and Conco, “Chapter 17 - Monitoring the implementation of community service”. 1999 South Africa Health Review, 1999

149 Boylan and King, “Educational reforms: impact on rural teachers” Rural Society Journal, Vol1. Issue 2;010-014, 1991

150 ibid., p. 11

151 Boylan et al, “Teaching in Rural Schools” in Boylan and King “Educational reforms: impact on rural teachers” Rural Society Journal, Vol1. Issue 2;010-014, 1991