Netherlands: #4 in the 2024 World Index of Healthcare Innovation

In the 2024 World Index of Healthcare Innovation, the Dutch healthcare system achieves an impressive 4th place with an overall score of 57.82, trailing only behind Switzerland (1st, 66.19), Ireland (2nd, 59.52), and Germany (3rd, 58.54). This marks a slight drop from its 3rd place ranking in 2022.

The Netherlands demonstrated consistent strength across various dimensions, never ranking below 10th (Quality).

The country’s standout performance was in Science and Technology, where it ranked 5th. This reflects the Netherlands’ robust commitment to healthcare research and technological integration, which continues to drive its healthcare system forward.

Background

The Dutch healthcare system, initially influenced by German policies during World War II, features a distinct structure in which a private health insurance system, akin to Germany’s, was established for individuals earning below a certain income threshold. This system has evolved significantly, particularly following the 2006 health reform led by the Dutch government and Stanford economist Alain Enthoven.

By the late 1990s, the Netherlands faced critical challenges with its healthcare system, primarily due to over-regulated budgetary practices that fixed all prices, stifling innovation. The response was a transition to a system of “managed competition” under then-Health Minister Ab Klink’s leadership. This system allows multiple private insurers to compete over price and quality, while still requiring them to accept all applicants and adhere to a mandated basic benefits package. This competitive model is bolstered by the obligation for all residents to purchase insurance, with premiums constituting 6.5 percent of the first €30,000 of annual income, directly deducted from employee paychecks by employers.

Under this framework, prescription drug formularies are managed competitively by insurers, yet some drug coverage is mandated by the Ministry of Health, which relies on guidance from the Netherlands Healthcare Institute (Zorginstituut Nederland). Although drug prices are subject to negotiation between insurers and manufacturers, the government curtails potential monopoly pricing by enforcing price ceilings. The Netherlands mirrors the United States in its high utilization of generic drugs, which contributes to cost efficiency and accessibility. Generic drugs comprise approximately 70 percent of all drugs dispensed, reflecting a strong preference that aids in controlling healthcare costs.

The healthcare landscape in the Netherlands is also characterized by significant contributions from large corporations and a burgeoning biotechnology sector. Philips NV stands out as a major player with its extensive medical equipment division, driving innovation and expansion in both local and international markets. Additionally, the early-stage biotechnology sector continues to grow, fostering developments that contribute to global health advancements. Despite the sale of the mid-sized pharmaceutical company Organon to U.S.-based Schering-Plough in 2007—subsequently acquired by Merck—the Dutch biotech industry remains a critical element of the national innovation ecosystem, contributing significantly to the country’s GDP.

The Dutch health system employs a unique hybrid model that combines compulsory health insurance with private competition and stringent regulatory oversight. This ensures universal coverage while promoting efficiency and innovation within the healthcare sector. Insurers in the Netherlands are pivotal in managing both the funding and delivery of healthcare services, operating under a closely regulated framework that aims to balance cost, quality, and accessibility. This system not only provides comprehensive healthcare access to all residents but also encourages continuous improvement and innovation in healthcare services and products. Annually, the Netherlands invests approximately 10 percent of its GDP in healthcare, maintaining its rank among the top spenders in Europe for health-related expenditures.

Dimension Performance

Quality

The Netherlands holds the 10th position in the Quality dimension. Although there are areas such as cancer treatment where improvement is needed, it excels in cardiovascular survival, achieving the highest marks in the Index for this category. Early in the pandemic, the country implemented stringent lockdown measures to control COVID-19, resulting in a marred 13th place ranking for pandemic preparedness. It also trailed behind much of continental Europe in vaccination rates.

Choice

The Netherlands ranks 7th for Choice in this year’s rankings. One main reason is that despite its smaller population, the Netherlands has access to innovative drugs on par with other major economies in Europe, including Germany and the United Kingdom. In addition, the country values individual freedom to choose healthcare services (11th), including offering a wider variety of insurance plans and designs than all but four countries in the Index.

Science & Technology

The Netherlands highly values advancements in Science and Technology, ranking 5th overall in the Index. This ranking is bolstered by the widespread adoption of health digitization across all types of healthcare providers. Moreover, the Dutch are noted for their contributions to scientific discoveries, ranking 6th, with a robust portfolio of frequently cited research in biochemistry, genetics, and molecular biology. Although investments in medical research and development are relatively low for such an advanced country, the Netherlands compensates with a significant number of healthcare patents, particularly in the medical technology sector, where it ranks 7th.

Fiscal Sustainability

The Netherlands excels in delivering universal healthcare while also achieving a robust Fiscal Sustainability ranking (6th). The country’s manageable national solvency, ranked 13th, is supported by a debt-to-GDP ratio of 48.5 percent. Furthermore, by relying on universal private insurance, the Dutch have successfully maintained low public healthcare spending, also ranked 6th. Remarkably, the Netherlands has managed to keep its public healthcare expenditure as a percentage of GDP relatively stable over the past decade.