Austria: #24 in the World Index of Healthcare Innovation

Introduction

In the 2024 World Index of Healthcare Innovation, Austria is ranked 24th with an overall score of 42.23, a decline from 23rd in 2022 and 19th in 2021. The country performed well in Science & Technology, securing the 16th spot, largely due to its robust research and development sector.

However, Austria faced challenges in other areas: it ranked 24th in Quality, primarily because it had the lowest score for patient-centered care in the Index. In the Choice dimension, Austria came in 21st,where a high degree of freedom to choose healthcare services somewhat mitigated the limited access to  new treatments.

Furthermore, Austria scored poorly in Fiscal Sustainability, ranking 28th, which was significantly influenced by its high public healthcare spending.

Background

Austria maintains a healthcare system rooted in “Bismarckian” principles, honoring the system initiated by Chancellor Otto von Bismarck in Germany in 1883. Following Germany’s lead, the Austro-Hungarian Empire adopted this model in 1887. Austria’s approach is mirrored in several central European countries, with origins tracing back to the former Austro-Hungarian Empire, including Hungary, the Czech Republic, and Slovakia.

Governance of healthcare in Austria occurs at two levels: the federal and the state (Länder). A significant reform in 2020 consolidated the health insurance funds from each of the nine Länder into a single entity, the Austrian Health Insurance Fund (Die Österreichische Gesundheitskasse). This reform aimed to streamline operations and improve coordination across the country’s healthcare system.

The federal government sets maximum drug prices, with the power to negotiate prices delegated to the Main Association of Austrian Social Security Institutions (Hauptverband der österreichischen Sozialversicherungsträger), representing the health insurers. For drugs not covered by insurance, pricing remains unregulated unless annual revenues for a particular drug surpass €750,000 in Austria, which then triggers a pricing cap.

Despite Austria’s structured system, the country has a relatively low utilization of generic drugs, accounting for only about 30 percent of all dispensed medications. This is partly due to regulations that restrict pharmacies from substituting prescribed branded drugs with generics, which limits flexibility in drug dispensing and may contribute to higher overall healthcare costs.

Austria’s healthcare system operates on a compulsory insurance model, providing universal access to a comprehensive range of services. These services, including inpatient, outpatient, mental health care, and prescription drugs, are funded through payroll deductions which typically range from 7 percent to 8 percent of wages and government subsidies. Recently, Austria has made significant advances in digital health services, investing approximately €200 million in e-health technologies like electronic health records, telemedicine, and mobile health applications. These investments aim to improve patient care and increase operational efficiency. Moreover, aligning with global sustainability trends, Austrian healthcare facilities have integrated eco-friendly practices to reduce their environmental impact and promote sustainable operations.

Dimension Performance

Quality

Austria ranks 24th in Quality. It performs well in terms of infrastructure (8th), and relatively well in disease prevention (19th), thanks especially to low rates of treatable mortality. However, Austria’s approach to pandemic preparedness ranks 22nd in the Index. The country’s life expectancy is one of the highest globally, approximately 82 years, reflecting its overall health system effectiveness. Despite these positives, Austria ranks near the bottom (30th) in patient-centered care, due to low standardized scores in transparency (20.0) and physician consultation time (3.3).

Choice

Austria ranks 22nd for Choice. Austria ranks in the middle of the Index on provider choice, while the cost of insurance is growing increasingly less affordable. Though Austria’s universal coverage scheme limits catastrophic health spending levels for families, it comes at a relatively high cost for insurance.  It also ranks behind most countries in the Index in access to new treatments (25th). Not only does Austria have one of the lowest generic drug market shares in Europe, but it lags behind most countries in the Index in bringing low-cost biosimilars to market.

Science & Technology 

Austria may not be the medical innovation powerhouse it once was during its imperial heyday, but the central European nation still holds a respectable position, ranking 15th overall in Science and Technology. This ranking reflects Austria’s strengths across various domains, including medical innovation (10th), scientific innovation (18th), and health digitization (18th). Despite these accomplishments, Austria has not produced any Nobel laureates in chemistry, medicine, or physiology within the last 20 years, either by nationality or through its institutions.

Fiscal Sustainability

Austria ranks 28th in the Index for Fiscal Sustainability. The country allocates a significant portion of its GDP, 10.9 percent, to public healthcare, ranking 28th in this measure. Concerns about Austria’s fiscal health persist, underscored by a debt-to-GDP ratio of 77.8 percent. However, there is a silver lining: Austria has experienced relatively stable growth in public healthcare spending, with an increase of just 0.7 percent over the past decade (22nd). This demonstrates a measure of control over healthcare expenditure growth amidst broader fiscal challenges.