New Zealand: #21 in the 2024 World Index of Healthcare Innovation

Introduction

In the 2024 World Index of Healthcare Innovation, New Zealand ranked 21st overall, a slight decline from its 17th position in 2022. The country performed best in Quality, securing the 19th spot, with its pandemic preparedness and response, ranked 9th, significantly bolstering its score. However, New Zealand ranked at or below the median in the other three dimensions of the WIHI: Fiscal Sustainability (17th), Science and Technology (21st), and Choice (29th).

Background

Established in 1938, New Zealand’s healthcare system began as a taxpayer-funded, government-run entity, providing mostly free point-of-service care. Over the subsequent decades, regional fragmentation necessitated a reconsolidation in 1997 into a unified single-payer system. Today, public hospitals managed by government agencies deliver the majority of healthcare services, serving both citizens and permanent residents.

The public healthcare system operates under a publicly funded health insurance model that supports inpatient and outpatient services at public hospitals, along with preventive and primary care through private providers. Notably, certain services such as optometry, adult dentistry, and orthodontics are not covered. The system extends its coverage to include mental healthcare, long-term care, hospice care, and disability support services. New Zealand’s national formulary lists all inpatient and outpatient prescription drugs covered, ensuring comprehensive pharmaceutical care.

Public hospital access in New Zealand is essentially free of charge, avoiding any cost-shifting to patients. The government’s strict regulatory control over prices and access helps contain healthcare costs. The Pharmaceutical Management Agency (PHARMAC) employs strategies like reference pricing to set fees for publicly subsidized drugs, leading to drug expenditures per capita that are fourth lowest in the Organization for Economic Co-operation and Development (OECD). For instance, in 2023, New Zealand spent approximately $360 per capita on drugs, significantly lower than the OECD average of $590.

The healthcare system in New Zealand employs a mixed model blending public and private healthcare provisions under a single-payer framework, where the government acts as the primary financier. This system ensures equitable access to healthcare services across the population, characterized by high standards of care managed through centralized oversight and localized delivery. In 2023, New Zealand allocated about 9.6 percent of its GDP to healthcare, slightly above the OECD average of 8.8 percent, reflecting its commitment to maintaining an expansive and effective system. Recent digital health initiatives have been instrumental in improving the efficiency of service delivery and patient data management across the health sectors, addressing the evolving needs of a diverse population.

Dimension Performance

Quality

New Zealand ranked 19th for Quality in the latest assessment. Though the country performed well in pandemic preparedness and response (9th) and patient-centered care (12th), it ranked lower on providing adequate infrastructure (19th) and ranked below the Index median on disease prevention (24th), punctuated by poor performance on preventing hospital admissions.

Choice

New Zealand ranked 28th in Choice. New Zealand ranked highly in affordability of health insurance (3rd). However, it ranked poorly in freedom to choose healthcare services (30th) and access to new treatments (22nd) — a tradeoff inherent to its socialized healthcare system.

Science & Technology

New Zealand is ranked 21st in the Science & Technology dimension. In terms of health digitization, its adoption of electronic health records places it in the top half of countries, securing the 16th position. However, New Zealand’s contribution to global medical innovation is much lower, ranking 30th in medical advances and 19th in scientific discoveries.

Fiscal Sustainability

New Zealand ranked 17th for Fiscal Sustainability. The country showed a strong performance in its national solvency, securing the 12th spot. While New Zealand found itself in the lower half for public healthcare spending overall, ranking 23rd, its low growth in public health spending (5th) suggests it has adequate control of future spending.