Netherlands’ EMS Sector to Face Financial Problems in Years to Come

The EMS sector of the Netherlands, one of the most economically prosperous states of the EU, may face serious financial difficulties due to high inflation rates and insufficient state funding.

That has been recently confirmed by the Barometer of Dutch Healthcare, a report, which was prepared by EY, to show the financial performance of the entire healthcare sector of the Netherlands and its EMS segment. Following the report, the current situation in the industry is slowly deteriorating. According to some experts, that may eventually lead to the decline of the quality of provided services and other serious problems for the industry. The situation is also complicated by the rapidly aging population of the Netherlands, which puts additional pressure on the Dutch healthcare and EMS sectors in the long term. According to predictions of the Dutch National Association of General Practitioners and the Dutch Association of Hospitals, the number of people aged 80 and 90 in the Netherlands will triple in years to come.

Historically the Dutch EMS sector has been considered as one of the best in Europe and the whole world, primarily in terms of the quality of provided services and their accessibility, however, since recently, the situation has begun to change.

One of the reasons for this is the relatively small volume of state funding of domestic EMS in the Netherlands compared to other developed EU states.

According to official statistics of the Netherlands’s Central Bureau of Statistics,  more than 65 percent of Dutch healthcare expenditure is spent on medical or paramedical care, which is significantly lower than in the majority of other EU states, primarily Western Europe. The annual funding of the sector is varied in the range of 50-55 billion euros, being equivalent to 6.5 percent of GDP.   

As EY partner Rob Leensen told in an interview with a Dutch Accountant business paper, there are ever-growing differences within all sub-sectors of healthcare and EMS of the Netherlands, which are not financially compensated by the local state. That has already led to the fact that the rating for the Dutch healthcare and EMS sector declined below creditworthiness for the first time.

One of the reasons for this is also the consequences of the pandemic on the EMS sector of the country as well as the current high inflation rates.

Despite the current good technical level of the most of Dutch hospitals and their emergency departments in recent years most of them have faced an acute shortage of funds,  needed for their further development and day-to-day operations. Some latest studies show that hospitals, including emergency ones, are jointly heading for a financial deficit of €300 to 420 million in 2023 and 2024.

Most local analysts expect the current underfunding will create serious problems for the Dutch EMS sector already soon, as will complicate the solution of the most pressing problems for the industry. Like the majority of other developed nations, the Netherlands experiences the post-pandemic shortage of paramedics along with ambulance doctors as well as increased pressure on the current staff. The latter is also the result of the increased paperwork in them, which is criticized by the majority of emergency doctors and paramedics.

As a result, personnel costs are rising, partly caused by the increased use of temporary workers. Prior to 2021-2022, the industry faced a massive outflow of staff, as, according to experts of a well-known Dutch private home care organization Zuster Jansen, salaries in the healthcare and EMS sectors of the country were by about  6-9% lower than the average wages in industrial and public sectors of the country.

In addition, personnel costs are increasing due to salary increases for permanent staff.  New collective labor agreements were signed this year in which wages rise sharply as a result of inflation. The sharply increased wage costs and inflation have not been fully compensated by the state, which puts additional pressure on the industry.

According to representatives of the Dutch healthcare and EMS community, currently, personnel costs are taking up an increasingly large part of the total budget of hospitals and their emergency departments in the Netherlands. According to Dutch consulting organization BDO, in 2022, personnel costs amounted to 60.6 percent of the total budget of hospitals and it is planned these figures will further grow this year. The situation is also complicated and the overall revenue flows of Dutch hospitals have significantly dropped in recent years. The number of hospitals and healthcare institutions that suffered losses doubled last year. Partly as a result of these trends, more and more of them are no longer meeting the agreements they have made with their banks about financing. 

Currently, the Dutch healthcare sector consists of about 800 institutions, with a combined turnover of almost 80 billion euros. Of these, a significant part accounted for emergency hospitals. In addition to a significant increase in general costs, in recent years the industry has faced significantly increased absenteeism costs. Absenteeism due to illness has significantly increased in the Netherlands’ healthcare and EMS sectors in recent years partly, which became mainly the result of higher work pressure due to the COVID-19 pandemic. Already now the absenteeism rate in some hospitals in the Netherlands exceeds 12%.

In this regard, according to analysts, particular attention should also be given to a system change, in which more focus should be placed on preventing care than just improving people's health and financing hospital visits.

Part of these plans is designing special measures for the rise of efficiency of the entire system, such as the provision of incentives to optimize treatment in emergency departments and to create conditions for their better specialization. There are also plans to liquidate unreasonable income differences between doctors. The same will also apply to paramedics.