Profits in the Dutch healthcare sector

Gupta Strategists has systematically charted profits in the Dutch healthcare sector. Their analysis shows that of the approximately EUR 80 billion spent on healthcare in total, around EUR 7 billion is net profit. That amounts to about EUR 430 per resident per year.

With a profit margin of 10%, healthcare is less profitable than the average for all sectors (12%). In absolute terms, the largest portion of these profits – EUR 1.8 billion – went to manufacturers of medical devices and equipment. Healthcare institutions earned EUR 1.5 billion, while pharmaceutical companies earned EUR 1.0 billion from the Dutch healthcare market. Another EUR 1.1 billion in profits went to healthcare professionals. This was spread more or less evenly across general practitioners, specialists, pharmacists and paramedics.

In relative terms, financial service providers and the pharmaceutical industry had the highest profit margins: 25-30% and 20-25% respectively. Among healthcare professionals, profit margins ranged between 10% and 20%, with general practitioners, paramedics and dentists at the higher end of the scale. Residential facilities and hospitals, as well as well as health insurance companies, wholesalers and construction were the subsectors with the lowest profit margins, ranging from 0-5%.

Our research shows that these profits correspond to the power the various players have in the healthcare market. However, the level of profit regulation does not align with the level of power.

Current profit regulations are the strictest for the least powerful subsectors, which also have the least need for such regulations. For subsectors with a relatively high position of power, like the pharmaceutical industry and healthcare professionals, there are very few profit regulations.

Based on the heated public debate surrounding profits in the healthcare sector, it seems many find this (excessive) profitability unfair. The intensity of the debate is perhaps fueled by the powerlessness of politics to reduce these profits. That’s because profitability is the result of power, and the sectors where profits are being made are too powerful to be regulated.

But ultimately, profits are only a small percentage of the total healthcare costs. Even if all the profits could be heavily taxed, 90% of the total healthcare costs still remain, and on average we currently live 20 years in poor health. It therefore seems more important to focus on the quality and efficiency of our healthcare, instead of only looking at profitability.

Download the full report 'Winst in de Nederlandse Zorgsector' (in Dutch) here »

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