In 2004 institutional care drove provincial health spending growth.

According to the Canadian Institute for Health Information, institutional care continues to drive provincial health spending growth. The Preliminary Provincial and Territorial Government Health Expenditures 1974-1975 to 2004-2005 released in November of 2004 reveals more than half of the annual health care spending is attributable to increased spending on institutional care.

Graph Source: Canadian Institute for Health Information, National Health Expenditure Trends, 1975-2004.

As Canada’s population ages, the prevalence of chronic conditions increases creating additional demands on our health care system. A key challenge in keeping Canada’s health care system financially sustainable will be to reduce the financial burden of institutional care by shifting costs from inpatient to outpatient services. Medical innovation including research-based pharmaceuticals will play an important role in containing health spending growth by allowing patient to manage their chronic conditions and avoid hospital care.