Shifting costs from hospitals and other institutions to outpatient services and prescription drugs is good news for Canada's health care system.

In 2001, hospitalization rates declined 3.5 % from the previous year continuing a trend of more than 20 years of reduced hospitalizations in Canada. This is not only good news for patients who prefer to be cared for within their own communities, it is also good news for the financial sustainability of Canada's health care system. These changes in spending reflect a shift towards the use of more cost-effective therapies.

As Canada's population ages, hospital and institutional care will continue to be the primary drivers of health spending and health spending growth. It is likely that the majority of health spending will always be in these areas. But increased use of outpatient services and prescription drugs helps to avoid costly hospitalizations and nursing home or other institutional care.

Increased knowledge about disease, innovative medical procedures, and the availability of effective new drugs are among the many factors that can contribute toward reducing the demand for costly institutional care.