Health care systems across Canada are under increasing strain from growing demand for services and rising costs. This pressure is challenging the system’s financial sustainability, creating a sense of urgency to act by seizing opportunities to innovate and challenge the status quo.
Governments — both provincial and federal — have increased spending on health care in recent years to address fiscal challenges, but demand is outpacing governments’ ability to continue to invest at the same rate. There is recognition that future spending increases must be combined with efficiency gains to drive long-term sustainability and increased value to the health care system.
These efficiency gains will be achieved through a combination of operational optimization and more structural system changes:
- Structural changes to health care systems across the country are required to better align health care system capacity to population health needs to provide timely care to people in the most appropriate care setting.
- Health care operations must become models of efficiency through the reinvention of service delivery models. Adopting new models of care and deploying emerging innovations in care delivery will both drive down the cost of delivering services and increase the system’s capacity to manage growing demand.
Across Canada, health care leaders are rising to the challenge and seizing the opportunity to build a more sustainable health care system by undertaking transformations at all levels. Such transformations include bolstering primary, home and community care; developing and scaling innovation; and investing in technology and workforce transformation.
At the same time, we are seeing a heightened focus on optimizing how resources — both financial and human — are managed and deployed to maximize the value delivered by the system for every dollar invested. While this starts with assessing where and how funds are being spent and seeking opportunities to optimize where and how resources are deployed, taking action to implement operational optimizations at pace and enforcing this progress through enhanced accountability mechanisms and capabilities are critical to success.
The goal is to enable the strategic investment of scarce resources to unlock operational efficiencies and capacity to manage growing demand within resource constraints.
The urgency to tackle financial sustainability in health care:
Demographic shifts are driving increasing demand for health care services in Canada and a corresponding increase in health care costs. Canada’s population has increased by 16% over the past decade, while those aged 65 and older have surged by 40%, now representing nearly 1 in 5 Canadians (19%) as of July 1, 2024.1 This age group is a significant driver of health care demand and costs, accounting for more than 40% of health expenditures.2 These demographic shifts present a significant challenge to health care sustainability that will intensify as the population continues to grow and age.
Further, inflationary pressures on both labour and supply costs have increased the cost of delivering services over the last several years. These impacts are seen in the accelerated growth of annual health care spending in Canada — from 1.7% growth in 2022 to an expected 5.7% in 2024.3 Since 2013, provincial government spending on health care has increased by 60%, federal by 86%.4
It is acknowledged that this rate of spending growth is unsustainable, constrained by the financial realities of federal and provincial/territorial government budgets. From 2019/20 to 2023/24, the accumulated debt of the federal and provincial governments grew by 24.3%, to approximately $425 billion.5
How are health care systems responding to the financial sustainability challenges?
Across Canada, we are seeing accelerated large-scale changes to health care systems to meet this moment. These include:
These transformations must be paired with a strong focus on improving how resources are managed, facilitating decision-making on how and where scarce resources are deployed to maximize the value delivered by the system for every dollar invested.
Effective resource management strategies span three key types of activities, which work together to drive iterative improvements in financial sustainability:
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