In 2004 institutional care accounted for the largest proportion of Canadian health care spending at $38.9 billion, with hospitals accounting for nearly 30% of total health expenditures in Canada and other institutions (primarily nursing homes) accounting for another 10% of total health spending. Hospital spending has consistently been the primary driver of health care spending growth.

Hospital spending as a proportion of total health spending has declined steadily over the last three decades, from a high of 45.2% in 1976, reflecting the cost-effectiveness of shifting health care delivery to outpatient care.

Shifting health care delivery to outpatient services has been an important factor in containing health care spending growth. This is particularly important as Canada’s population ages and the prevalence of chronic conditions increases.

But health policy makers should be concerned that in 2003, for the first time in decades, Ontario and Quebec experienced an increase in hospital utilization as measured by the total number of hospital bed days. This may signal a shift toward increased utilization of institutional services that may result in higher rates of health spending growth in the years ahead.

Canadian Institute for Health Information (CIHI), National Health Expenditures
CIHI, http://secure.cihi.ca/cihiweb/dispPage.jsp?cw_page=media_29oct2004_e Table 3. Total Inpatient Hospital Days for Canada (Provinces and Territories), 1995–1996, 2001–2002 and 2002–2003