Anyone discussing the future shape of medicare should visit Shouldice Hospital, a money-making private institution with one main service -- abdominal-wall hernia operations -- in suburban Thornhill, north of Toronto. Something about the stately building rising in a lush green landscape, and the restful calm inside, speaks of luxury; yet patients receive their operations courtesy of public health insurance.

As anyone knows who has ever visited Shouldice, all men and women are equal when shuffling, post-hernia, in a bathrobe and slippers.

Equity is at the heart of Canada's medicare debate. It is what Canadians prize, and do not want to lose. Yet as Shouldice makes clear, equity and entrepreneurship can exist side by side.

Canada should remain committed to a publicly funded system that guarantees access to all, based on medical need. But the health system needs shaking up.

Wait times are untenable: 7.2 hours on average in the emergency rooms of Alberta's Capital Health Region. Only 31 per cent of cancer patients in Ontario move from referral to treatment within four weeks, the maximum recommended by the Canadian Association of Radiation Oncologists. Canada ranks 19th among 28 OECD countries in the availability of MRI scanners and 21st in the availability of CT scanners.

At times, medicare exudes the arrogance of a monopoly: comfortably second-rate, the Canadian Football League of social programs. So public approval has tumbled. In 1991, 61 per cent of Canadians said the system was excellent or very good; in 2000, just 29 per cent thought so.

The core question is how to release the health system's creative energies so it can innovate, while preserving its commitment to equity.

Monopolies are difficult to shake. The government pays for, oversees and evaluates health care. In such an insular system, the air grows stale. Would a parallel private system -- one where people could pay for primary care out of their own pockets -- allow for more choice and competition? Yes, but equity would be destroyed.

Can the system have both equity and competition? Michael Kirby's Senate committee, which reported last month, says yes. It wants to give regional health authorities the power to buy services from hospitals, which would be paid on a fee-for-service basis, much as doctors are now. The hospitals could be for-profit or non-profit; either way, they would have to make a case for their efficiency and quality of service. "Internal competition," he calls it.

The problem is that this model could create perverse incentives: to treat the marginal cases, to avoid the tough patients. The U.S. courts have been full of fraud cases linked to service-based funding. Internal competition it might be, but primarily among the accountants and bureaucrats.

But the principle is correct. More competition. Less fuss over whether someone is making money. An end -- please -- to the phony claims by Ottawa that it is watching those renegades in Alberta who dare to permit for-profit clinics to keep patients overnight. So what if they do? Medicare hasn't turned Canadians completely socialist. Diagnostic services have been run by profit-making companies for years. Long-term care and addiction centres make profits. And the much-loved family medical clinics make a profit for their owners.

Shouldice runs on the same principle as those clinics. The investors take a percentage of all the doctors' billings for the hernia work, according to a Shouldice spokesman. Ontario also permits the owners a nominal return of 6.5 per cent on the money they spent in 1969 to build their 89-bed hospital.

Technological advances mean that more of these small, specialized hospitals or clinics are becoming possible. For-profit clinics in Alberta have been given the go-ahead to offer hip, knee and shoulder-joint replacements and lower-back surgery, all of which may require overnight stays. Developments in imaging equipment mean less need for exploratory surgery.

It is no coincidence that Alberta, with its entrepreneurial tradition, has been a leader in permitting business to compete for medicare dollars. The province's hope is that high-volume specialties and the profit motive will produce efficiencies. The danger is that the profit imperative will oblige entrepreneurs to cut corners -- by hiring less qualified staff, for instance.

This is the contention of a study published yesterday in The Journal of the American Medical Association. After reviewing eight studies comparing for-profit and non-profit dialysis centres, it found the death rate was 8 per cent higher in the for-profit centres.

The results underscore the need for oversight, regulation and proper funding incentives, including those based on the patient's health after care. But they should not blind Canadians to the problem of government's near-monopoly over medicare.

"There are few centres of specialization and little, if any, choice for individuals and health authorities," Donald Mazankowski said in a report to the Alberta government this year. "There are few incentives to be innovative and try new approaches if public facilities have a 'captive market.' " His idea was to "unbundle the system," in part by encouraging doctors and other health-care providers to set up businesses and compete for contracts with health services, or to market their services to individuals.

At bottom, the opposition to private enterprise in medicine rests on a deep-seated fear that it will destroy equity. Alberta's system fuelled this fear by permitting "enhanced services" such as a flexible lens in cataract treatment, at a direct cost to the patient. (The government has since begun covering the cost of the better lenses.)

Medicare supporters should recognize, however, that equal access to a system in decline is no virtue. Canadians will give up on equity if they do not respect the quality of the system's care.

We need a system that can last. This country should embark on a prolonged period of experimentation. We would also drop our objections to the service-based hospital payment if it were done not as a massive upheaval of existing funding models, but as a pilot project in limited areas such as obstetrics.

It is time to let a little air into the stifling world of medicare. It is time for more diversity of options. And yes, it is time for a little capitalism.