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'Canada is a country of perpetual pilot projects," Monique Bégin famously wrote in the Canadian Medical Association Journal. The former minister of health and welfare pithily described a long-standing, frustrating problem in our medicare system: We have solved every single problem in our health-care system 10 times over, but we seem incapable of scaling up the solutions.

This inability to learn, to share and embrace innovation across jurisdictions, is explored thoughtfully in the new report of the Advisory Panel on Healthcare Innovation. The panel, led by David Naylor, a physician and former president of the University of Toronto, stressed that "Canada has no shortage of innovative healthcare thinkers, world-class health researchers, capable executives, or dynamic entrepreneurs who see opportunity in the health sphere."

But innovation is stifled by the structure and administration of the health system, and a dearth of leadership. Medicare – the name we give our publicly funded health insurance scheme – is, in fact, not a system at all; it's a collection of 14 federal, provincial and territorial programs that are neither integrated nor co-ordinated. Worse yet, within those programs, there is a near total absence of vision and goals.

The role of our health bureaucrats is to hold the line on spending as best they can and, above all, ensure that the names of their political masters don't appear in damaging headlines. Improving patient care is rarely the No. 1 priority.

The way our system is funded – predominantly with block transfers to hospitals and fee-for-service payments to physicians – encourages volume of procedures and the status quo. It does not reward quality of care, or responsible stewardship. In fact, when an individual or a program goes out on a limb and makes changes to improve efficiency or cost-effectiveness, the benefits often accrue to others; perverse disincentives are commonplace and counterproductive.

These problems and frustrations are not new. The Naylor report cites an example from 1974, when Canadian researchers published a landmark paper showing that nurse practitioners could do 70 per cent of doctors' work with no difference in outcomes or patient satisfaction. Using NPs also saved money, but hiring more nurse practitioners was hampered by the fact that, generally speaking, doctors are paid on a fee-for-service basis and nurses are salaried. Four decades later, that same bureaucratic hurdle remains. Most other Western countries acted on the research: NPs are an integral part of health-care delivery and most physicians are salaried. But in Canada, NPs are still grossly underused – except in pilot projects, of course.

We still negotiate physician and nurse contracts separately and our management of health-care human resources is a mess. Until you get workers with the right skills in the right place at the right time, you will never deliver seamless, patient-centered care and you will never control costs, because labour accounts for two-thirds of all spending. As the NP story and countless not-acted-upon research findings since illustrate, innovation is hampered by policy gridlock. The managers of the system, who are largely powerless and beholden to the whims of politicians, are with few exceptions profoundly mistrusting of entrepreneurship and pathologically risk-averse.

For decades, we have produced reports about the need to transform health-care delivery and funding while, simultaneously, clinging to the same old way of doing things. It's a fundamental disconnect between evidence and action. If you don't take risks, you will never innovate. So how do we break the logjam?

According to the Naylor report, it has to begin with leadership, and it should come from Ottawa. One of the panel's central recommendations is the creation of an independent health innovation agency to not just fund pilot projects, but promote scaling-up, using searchable repositories of successful programs, financial incentives, regulatory change, all with the aim of spurring innovation. More resources alone will not ensure the scaling-up of good ideas. There needs to be partnership, commitment and monitoring to ensure implementation.

In short, it's not more money the system needs, it's culture change – a shift from perpetual pilot projects to embracing best practices.