Beset by unprecedented fiscal pressures, Canadian medicare has reached a crossroads. The authors review the impact of recent cuts in federal transfer payments on provincial health care programs and offer seven suggestions to policymakers trying to accommodate these reductions. (1) Go slowly: public health care spending is no longer rising and few provinces have the necessary systems in place to manage major reductions. (2) Target reductions, rewarding quality and efficiency instead of making across-the-board cuts. (3) Replace blame with praise:give health care professionals and institutions credit for their contributions. (4) Learn from the successful programs and policies already in place across the country. (5) Foster horizontal and vertical integration of services. (6) Promote physician leadership by rewarding efforts to promote the efficient use of resources. (7) Monitor the effects of cutbacks: physician groups should cooperate with government in maintaining a national "report card" on services, costs and the health status of Canadians.

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