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The health care industry involves the continual introduction of new clinical interventions and technologies designed to improve patient and business outcomes. This article argues for the integration of two possible improvement strategies, namely the use of work groups to generate and implement new ideas and the development of leadership capacity to promote innovativeness in others. A longitudinal study of 45 groups of employees at a specialist metropolitan teaching hospital revealed that the adoption of transformational styles of leadership in the workplace influences innovation by producing high levels of group morale that, in turn, results in work group interventions having measurable benefit to patients.