Objective: To determine how innovation occurs and identify the factors that support innovation in a rural hospital in New South Wales, Australia.

Design: Situated within a larger case study, this research collected qualitative data using semi-structured interviews.

Setting: Inner regional hospital, located in a city, providing a broad range of acute and primary health services to a rural community.

Participants: Hospital executives, department managers, consultant and staff specialist surgeons, physicians, nursing, nursing managers and allied health staff were recruited after a phone, personal or email approach.

Main Outcome measure: Qualitative interviews (n=25) conducted in a rural hospital.

Results: Fourteen innovations were identified. Factors supporting innovation were when individuals who were valued by team members had the ability to make within team innovations with ease; clinicians with ideas for improvement led innovation; external agencies- the Clinical Excellence Commission and the Agency for Clinical Innovation provided expertise, ideas, and motivation for innovation. Limiting factors included time for innovation, creative thinking, planning, and implementation. Funding, the bureaucracy and multiple points of consultation to make changes were also identified.

Conclusions: Innovation occurred despite the absence of factors theory suggests are required. In rural settings, there are limited staff and resources leading to scarcity with no additional capacity in the system and innovation is a necessity. Further innovation could be unleashed if small amounts of resourcing and time were provided to staff with innovative ideas to improve services, change processes or introduce new ways of working.