An evidence-based approach was used to examine the recent salient systemic changes in the Australian health system and from these the related main management issues and the pertinent competencies and skills of health managers were defined. One key competency identified was that of innovative thinking. Studies have shown that effective health care requires innovation in processes and systems to address the increased demand and quality issues (Berwick 2003; Guo 2009). Innovation is regarded as a necessary component for effective public health program implementation (Frieden 2014). As health care is undergoing a most significant period of change and reform in decades: are our postgraduate programs in health management preparing adequately our future health sector leaders and managers to promote a management environment in which innovation is fostered and a resort to meet these challenges? Are graduates being provided with the appropriate competencies and skills? This paper reviews the need to close the gap between the identified need for innovative thinking as a competency to deal with current management issues and the current curricular offerings in health management education.