An ambitious reform to increase efficiency of the Portuguese health care system was launched in 2002. In contrast to previous attempts of gradual reforms, which were never fully implemented, the strategy has been to create a big bang in the health sector, making changes essentially irreversible. The reform has two main aims: to deliver better-quality public health services than at present but at no higher cost; and to reduce the underlying growth rate of public health-care spending over the medium term. New legislation approved includes the separation of the functions of regulation, financing and provision of health care services; setting up new models of financing for providers, which impose harder budget constraints; the introduction of incentives towards productivity, management and quality improvements; the possibility for the private sector to play a larger role in service provision; and the promotion of generic drugs. After assessing the strengths and weaknesses of the ...