Against a background of increased expenditure and improved equity, this reform of public health management in Chile, set in the context of a dual health system, aims to consolidate a cost advantage over the private sector. Emphasis has been placed on the distinction between the regulatory, financial and supply functions in the public sector, and a relative opposition of interests between them has been encouraged, with a view to generating quasi-markets. The "management commitments" entered into between the Ministry of Health and the Health Services mark a departure from the strategy of resource allocation guided by historical budgets and make results the decisive factor of funding. These commitments establish each year the types of service that are to be provided, the allocation and transfer of resources, and the performance indicators, in an overall perspective that includes the areas of programme content, financing, human resources and investment, and they govern the many dealings between the Ministry and the Health Services. The other focus of the reform is the improvement of labour productivity, to which end attempts are being made to change the existing conditions of recruitment and pay. The duality of the health model significantly limits the financial control of aspects that are endogenous to it, such as absenteeism and medical hours not worked. The changes also clash with current budgetary frameworks, which inhibit decentralized resource management. Performance measurement has emphasized micro-economic efficiency more than effectiveness: in order to evaluate quality, the ultimate aim of management reform, there is a need to set standards of performance which will make it possible to measure the quality of the service provided.