The Provincial Health Sector Development Project addresses the Government ' s sectoral policy goal to rationalize sector spending by strengthening policy-making and improving efficiency in service delivery. The project will consist of three main components. First, the formulation of policy for reform will help establish the basis and provide critical tools to further sector reform. The studies are designed to help fulfill the following objectives: a) improve the sector ' s allocative efficiency; b) improve the sector ' s productive efficiency; c) improve the targeting of public subsidies; and d) compensate for market failures in health insurance and services delivery through design and implementation of a regulatory framework for private insurance and for minimum quality requirements for private provision of services. Second, implementation of autonomous hospitals will help transform the organization and management of up to 15 hospitals to improve the internal efficiency and guide their transformation into Autonomous Public Hospitals. And third, dissemination of reform initiatives will contribute to disseminate nationwide the findings and experiences of the first two components and to help strengthen the technical and management capacity of sector professionals. To this end, the project will support training and workshops and a limited number of national and international scholarships in the areas of hospital management, public health, and health economics.