Public sector policies often try to extend access and redirect public resources, depending on private sector actions. These strategies focus on reducing demand, improving efficiency, and generating increased revenues in the public sector. In order to provide incentives for efficiency, acquire capital, and redirect limited public resources to public priorities, there must be an expanded role for the private market in the provision of health services. This presents opportunities to improve the focus of resources on high-priority health activities in the public sector and to make more effective and efficient use of the resources of the private sector. The authors discuss the form that such policies may take. However, while the overall set of options available to policy makers can be identified, what is an effective strategy in one country may be neither appropriate nor feasible in another. The challenge to policy research is not to identify what works, but rather to understand the conditions that make a policy effective in some settings but not in others. The objective is not to prescribe the actions to take but to understand the factors that create the current experience in a specific setting.