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Transforming a national healthcare system

System reconfiguration encourages better outcomes and improved care delivery.


The health ministry of a Middle Eastern country wanted to extend healthcare coverage to all citizens. The system was ripe for reform, but was limited by potential conflicts of interest and inefficiencies from having placed all aspects of healthcare—from regulating and licensing, owning, and running hospitals to budgeting and allocating funds—within a single government entity.

The McKinsey team was asked to work with the health ministry to design a new nationwide healthcare framework and help implement the transformation.


The team began by conducting interviews with all stakeholders and key personnel to establish a fact base, including moderating workshops with operations and financing teams, conducting market assessments, interviewing local physicians, and convening focus groups with patients.

The team met regularly with the senior leaders of government agencies to define the details of the new framework. During these discussions, the one orienting question was, "What would any of us want and expect if we were the patient?"

The new framework focused on creating efficiencies in the system. For example, the team recommended an outcomes-based funding model for both public and private facilities. Claims would be paid only when there were real health improvements—such as reducing obesity or reducing blood pressure—not just because someone went to the hospital.

The plan also recommended separating policy making from healthcare delivery. The team helped identify institutional partners who could work in the country, laying the groundwork for public/private partnerships and helping to recruit the international managers who now operate many of the nation's public hospitals.


The system has been radically transformed into a viable healthcare market. It is no longer self-regulating, and all citizens now have health insurance coverage through a mandated system. Residents have the choice of public or private hospitals, with claims being paid by 1 of more than 30 competitive health insurers.