AbstractThe health care system in Sweden has been undergoing radical change since 1991. The mainly public financed (90%) system with 26 autonomous counties spent 8.5% of its gross domestic product on health care in 1991. The main features of the ‘paradigm shift’ are: separation of production and financing; resource allocation to health districts in relation to the needs of the population; and introduction of public competition between health districts (purchasers) and hospitals (providers). The health district boards are responsible for the health care of the population in their district hospitals financed by their activities (e.g. through diagnosis‐related groups (DRGs)) and quality aspects monitored by central authoritiesA parliamentary committee (HSU 2000) is investigating how Sweden's health care system can be organized and financed in the future. Three models are analyzed: a reformed county council court model, a primary care‐managed model, and a compulsory insurance model. Each model must be consistent with equity and public financingFrom 1992 in the Stockholm county, five surgical specialities were paid for their activities according to DRGs for inpatient care and another system for outpatient care. The number of treated patients during 1992 increased by 8% in inpatient care, 50% in day surgery and by 15% in outpatient care. Taken together, the activities increased by 11%, which is slightly more than the expected 10% increase in productivity. (There was a 10% decrease in DRG prices from 1 January 1992.) The total costs decreased by 1% due to fewer personnel. Nothing has been reported concerning the quality of care, neither before nor after the model was introduced. From 1993, all somatic acute specialities are paid by DRGs and the equivalent outpatient classification systems. The results from 1993 will be presented in the autumn