Objectives: : To test the hypothesis that the health reform enacted in Peru in 1997 increased the rate of cesarean sections in the private sector due to non-clinical factors. Methods: : Different rounds of the Demographic and Health Survey are used to estimate determinants of c-section rates in private and public facilities before and after the healthcare reform. Estimations are based on a pooled linear regression controlling by obstetric and socioeconomic characteristics. Results: : C-section rates in the private sector grew from 28 to 53% after the health reform. Compared to the Ministry of Health (MOH), giving birth in a private hospital in the postreform period adds 19% to the probability of c-section. Conclusions: : The health reform implemented in the private sector increased physician incentives to over-utilize c-sections. The reform consolidated and raised the market power of private health insurers, but at the same time did not provide mechanisms to enlarge, regulate and disclose information of private providers. All these factors created the conditions for fee-for-service paid providers to perform more c-sections. Comparable trends in c-section rates have been observed in Latin American countries who implemented similar reforms in their private sector, suggesting a need to rethink the role of private health providers in developing countries.