OBJECTIVES: On May 2010 Greece reached an agreement with a joint team of the International Monetary Fund, the European Commission and the European Central Bank, as the country faced severe fiscal problems. According to the Agreement, public pharmaceutical expenditure should be reduced from 1.9% to 1% of GDP, while the reduction on health services and social security expenditure should be accounted for 1.5 billion euros and 1.2 respectively. The aim of the study was to evaluate the progress of the measures taken and to estimate their impact on health expenditure and provision of services. METHODS: For the purpose of the study, we used data from the Stand-By Arrangement and its reviews, Hellenic Statistical Authority and Greek System of National Accounts, as well as published data in the literature. RESULTS: The cuts of wages in public and private sector (>15%) and the increase of unemployment (from 9% to 15%) resulted in increased demand for public hospital care by 24% as a consequence of reduced demand (>30%) in hospital units of private sector, while a decrease in demand for primary health care in both public and private sector by 10% and 35% respectively was observed. In addition, the cost of time in public hospitals is steadily increased, due to surgical interventions and the use of high technology services, as well as because of reductions on hospital budgets for medical equipment procurements. CONCLUSIONS: Although the impact of the implemented reforms and policies in private health expenditures is already visible the significant reduction of health services inputs causes a decrease in quantity and quality of services. The need for balanced development relating both to supply and demand side requires structural reforms in healthcare sector as well as transition from a costly technological model to a health system based on primary care and public health.