- Background: On 1 January 1995 a new mandatory National Health Insurance Law was enacted in Israel. The new law fostered competition among the four major Israeli healthcare providers (HMOs or sick funds) already operating in the market due to the possibility that an unlimited number of patients and the relative budget share would shift among the HMOs. This led them to launch advertising campaigns to attract new members. Objectives: To examine newspaper advertising activities during the early stages of healthcare market reform in Israel. Methods: Advertising efforts were reviewed during a study period of 24 months (July 1994 to June 1996). Advertisements were analyzed in terms of marketing strategy, costs and quality of information. Results: During the study period 412 newspaper advertisements were collected. The total advertising costs by all HMOs was approximately US$4 million in 1996 prices. Differences were found in marketing strategy, relative advertising costs, contents and priorities among the HMOs. Conclusions: The content of HMOs' newspaper advertising was consistent with their marketing strategy. The messages met the criteria of persuasive advertising in that they cultivated interest in the HMOs but did not provide meaningful information about them. Future developments in this area should include consensus guidelines for advertising activities of HMOs in Israel, instruction concerning the content of messages, and standardization of criteria to report on HMO performance.