The paper investigates the introduction of some contractual elements in the command and control mechanism used in an Italian Region (Emilia-Romagna) to integrate private providers of hospital services in a publicly financed health service. The main focus is on the attempt to reduce simultaneously the large deficits of most public purchasers at the local level and to introduce some degree of contestability on the supply-side. To achieve these results, the regional authority signed with the associations of private providers a contractual agreement defining overall volumes, tariffs and the rules to deal with individual and aggregate overproduction. We examine the working of this agreement through the analysis of the demand addressed to private providers, and we discuss the main differences across regional areas to outline the circumstances under which private providers act as competitors and/or partners of the public ones. Moreover, we analyse the flows of patients from other regions - not covered by the contractual agreement - to shed some light on its contribution to the design of an integrated supply network including private providers. In this respect, data show that when a single Region introduces a contractual agreement specifying individual quotas and sanctions for overproduction, private providers succeed in increasing the num-ber of patients from other regions. This might suggest the suitability of some form of inter-regional coordination.