Evaluating the implementation of health care reform provides important information on its effect, as well as a factual basis for deciding upon mid-course modifications. Although researchers in various countries are addressing the impact of reform, only few governments have initiated a structured, planned evaluation to accompany reform efforts. In Israel, the 1995 National Health Insurance Law earmarked 0.1% of the health care budget for research on the law, coordinated by the National Institute for Health Policy and Health Services Research. This paper describes the evaluation strategy of the JDC-Brookdale Institute which is taking part in the research efforts. Implementation of the evaluation strategy and the challenges of evaluating a major reform of the health system are discussed. The evaluation strategy combines elements of formative and summative evaluation using a 'case study' approach which seeks to integrate in-depth understanding of the changing health system and of health care provider's organizational behavior, with a variety of outcome measures. The Israeli case provides support for the proposition that an integrated approach to evaluating health reform provides a better understanding of the subject under review and thus a better basis for making useful recommendations to policy makers. In addition, such an approach enhances the validity and credibility of the data and thus the probability of making an impact, which is a main objective of formative evaluation. Examination of the Israeli case, provides important insights about evaluation of health system reform, and may benefit researchers in other countries attempting to evaluate health care reform.