We evaluate the effect of a major health care policy in public hospitals which changed the demand and supply side incentives for c-section procedures in 2014 in Iran, where the c-section rate at the time was 55%. Following the reform, vaginal delivery became free for patients. The policy also introduced financial incentives to doctors for performing vaginal deliveries and set a cap on their maximum c-section rate. We show that supply side incentives had a major role in the effectiveness of the programme, after which the national rate reduced by 6 percentage points. This reduction was mainly driven by first-birth mothers. The reform also shifted doctors with high c-section rates out of public hospitals. We cannot find any adverse effect on Apgar score, hospitalisation or mortality; however, gestation length and birth weight significantly increased.