INTRODUCTION: Performance–Based Grant Agreements are increasingly being used in Nepal in the healthcare sector, especially at public-private partnership hospitals. As interest in these agreements grows, it is essential to understand the process of implementation so that Nepali healthcare policy–makers can make better informed decisions about how they impact the public health situation of Nepal. This project studied the process of implementing Performance–Based Grant Agreements using qualitative research methods to interview key informants about their opinions, perceptions, and experiences associated with these agreements. METHODS: Semi–structured interviews with open–ended questions were conducted with key informants who have direct knowledge and experience about the design, implementation, and impact of the Performance–Based Grant Agreements. The key informants included healthcare administrators and healthcare workers at the various implementing hospitals, Government of Nepal officials, and members of various External Development Partners; these participants were chosen using a combination of purposive and convenience sampling methods in an attempt to triangulate responses and to generate a diversity of opinions, and perspectives. Participants were asked about their experiences with the Performance–Based Grant Agreements and interviews focused on associated challenges, opportunities, learned experiences, and both expected and unexpected consequences. Data analysis was overlapping with data collection and concentrated on identifying recurrent themes and ideas from transcribed interviews. These themes and ideas along with illustrative quotes guided discussion and results. RESULTS: A total of 16 interviews, ranging from 12 minutes to 75 minutes in length, were conducted with different hospital administrators, Government of Nepal officials, and members of different External Development Partners about the Performance–Based Grant Agreements. Participants had widely varying experiences about the process of implementing these agreements, which yielded a diversity of responses. DISCUSSION: There was an awareness gradient among the participants about the agreements as some participants had barely heard of the contracts while others had detailed knowledge of how their institution was implementing them. The process of implementation for participants and their institutions included grappling with the concept of conditionally tying funding to performance, figuring out how to do monitoring and evaluation, understanding the barriers to implementation, and using new technology and practices to meet the demands of the agreements. Despite the varying experiences associated with implementation or a lack thereof, participants were unanimous in their support for the adoption of these agreements and hopeful that these agreements can enhance partnership while improving the delivery of health services in Nepal.