New Zealand is in the process of implementing major changes in the organisation and funding of its health services. Central to these changes is a largely elected area health board responsible for the funding and coordination of all services for a defined population, both public as well as non-government. Four different models of decentralisation, deconcentration (administrative), devolution (political), corporatisation (functional) and privatisation (non-government), have been used to describe and analyse these changes. There is expected to be a major devolution of powers to area health boards from central government, reversing the centralising tendencies which have occurred over the past century. Within boards a pluralistic system of service management, incorporating the above models of decentralisation, is being implemented to replace the present system of institutional administration and to give greater decision-making responsibility to health professionals, non-government agencies and community groups. These initiatives are associated with population-based funding of hospital boards complemented by service planning guidelines. Of particular importance has been the recent government decision to place the funding and management of primary health care under area health boards. However, there are serious concerns as to whether such radical changes, which could put New Zealand ahead of the rest of the world in achieving an integrated health system, can be implemented given the management expertise needed.