Purpose
– Despite enormous progress in health globally, primary healthcare services in many developing countries are facing different challenges. Many studies have documented that decentralisation could be useful in supporting and developing health services closer to citizens. The purpose of this paper is to assess the effect of decentralisation on health services, and to draw general lessons which might help to develop appropriate strategies to improve health services in Nepal.

Design/methodology/approach
– A mixed method was used, consisting of reviews of current literatures relevant to decentralisation and health performance, engaging with health service inputs-outputs data between 2001 and 2007, and assessing the range of choices (management, finance and governance) available to local authorities using Bossert's “decision-space approach”.

Findings
– Decentralisation in many countries, including Nepal, suggests a new form of service delivery.

Originality/value
– Review of the selected studies in triangulation with health services data has revealed that decentralisation in many cases has improved access to, utilisation of, and management of health services. The effects on other performance dimensions such as policy, equity, quality and service effectiveness are poorly investigated topics in the literature. The findings suggest that the successful implementation of decentralisation requires a broader context of institutional capacity building and resource management, and underlines the need for their consideration during implementation processes, and further investigation.