OBJECTIVES: District Health Boards (DHBs) in New Zealand are mandated to assess and prioritise the health needs of their resident populations. This paper evaluates the impact of those health needs assessments (HNAs) and prioritisation practices on health service planning and purchasing in the first 3 years of the DHBs (2001-2003). METHODS: DHB HNAs, 5-yearly strategic plans, and annual plans were evaluated using document analysis to determine the impact of needs assessments on prioritisation and planning by boards. Key informant interviews with DHB senior managers were used to identify differences between boards. RESULTS: HNAs had relatively little influence on the direction of planning and purchasing. HNAs conducted in DHBs that focussed on planning at the service level and in relation to population subgroups using a 'mixed-scanning' approach and 'service planning groups' had a greater impact on planning and purchasing than more comprehensive approaches. DHBs found prioritisation difficult due to the level of control exercised by central government over their actions. CONCLUSIONS: HNAs in New Zealand need to be less ambitious, more focussed and more closely institutionally linked to prioritisation, service planning and purchasing processes if they are to have an impact on the allocation of resources.