Vietnam is rapidly changing from a centrally planned to a market economic system. Explores the existing constraints and the degree of flexibility for management in the Government health system. Analyses the potential influence of the recent changes in health sector resource allocation with budgets becoming less under the direct control of the local authority, and based on population rather than the current number of beds. These changes create new possibilities, and responsibilities, for managers actively to manage health services and preventive programmes. Health managers are ill-prepared for this challenge.