This study examined the impact of community health needs assessments used in country South Australian health service planning between 1995 and 1999. Data were collected from regional health planning officers during a Search Conference and a series of Delphi rounds. The needs assessments were found to vary from regionally to locally driven approaches. Locally driven approaches ensured local involvement but the process was slower and required more effort from the planner. It was also felt that locally driven approaches could exacerbate tension between a community's imperatives and the regional focus of regional decision-makers. In the overall regional budgets, the reallocation of health service funds according to the needs assessment findings was only small because of difficulties in refocusing from traditional clinical services in the short term. In contrast, the impact on health service thinking about population health issues was thought to have been more significant, for example, in the development of regional women's health plans. The use of community health needs assessments was useful, but for greater impact these should not now be so 'broad-brushed', but be more focused on feasible changes that health services could support. Other priority-setting techniques, such as marginal analysis, should also be used to determine where maximum health gains can be obtained.