The field of health literacy continues to evolve and concern public health researchers and yet remains a largely overlooked concept elsewhere in the healthcare system. We conducted focus group discussions in England UK, about the concept of health literacy with older patients with chronic musculoskeletal conditions (mean age = 73.4 years), carers and health professionals. Our research posed methodological, intellectual and practical challenges. Gaps in conceptualisation and expectations were revealed, reiterating deficiencies in predominant models for understanding health literacy and methodological shortcomings of using focus groups in qualitative research for this topic. Building on this unique insight into what the concept of health literacy meant to participants, we present analysis of our findings on factors perceived to foster and inhibit health literacy and on the issue of responsibility in health literacy. Patients saw health literacy as a result of an inconsistent interactive process and the implications as wide ranging; healthcare professionals had more heterogeneous views. All focus group discussants agreed that health literacy most benefited from good inter-personal communication and partnership. By proposing a needs-based approach to health literacy we offer an alternative way of conceptualising health literacy to help improve the health of older people with chronic conditions.