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Chinese hospitals are going through a period of rapid change, including devolution of management responsibility. These changes have profound implications for managers' roles. A study of health management education needs was undertaken in three hospitals in China. Priorities for training were determined by identifying areas where lack of management expertise appeared to be limiting hospital performance. Shortfalls in organisational performance were identified, some of which are partly due to lack of management expertise. However, there are contradictions in the wider policy environment that would limit the performance of even the best-trained manager. Management education is essential for improving organisational performance and addressing the policy constraints. Training programs for managers should enable them to deal with the daily practical problems that they face and also contribute to solving the systems issues which frame many of those practical problems.