Haydom Lutheran Hospital (HLH) is an important service provider in an area of Tanzania where the population is poor and government health services are inadequate. In 2011, The Royal Norwegian Embassy funded 61% of the hospital’s budget, but the long term goal is to terminate the support. The government has decided that HLH will be upgraded to Referral Hospital at Regional Level, and this will entail that the government will take responsibility for a much larger share of the budget. While this is a very positive development, it is uncertain what increased government funding will mean for the autonomy of the hospital. Challenges that HLH need to address in the future include incentive packages to attract specialists, and proper implementation of the new systems for medical records and invoicing.