There are few studies exploring the need to develop and manage culturally competent health services for refugees and migrants from diverse backgrounds. Using data from 50 interviews with service providers from 26 agencies, and focus group discussion with nine different ethnic groups, this paper examines how the Victorian state government funding and service agreements negatively impact on the quest to achieve cultural competence. The study found that service providers have adopted 'one approach fits all' models of service delivery. The pressure and competition for resources to address culturally and linguistically diverse communities' needs allows little opportunity for partnership and collaboration between providers, leading to insufficient sharing of information and duplication of services, poor referrals, incomplete assessment of needs, poor compliance with medical treatment, underutilisation of available services and poor continuity of care. This paper outlines a model for cultural consultation and developing needs-led rather than service-led programs.