This study explores hospital board governance, particularly the dimensions of accountability, transparency and civic participation, within Local Health Councils (LHCs) in two locations in rural Paraguay. The democratization and decentralization efforts of the Paraguayan federal government in the last 20 years resulted in creation of the LHCs, but little research has been conducted on how these entities are now working in comparison to the expectations envisioned for them. This study examines LHC member understanding and practices by conducting semi-structured interviews with council members in two different locations. I reviewed relevant Paraguayan law and compared LHC member responses with the legal expectations of the role of the LHC and council member responsibilities. I also reviewed several health council organizational documents, such as rules and procedures, financial statements and by-laws, with the same intent. Using interpretive social science methods, I analyzed this data in conjunction with the information I gathered through participant-observation during my Peace Corps service in one of the communities examined here. This study finds that local health councils face numerous challenges to governance, including member role confusion, few implemented planning and oversight processes, weak systems of accountability and a lack of resources and support given to LHCs, creating a great challenge to meet expectations set out for them by federal law.