Civil wars, political conflicts, ethnic issues and stagnant social development have resulted in fragile health systems in Northeastern Myanmar. The healthcare provision continues to be fragile and inefficient, with prevalent health inequity. Limited service point, poor financial protection mechanism and gender-based inequity restrain the population’s access to healthcare services, not to mention local authority’s lacking participation in the making, implementation and evaluation of health policies. The issuance of the National Health Plan (NHP) 2017–2021 brought huge potential for the ethnic health organizations to strengthen the health system in ethnic regions. The present study aims to audit the local health systems and their performance in Northeastern Myanmar ethnic region through qualitative data collected by 26 semi-structured interviews and seven focus group discussions with key informants including health officials, policymakers, international donors, ethnic authority/government officials, local clinic managers/staff and health workers, non-governmental organizations, private outlets, etc. The findings indicated that challenges exist within each pillar of the health system. To achieve universal health coverage in the ethnic regions, health system alignment and decentralization is needed. Health system strengthening could serve as both an urgent need and also a way of peace building.