Background: Cutaneous leishmaniasis (CL) and other skin diseases impose a high burden in Ethiopia, yet underreporting is common due to limited access to diagnostics and treatment. Decentralizing care could improve this situation but may necessitate substantial changes in the healthcare system. This study assessed the available resources, and healthcare professionals' knowledge and skills across Southern Ethiopia's healthcare facilities to inform decentralization plans. Methodology/Principle findings: A cross-sectional study was conducted from May to July 2023 in Gamo Zone, South Ethiopia, including visits to 11 health centers, 4 primary hospitals, and 1 general hospital. Available resources were evaluated, and clinical and laboratory staff's knowledge and skills were tested through questionnaires focused on CL and other skin diseases. Most facilities had equipment for diagnosis and localized treatment. Adequate hospitalization space and necessary equipment for systemic CL treatment were found in 3 out of 4 primary hospitals but none of the health centers. Consumable and drug shortages were common across all facilities. BSc laboratory technologists scored significantly higher than diploma technicians (29 vs. 15 out of 39, p<0.001). Clinical staff scores varied significantly across education levels (p=0.007), with clinicians scoring the highest (median 33, IQR 31-36), followed by health officers (median 29, IQR 27-32), BSc nurses (median 28, IQR 16-36) and diploma nurses (median 25, IQR 19-29). Notably, no significant differences in median scores were observed between primary hospitals and health centers for both clinical and laboratory staff. Conclusions/Significance: Decentralizing diagnosis and treatment of common skin diseases and localized CL treatment to health centers appears feasible with facility adjustments and continuous staff training. CL cases requiring systemic treatment should be referred to primary hospitals. Strategic efforts to enhance and maintain skills and tackle supply shortages are crucial for successful decentralization.