Hospital Reform in Germany

The hospital reform – legally established through the Hospital Care Improvement Act (KHVVG, in force since December 2024) and further developed in practice through the Hospital Reform Adjustment Act (KHAG, in force since April 2026) – is one of the most significant reforms of inpatient hospital care in Germany in decades.

• Hospitals are assigned defined service groups, for which they must demonstrate compliance with quality-related requirements.
• The previous DRG-based reimbursement system is being supplemented by capacity-based financing (retention funding) – intended to reduce financial incentives for unnecessary procedures. The Transformation Fund supports hospitals with 29 billion euros for restructuring the hospital landscape.
• Hospitals are expected to specialize more strongly; highly complex inpatient hospital services will be concentrated in qualified centers.
• The goal is to ensure high-quality patient care while strengthening the economic sustainability of hospitals.
• Implementation is the responsibility of the federal states as part of their hospital planning; Federal Minister of Health Nina Warken (Federal Ministry of Health, BMG) coordinates the further development of the hospital reform within the framework of the coalition agreement between CDU, CSU, and SPD.

Germany has one of the densest inpatient hospital care systems in the world. At the same time, there are considerable differences in specialization, infrastructure, and quality of care between individual hospitals.

• Many hospitals provide a broad range of services – regardless of how frequently certain procedures are actually performed.
• International experience shows that for complex diseases, experience and case volumes may be associated with better treatment outcomes.
• The previous hospital financing system based on DRG reimbursements created incentives for a high number of cases – rather than primarily focusing on quality standards and high-quality healthcare.
• By concentrating complex services in specialized centers, the quality of care for patients is intended to improve while ensuring needs-based hospital care.
• At the same time, basic local care is intended to remain accessible – particularly for emergencies, common illnesses, and hospitals in rural areas.

Service groups are a central instrument of the hospital reform. They define which medical care areas a hospital is allowed to provide and bill for – and which requirements it must fulfill in order to do so.

Why are service groups important?

• They create transparency regarding which hospital is qualified for which treatment.
• Hospitals must demonstrate for each service group that they meet the required personnel-related (medical and nursing specialists), structural, and procedural requirements.
• For patients, service groups may become a quality indicator: A hospital assigned to a service group has demonstrated compliance with defined quality standards.
• The requirements vary depending on the complexity of the service group – ranging from basic care to highly specialized medicine.

Examples of service groups

The reform changes how hospital care is organized in Germany. This raises specific questions for patients.

Choosing a Hospital for Planned Procedures

• For planned treatments – such as cancer surgery, joint replacement, or heart disease treatment – choosing a specialized hospital may be important.
• Hospitals assigned to the relevant service groups have demonstrated compliance with defined quality requirements.
• Certifications (e.g. Organ Cancer Center, EndoProsthetics Center) provide additional guidance when selecting a hospital.
• The experience of the treatment team and interdisciplinary collaboration remain important criteria.

Emergency Care

• In an emergency: Call emergency services at 112 or go to the nearest emergency department – there is no time for hospital research.
• Emergency care is intended to remain accessible nationwide and ensure needs-based healthcare provision.
• For time-critical emergencies such as heart attacks or strokes, emergency medical services will transfer patients directly to appropriate hospitals.

Specialization means that a hospital or treatment team focuses on specific diseases or procedures – thereby building targeted expertise, experience, and technical infrastructure.

• Case volumes and experience: Studies indicate that for complex procedures, higher case volumes and specialized teams may be associated with better outcomes.
• Interdisciplinary teams: Specialized centers bring together different medical disciplines – for example oncologists, surgeons, radiologists, and psycho-oncologists within a cancer center.
• Technical infrastructure: Certain treatments require specific equipment or infrastructure that can only be maintained economically at specialized locations.
• Quality certifications: Certified centers must regularly demonstrate compliance with defined quality standards.

The hospital reform affects all medical specialties – however, the changes are particularly noticeable in some areas where specialization and minimum case volumes already play an established role.

In Germany, the implementation of the hospital reform is the responsibility of the federal states. Each federal state independently plans its hospital care system – which may lead to regional differences in the pace and structure of healthcare implementation.

• The federal government's draft legislation was based on a joint framework paper agreed upon by the federal government and the states; however, hospital planning itself is the responsibility of the federal states.
• The specific impact on individual hospitals depends on the respective state-level hospital plans and the fulfillment of quality criteria.
• Hospitals in rural areas are granted expanded cooperation opportunities and special exemptions to ensure comprehensive and needs-based local basic care.
• Cross-sector healthcare facilities and increased outpatient treatment options are intended to make the healthcare landscape more flexible; additional regulations and deadlines regarding hospital structures are planned through 2027.
• Regional characteristics – such as urban density or rural healthcare needs – play a role in implementation.