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German legislators approve amendment to new hospital reform

On October 8, 2025, the German Federal Cabinet approved the draft bill of the Hospital Reform Adjustment Act (KHAG) aiming to make the original reform more practical. The reform adjustment focuses on giving states and hospitals more leeway, but leaves key questions about long-term financing, feasibility, and bureaucratic relief open.

The cabinet’s decision on the KHAG marks a new phase in the hospital reform legislation. The planned changes are intended to enable a more balanced combination of quality requirements, supply security, and regional flexibility. However, it remains to be seen whether the planned measures will be sufficient to successfully meet the structural and financial challenges facing the hospital sector in the long term.

An overview of the key regulations: 

  • More room to adapt for different regions: Extended exemptions and opportunities for cooperations between healthcare providers are intended to ensure care, particularly in rural areas. In the future, the federal states will be able to independently decide on exemptions, but in agreement with health insurances.
  • Service groups: For a concerted implementation of the new quality criteria, hospital services are divided into 61 groups instead of 65.
  • Onco-surgery: Lower case number limits are intended to ensure comprehensive care and incorporate specialized care centers.
  • Transformation fund: The KHTF (up to €25 billion over ten years) will be financed from federal funds; an additional €1 billion will be made available annually for four years to relieve the burden on the states. University hospitals will be able to receive subsidies.
  • Pre-Reimbursement: The introduction as well as the supplements will be postponed by one year; existing supplements for pediatrics and obstetrics are to be extended. 

The question now for hospitals, the German federal states, and the cost bearers is: How will the changes affect the future healthcare landscape, planning authority, and financing system? 

Healthcare Heads are experts in market access and reimbursement in the German healthcare market. We will analyze the impact of the KHAG on the structural planning of the federal states, the reimbursement systems, and investment decisions—we will show you the opportunities and possible challenges you and your product might face in the future.

Contact us for a complimentary consultation.

Author: Healthcare Heads GmbH

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