The Austrian healthcare system relies mainly on physicians in private practice and on various services provided by hospitals. The social health insurance scheme is compulsory, covering 99% of the population. The system is very decentralized. While the federal state provides the framework, the nine autonomous provinces are responsible for administering health and social services. There is ongoing public discussion about centralizing the healthcare system to make it more efficient and to enforce structural reforms. Because of concerns about healthcare expenditures, in 1997 the Performance-Related Hospital Financing System (LKF), a system similar to the diagnosis-related group system, was introduced for hospitals, including a plan for large medical devices. It is too early to evaluate the success of this new system, although some effects of the LKF system that could have been anticipated, such as shortened lengths of stay and more hospitalizations, have been seen. Previously, health technologies have been almost uncontrolled in Austria. The evaluation of health technologies as an instrument to support or to control their dissemination and use or to help define policies is not institutionalized or systematically used. It seems clear that structural reforms of the Austrian healthcare system are needed. Health technology assessment should be part of such reforms.