In view of the growing need for rehabilitation worldwide due to demographic changes and health trends, healthcare organizations are facing increasing pressure to innovate. This study focuses on the institutional dynamics shaping service innovation in orthopedic rehabilitation settings in Germany. Using Scott's framework of institutional pillars and carriers, we conduct a multiple case study analysis. Based on interviews with physicians and managers from six different clinics, conducted in two rounds and supplemented by secondary data analysis, we investigate the influence of regulative, normative, and cultural-cognitive institutions on healthcare service innovation. By distinguishing between the various institutional barriers and facilitators, our research provides valuable insights for healthcare practitioners and managers, equipping them with the necessary knowledge to effectively navigate and utilize the institutional environment.