The
healthcare
industry
has
faced
a
flurry
of
sweeping
changes
at
the
federal
level
since
President
Donald
Trump
took
office.
In
recent
months,
healthcare
leaders
have
scrambled
to
come
up
with
strategies
to
address
proposed
Medicaid
cuts,
slashed
research
funding
and
the
dismantling
of
the
country’s
public
health
infrastructure.
Now,
the
Trump
administration’s
tariffs
are
the
latest
threat
to
further
destabilize
an
industry
already
grappling
with
mounting
financial
and
operational
pressures.
Even
though
Trump
paused
most
reciprocal
tariffs
for
90
days
last
week,
hospitals
are
still
bracing
for
the
effects
of
these
trade
regulations,
as
the
pause
won’t
last
forever.
It’s
also
worth
noting
that
many
essential
healthcare
products
—
including
active
pharmaceutical
ingredients,
medical
devices
and
personal
protective
equipment
—
are
manufactured
primarily
in
China.
The
Trump
administration
has
instated
a
145%
tariff
on
all
goods
imported
from
China
—
and
that
rate
is
not
a
part
of
the
pause.
Since
these
goods
are
all
must-haves,
hospitals
are
left
with
little
choice
but
to
deal
with
the
increased
costs
—
which
experts
warn
could
significantly
exacerbate
the
instability
of
hospitals’
bottom
lines.
Tariffs
are
part
of
a
broader
strategy
to
bolster
domestic
manufacturing,
but
healthcare
leaders
say
it
would
take
decades
before
the
U.S.
could
onshore
the
majority
of
its
medical
supply
production.
In
the
meantime,
experts
believe
tariffs
could
worsen
hospitals’
already
shaky
finances,
as
well
as
compromise
their
ability
to
deliver
timely,
high-quality
care.
How
will
tariffs
impact
hospitals?
The
healthcare
supply
chain
has
always
been
fragile
and
complex,
noted
Akin
Demehin,
the
American
Hospital
Association’s
vice
president
quality
and
safety
policy.
Domestic
disruptions
often
occur
after
natural
disasters
like
hurricanes
—
such
as
the
IV
fluid
shortage
caused
last
year
by
Hurricane
Helene.
International
events
also
often
result
in
shipping
issues
and
shortages
of
raw
materials,
Demehin
explained.
Hospitals
have
had
to
routinely
adapt
to
supply
chain
disruptions
by
doing
things
like
redesigning
sourcing
strategies
and
pulling
data
to
manage
inventory
for
decades
now
—
but
the
Trump
administration’s
tariffs
take
supply
chain
challenges
to
a
new
level,
he
pointed
out.
This
is
because
U.S.
healthcare
delivery
is
highly
dependent
on
foreign
goods.
For
instance,
the
majority
of
drugs
prescribed
to
Americans
are
produced
overseas,
primarily
in
China
and
India.
The
U.S.
also
imports
many
of
its
medical
devices
—
in
2020
alone,
the
country’s
medical
device
imports
totaled
nearly
$70
billion.
Even
for
more
basic
supplies,
providers
in
the
U.S.
rely
heavily
on
foreign
manufacturing.
Take
surgical
gloves
and
syringes
for
example
—
the
vast
majority
of
these
products
are
manufactured
outside
North
America.
Tariffs
will
increase
the
costs
of
these
goods,
but
hospitals
have
no
choice
but
to
buy
these
essential
items.
These
added
costs
could
cause
major
financial
strain
on
hospitals,
as
many
of
them
operate
on
razor-thin
margins
they
are
already
struggling
to
maintain
amid
pressure
from
labor
costs
and
reimbursement
challenges.
Demehin
is
also
concerned
that
increased
supply
costs,
combined
with
limited
domestic
production
capacity,
could
lead
to
shortages.
He
is
mainly
worried
about
how
these
shortages
will
affect
the
quality
of
care
hospitals
are
able
to
deliver
to
their
patients.
“The
expertise
of
clinical
teams
comes
together
with
a
wide
range
of
medical
devices,
drugs
and
other
supplies
—
and
all
that
has
to
come
together
at
the
right
time
to
deliver
the
best
care
possible,”
Demehin
explained.
Healthcare
has
a
lot
of
sequenced
treatment
pathways
that
require
a
constant
supply
and
are
especially
vulnerable
to
tariff-related
delays
or
cost
increases,
he
added.
“We
know
chemotherapy
treatments
rely
on
a
careful
schedule
of
the
delivery
of
those
drugs.
We
know
that
the
availability
of
antibiotics
is
incredibly
important
for
a
wide
range
of
patient
care
issues.
There’s
certain
cardiovascular
medications
that
often
are
sourced
internationally.
We
also
know
that
a
lot
of
devices
that
we
use
day
in
and
day
out
to
deliver
care
come
from
international
sources,”
Demehin
remarked.
Without
a
consistent
supply
of
these
types
of
goods,
providers
can’t
deliver
the
best
care,
he
noted.
Not
only
is
care
quality
at
risk
—
but
workforce
protection
is,
too.
Demehin
pointed
out
that
much
of
the
personal
protective
equipment
used
to
protect
healthcare
workers,
such
as
masks,
gloves
and
respirators
comes
from
overseas.
With
tariffs,
these
products
become
at
risk
of
being
rationed
or
reused.
How
are
hospitals
reacting?
Tyler
Giesting,
director
of
healthcare
M&A
at
consulting
firm
West
Monroe,
said
that
providers
are
actively
reviewing
their
supply
chains
and
preparing
contingency
plans
to
assess
and
mitigate
the
potential
impact
of
new
tariffs.
This
could
include
conducting
inventory
audits
to
identify
which
supplies
are
sourced
from
overseas,
modeling
cost
surges
under
various
tariff
scenarios,
and
exploring
alternative
vendors
or
domestic
manufacturers,
he
noted.
Giesting
also
pointed
out
that
hospitals
are
in
discussions
with
their
group
purchasing
organizations
(GPOs)
to
understand
the
effects
tariffs
could
have
on
existing
contracts
and
supply
availability.
Leveraging
volume
to
drive
down
costs,
GPOs
negotiate
bulk
purchasing
contracts
for
medical
supplies
and
equipment
on
behalf
of
hospitals.
Giesting
is
concerned
about
the
enforceability
of
these
contracts
under
new
tariffs.
Tariffs
can
blow
up
GPOs’
contracts
by
dramatically
increasing
the
cost
of
imported
goods
—
and
therefore
triggering
force
majeure
clauses
and
rendering
fixed-price
agreements
financially
unsustainable,
he
explained.
This
could
lead
to
changes
in
GPO
contract
structures,
possibly
resulting
in
shorter
or
more
flexible
agreements,
Giesting
stated.
When
these
contracts
are
broken
or
renegotiated,
hospitals
are
typically
left
paying
more.
Overall,
hospitals
are
on
high
alert
over
tariffs,
he
said.
He
pointed
out
that
there
is
still
a
lot
of
uncertainty
surrounding
the
issue,
making
it
a
chaotic
time
for
hospitals’
leadership
teams.
“If
your
role
within
your
organization
involves
purchasing
or
supply
chain,
or
frankly,
finance,
it’s
probably
all
hands
on
deck
for
the
near
term,”
he
declared.
Another
healthcare
expert
—
Ron
Present,
partner
at
consulting
firm
Armanino
—
also
highlighted
the
uncertainty
hospitals
must
deal
with
when
it
comes
to
tariffs.
Providers
are
in
regulatory
limbo
due
to
ongoing
legal
challenges
to
executive
orders,
which
makes
strategic
planning
difficult,
Present
noted.
Several
lawsuits
have
been
filed
arguing
that
the
tariffs
exceed
the
president’s
authority
and
lack
proper
justification.
For
instance,
a
group
of
small
businesses
recently
sued
the
administration,
claiming
that
the
tariffs
were
enacted
without
public
input
and
threaten
significant
economic
damage.
Additionally,
the
Trade
Review
Act
of
2025,
a
proposed
bipartisan
bill,
seeks
to
reassert
Congressional
authority
over
trade
policy
decisions.
Present
stressed
the
importance
of
preparing
for
different
scenarios.
“I
think
that
what
all
the
providers
need
to
be
doing
is
focusing
major
attention
on
strategy
and
having
different
scenario
projections
of
what
they’re
going
to
do
based
upon
what
supplies
become
scarce.
When
it
becomes
financially
not
feasible
for
them
to
provide
services,
how
do
they
consolidate?
Which
services
will
they
cut?”
Present
remarked.
Some
providers
could
pass
on
added
costs
to
the
patient.
Black
Book
Research
released
a
report
last
week
based
on
survey
responses
from
81
hospital
executives
and
28
physicians
and
ancillary
practice
administrators
—
and
it
found
75%
CFOs
plan
to
shift
costs
to
patients
and
payers
to
cope
with
the
added
financial
pressure.
But
many
nonprofit
providers
can’t
just
raise
prices
to
cover
costs
—
especially
those
that
serve
a
lot
of
patients
on
Medicare
and
Medicaid,
Present
pointed
out.
Some
hospitals
will
have
to
cut
services
or
staff
instead,
he
said.
Black
Book’s
survey
found
that
29%
of
hospital
executives
are
considering
staff
reductions
and
wage
freezes
as
a
response
to
tariffs
—
and
94%
are
pausing
tech
modernization
projects.
How
will
hospitals
weather
this
storm?
In
the
eyes
of
Dee
Donatelli,
tariffs
are
just
one
piece
of
a
broader
and
ongoing
challenge
in
the
healthcare
supply
chain.
Donatelli
is
senior
director
of
spend
management
at
healthcare
software
company
Symplr.
She
has
extensive
experience
in
healthcare
supply
chain
management,
having
held
executive
supply
chain
roles
at
several
healthcare
organizations
in
the
past,
including
Vizient
and
Kansas-based
Via
Christi
Health.
She
thinks
the
real
problem
is
how
hospitals
and
other
providers
manage
the
total
cost
of
care,
not
just
the
unit
price
of
products
like
ventilators
or
gloves.
In
her
view,
the
U.S.
healthcare
system
tends
to
focus
too
much
on
shaving
prices,
but
it
fails
to
optimize
how
products
are
used
and
integrated
into
care
delivery.
Donatelli
also
pointed
out
that
few
hospitals
are
well-equipped
to
track
or
manage
the
total
cost
of
care.
“There
are
very
few,
if
any,
hospitals
that
do
that
well
because
there’s
so
many
disparate
data
points
that
have
to
be
brought
together
to
be
analyzed,
and
we
don’t
have
technology
to
do
that
for
us,”
she
declared.
Donatelli
expects
hospitals
to
respond
to
tariffs
similarly
to
how
they
reacted
to
the
Covid-19
emergency:
by
being
more
resourceful.
Items
like
masks,
gloves
and
face
shields
—
which
were
normally
single-use
—
had
to
be
reused
carefully
to
conserve
limited
stock,
she
said.
Hospitals
may
need
to
rethink
their
product
usage,
look
for
alternative
supplies,
and
try
to
stretch
their
limited
resources
creatively
and
safely,
she
stated.
“If
you’re
not
looking
at
the
total
cost
of
care,
and
you’re
not
looking
at
how
you
are
using
products,
then
you’re
missing
part
of
the
equation.
You
can
only
buy
so
much
if
you
only
have
a
limited
amount
of
money.
So
we’re
going
to
have
to
get
creative
again,
just
like
we
did
during
Covid,”
she
remarked.
Donatelli
said
providers
simply
have
no
choice
but
to
accept
this
reality
—
because
while
onshoring
medical
manufacturing
in
the
U.S.
is
a
noble
idea,
it
would
take
decades
to
achieve.
She
and
many
others
believe
Trump’s
overall
goal
of
bringing
back
manufacturing
to
the
U.S.
is
unrealistic.
FDA
bottlenecks
have
historically
slowed
down
the
country’s
domestic
healthcare
manufacturing,
as
the
agency
imposes
rigid
regulations
on
facilities
producing
healthcare
products,
Donatelli
noted.
The
sheer
volume
of
U.S.
healthcare
demand,
as
well
as
consolidation
in
the
supplier
market,
are
key
challenges
as
well.
“There’s
been
such
significant
mergers
and
acquisitions
within
drug
and
medical
product
manufacturers
—
there
are
so
few
of
them.
They
would
be
hard
pressed
right
now
to
pick
up
the
volume
necessary
to
provide
all
of
the
goods
and
services
required
in
the
United
States’
3,000
hospitals,”
Donatelli
said.
When
it
comes
to
tariffs,
she
believes
one
thing
is
certain
—
that
they
have
exposed
a
deep
vulnerability
in
the
U.S.
healthcare
system’s
reliance
on
global
supply
chains.
As
hospitals
brace
for
higher
expenses
and
potential
shortages,
they
are
being
forced
to
confront
longstanding
gaps
in
cost
management
and
sourcing
strategy.
Donatelli
thinks
the
path
forward
will
likely
require
a
mix
of
creativity,
collaboration
and
difficult
decision-making,
all
while
trying
to
keep
patient
care
at
the
front
and
center.
Photo:
FabrikaCr,
Getty
Images
