Premier Inc.: Hospitals Need to Prepare Now for Tariffs-Induced Supply Chain Disruptions
Experts at the Charlotte-based Premier Inc. are warning patient care organization leaders that they will need to plan carefully and strategically ensure optimal supply chain management in the coming months, as the tariffs imposed by the Trump administration take effect and potentially disrupt the healthcare supply chain.
Premier leaders’ findings are summarized in a new publication, “UPDATE: Premier Supply Chain Special Report: Potential Impacts of Tariffs on Healthcare.” The staff-written publication, posted on April 28, begins by setting out the following “Key Takeaways”:
Ø Effective April 5, the Trump Administration implemented 10 percent tariffs on imported goods worldwide
Ø Reciprocal tariffs have been paused through early July, apart from China, where tariff rates are currently up to 245 percent.
Ø Premier continues to deliver key updates and data-driven solutions to help healthcare organizations navigate this complex environment.
As the report notes, the situation continues to change on the ground. President Trump has repeatedly changed his mind about levels of tariffs and the nations he wants impacted. Nevertheless, a very wide range of goods is involved, with some tariffs applied to specific nations, such as China, Canada, Mexico, and the European Union nations, and others applied to all countries. Readers should definitely consult the latest news reports for up-to-date details.
Further, the report notes, “The new tariff measures, paired with the rollback of de minimis exemptions, may introduce significant complexity and cost pressures, including for personal protective equipment, medical devices, pharmaceuticals, foodservice and capital projects. For example, enteral feeding syringes have no current known manufacturing outside of China and are currently subject to a 245 percent tariff.”
What’s more, “Tariffs on imported goods could affect the prices and availability of the approximately 75 percent of U.S.-marketed medical devices that are manufactured out of the country, and more specifically the 69 percent of U.S.-marketed devices that are manufactured exclusively outside of the U.S. Pharmaceutical imports, which had been exempt from initial tariff rounds, are now under consideration. President Trump announced in early April that “major tariffs” on pharmaceuticals will soon be introduced.”
And, the report adds, “China continues to play an integral role in manufacturing medical devices, pharmaceutical ingredients and other technological components. Because ex-U.S. manufacturing is a critical reality in sourcing for healthcare operations, escalated trade tensions with China could create further supply chain availability and cost risks for the healthcare industry.”
What can patient care organization leaders do about all of this? “Healthcare organizations are already burdened by product shortages, sustained inflation and persistently thin operating margins, all of which make any added import costs particularly difficult to absorb. The tariff changes only add stress as we seek definitive answers for clarity and to model the potential impact,” the report notes.
Per that, the report continues, “Healthcare organizations and leaders need a proactive strategy to help safeguard their supply chains and budgets. Here’s how to get ahead:
Ø Call for Supplier Transparency: Ask suppliers for detailed data: manufacturing country of origin, exposure risk, product attributes, and other relevant information and evidence. This level of reporting is essential to inform your strategies for resilience – both now and for the long term.
Ø Identify Vulnerabilities: Leverage business intelligence and financial planning tools to assess risk and variability across your contracts. Pinpoint which agreements lack tariff protections to create a customized exposure map for your organization.
Ø Explore GPO Alternatives: If you are buying supplies under local agreements or other contracts without built-in tariff protections, evaluate whether an equivalent GPO-contracted product exists. Transitioning to GPO contracts may help provide insulation from potential price impacts.
Taking these steps now can help healthcare organizations absorb less financial impact and navigate tariff-related disruption with greater confidence,” the report adds.
The full report can be accessed here.
