The healthcare industry often operates in a state of constant disruption. From global pandemics to geopolitical instability, supply chains are constantly tested. Tariffs and unpredictable trade policies are once again forcing leaders to ask themselves: How much risk do we face? How resilient is our network? What can be done today to prepare for tomorrow’s shocks?
Most healthcare organizations have historically taken a reactive approach to managing any crisis that impacts their supply chain. But simply reacting to a new crisis will only lead to chaos for leaders and their teams, making recovery more difficult and costly. Building supply chain agility and resilience does not come from experience or waiting for the next challenge.
It’s about how organizations can leverage these experiences and how they can develop proactive strategies before they are needed. Because, as much as we hate to admit it, disruption is inevitable, and the question is when the next disruption will happen, not if.
Hospitals and health systems can no longer pray that they will not be disrupted. Tariffs are one example that no organization is immune to, and we are still determining the full impact of these tariffs, as pharmaceuticals and healthcare products have historically been exempt. But a 15% tariff on medical devices imported from the EU could lead to higher costs for medical institutions and their patients. There is also uncertainty about drug tariffs and whether certain drugs produced outside the United States or Europe will be subject to tariffs of up to 200%.
After working in the healthcare supply chain industry for more than 20 years, I've learned that while it's impossible to predict the next disruption, what matters is how your organization prepares for it.
Here are five ways to build resilience under the impact of tariffs and before the next disruption arrives:
1. Start with education and visibility
You can't manage what you can't see. Start by finding your organization’s weaknesses and vulnerabilities. Go beyond standard supplier reporting and ask the hard questions of your team, partners, suppliers and manufacturers. Where do your products come from? Which suppliers face the greatest trade risks? Are there hidden dependencies? Do you have a backup plan for alternative supply sources?
Regular meetings with top suppliers increase transparency. They also allow health systems to run “what-if” scenarios and stress-test contracts and operations before new tariffs take effect. Additionally, healthcare organizations should consider working closely with industry associations and group purchasing organizations to help put together a toolkit to help hospitals respond to policy changes.
2. Use contracts as risk management tools
Contracts should not be viewed as merely transactional. There are opportunities for health systems to use them strategically and incorporate flexible terms to help limit tariff risk or allow for variable payments. These steps can help organizations avoid or absorb shocks from tariffs, inflation or price increases.
Still, contracts have limitations. Supply chain leaders should also focus on where products come from. In the face of uncertain healthcare and pharmaceutical tariffs, global and local supplier diversification becomes even more important. Offshoring is being discussed, but it may be years before a practical solution that provides immediate protection and stability is available.
3. Standardize to save costs
In part, tariffs provide an opportunity for healthcare leadership to work more closely with clinicians than ever before toward a shared mission of increasing standardization across departments. Addressing product differences has the potential to create enough savings to offset the impact of tariffs on an organization's bottom line and improve efficiency and consistency in patient care. When it comes to provider integration, increasing category-specific provider compliance levels and collaborating with provider partners has also proven to be an effective strategy for those willing to drive clinical integration and take a long-term approach.
4. Enhance change management and culture
Honest discussions about change management are critical to preparing for and mitigating disruption. Because even the best mitigation plans can quickly fall apart if the culture isn’t supportive. Additionally, sometimes leaders may overestimate a team's ability to adapt faster than it actually is, so it's important to stress-test these situations before they become a reality.
Leadership within the C-suite and supply chain should set the tone and empower their teams to make rapid, data-driven decisions while collaborating with clinical peers. Processes should all be in place to show how the supply chain functions across the entire healthcare enterprise to help balance cost, quality and patient outcomes. Without organizational support and integration, strategies may fail or not achieve the desired results.
5. Leverage artificial intelligence and predictive analytics
In supply chains, resilience means more than the ability to respond to impacts and withstand disruptions, whether tariffs or drug shortages. Resilience should be more about adaptability and having the tools and resources in place to respond and recover quickly. Technologies like artificial intelligence and predictive analytics help achieve this by identifying where the risk of tariffs is highest or which products are on the verge of shortages.
In turn, hospital and supply chain leaders can gain insight into their vulnerability and how it ripples throughout the organization. Putting all the data together can help illuminate problems and give leaders the foresight to take action, whether that means adjusting procurement strategies or finding alternative suppliers, to correct problems early and keep patient care flowing smoothly.
what will happen in the future
The reality is that tariffs are just the latest disruptor in an ongoing wave of volatility across the healthcare supply chain. These disruptions and trade negotiations are beyond any organization's control, but hospitals and health systems have an opportunity to stand out.
Despite the huge technological and pharmaceutical breakthroughs in healthcare over the past few decades, the core business of healthcare remains the same. The way we buy and pay for supplies hasn't changed in decades.
If we want to move forward and challenge the status quo, we need to start putting the supply chain at the center of cost, quality and access conversations now. The way forward is to create a more resilient supply chain that can bend without breaking and keep care services running seamlessly so hospitals and their patients achieve better outcomes.
Photo: Sorbet, Getty Images
Ryan Rotar, Vice President of Healthcare Market Strategy at Tecsys, is an accomplished healthcare veteran with 25 years of experience leading, developing and optimizing end-to-end supply chain operations. Ryan most recently served as Systems Director for ERP Solutions at UNC Health in North Carolina, where he led the Human Resources, Finance and Supply Chain Applications teams. Prior to that, Ryan served as executive director of the health care system, where he led supply chain operations. Ryan worked as a surgical technology and radiology systems administrator before discovering his passion for supply chain innovation, advanced distribution strategies, business process redesign, and workforce coaching.
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