Hospital Tariffs: How Health Systems Are Preparing
- As the Trump administration moves forward with sweeping tariffs aimed at increasing U.S.
- At Renton, Wash.-based Providence, COO Darryl Elmouchi, MD, saeid the health system has implemented a supply chain risk management program to help prepare for challenges with respect to...
- "We have mapped our item master against supplier and manufacturer tiers down to raw material sources, so we are confident in our reporting around potential tariff impacts on...
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As the Trump administration moves forward with sweeping tariffs aimed at increasing U.S. manufacturing, health systems are ramping up efforts to protect patients from potential effects.
At Renton, Wash.-based Providence, COO Darryl Elmouchi, MD, saeid the health system has implemented a supply chain risk management program to help prepare for challenges with respect to tariffs.
“We have mapped our item master against supplier and manufacturer tiers down to raw material sources, so we are confident in our reporting around potential tariff impacts on each item,” he said. “We have developed a tariff projection model that allows us to analyze different tariff scenarios and assess potential impact. Since tariffs are dynamic and changing on a regular basis, we regularly update our model and assess potential financial impact by category, item and supplier.”
In recent months, Providence has also increased it’s monitoring of critical inventory, especially product categories most at risk from tariffs, including cardiac ablation catheters, oximeters and gastrointestinal and urology devices. Pharmaceuticals remain especially concerning, Dr. Elmouchi said; that includes a recent tariff increase on India, which provides around 35% of generic drugs in the U.S.
In early August, President Donald Trump imposed a 15% tariff on exports for major U.S. trade partners, including the European Union, Japan and South Korea. Brazil and India face a higher rate of 50% on imports as of August. President Trump also floated a 250% tariff rate on pharmaceuticals, which came after an examination was launched in April to examine whether imports pose a threat to national security.
Embedding resilience into operations
To protect against disruptions, Providence is also leaning heavily into supplier collaboration and stocking strategies.
“We also continue holding firm on contract pricing through the terms of our agreements, maintaining frequent and open dialog with key suppliers and actively prompting upstream efficiencies,” Dr.Elmouchi said. “We conduct weekly and even daily disruption assessments of our inventory to balance our safety stocks.”
louisville, Ky.-based Baptist Health is also reinforcing its supply chain infrastructure amid tariffs going into effect recently and other supply disruptions.
“While trade-related factors like tariffs can affect supply dynamics, our approach is to build resilience into the supply chain for all types of conditions,” chief Pharmacy Officer Nilesh Desai told Becker’s. “That means maintaining strong communication between supply chain teams and caregivers, creating transparency through shared benchmarks and metrics, and prioritizing reliable, cost-effective sourcing. By focusing on operational excellence and minimizing inefficiencies, we work to use resources effectively to support clinical excellence and a seamless patient experience.”
) As the U.S. government implements new tariffs intended to bolster domestic manufacturing, hospitals and health systems are proactively working to shield patients from potential cost increases and supply disruptions. The tariffs,which include a 15% levy on exports to major trade partners like the European Union,Japan,and South Korea,and a 50% tariff on imports from Brazil and India,are creating a complex landscape for healthcare providers. A potential 250% tariff on pharmaceuticals has also been considered following a national security review of drug imports. At Providence,a health system based in Renton,Washington,leaders are taking a data-driven approach. COO Darryl Elmouchi, MD, explained that Providence has implemented a comprehensive supply chain risk management program. “We have mapped our item master against supplier and manufacturer tiers down to raw material sources, so we are confident in our reporting around potential tariff impacts on each item,” Dr. Elmouchi said. The system has developed a “tariff projection model” to analyze various scenarios and assess financial consequences. Recognizing the dynamic nature of tariffs, the model is regularly updated to evaluate potential impacts by category, item, and supplier. Providence is also closely monitoring critical inventory levels, notably for items vulnerable to tariffs, such as cardiac ablation catheters, oximeters, and devices used in gastrointestinal and urology procedures. The reliance on india for approximately 35% of generic drugs in the U.S. makes pharmaceuticals a significant concern. Beyond forecasting, providence is strengthening relationships with suppliers and optimizing stocking strategies. “We also continue holding firm on contract pricing through the terms of our agreements, maintaining frequent and open dialogue with key suppliers and actively prompting upstream efficiencies,” Dr. Elmouchi added.Weekly,and even daily,assessments of inventory levels are conducted to maintain appropriate safety stocks. Baptist Health, based in Louisville, Kentucky, is also focused on building a more resilient supply chain. Chief Pharmacy Officer Nilesh Desai emphasized a broader approach. “While trade-related factors like tariffs can affect supply dynamics, our approach is to build resilience into the supply chain for all types of conditions,” Desai stated. This involves fostering strong communication between supply chain teams and clinical staff, establishing transparency through shared data and metrics, and prioritizing reliable, cost-effective sourcing. Ultimately, the goal is to ensure operational excellence and a seamless patient experience, even amidst global trade challenges.
Protecting Patients: How Hospitals Are Navigating Rising Tariffs
Proactive supply Chain Management
Collaboration and Resilience