Survey: Tariffs expected to increase hospital costs, disrupt supply chains

Editor's Note

Rising tariff-related costs are expected to significantly impact hospital budgets and healthcare supply chains, according to a March 27 report in Becker’s Hospital Review.

The article focuses on a recent survey conducted by Black Book Market Research in January before the US enacted 25% tariffs on Canadian and Mexican imports and 10% tariffs on Chinese goods. The survey involved a wide range of healthcare professionals, including hospital finance and supply chain executives, payers, pharmaceutical manufacturers, medical equipment producers, and IT leaders. Findings include:

• 82% of healthcare industry experts predicted that import tariffs would raise hospital and health system costs by 15% within the next six months. 
• Nearly 70% of respondents predicted that pharmaceutical costs would rise by at least 10% due to tariffs on China, the world’s largest producer of active pharmaceutical ingredients. 
• 90% of healthcare supply chain professionals expect significant disruptions in procurement and contract negotiations.
• 90% of hospital finance leaders indicated they would likely pass increased costs on to payers and patients through higher service charges.
• 94% of healthcare administrators foresee reducing equipment purchases or postponing upgrades to manage financial strain.
• 81% of medical equipment manufacturers predict longer lead times and possible shortages due to increased production costs and import restrictions.
• Although 27% of respondents are exploring alternative suppliers, 92% of drugmakers caution that switching could lead to regulatory issues and supply chain disruptions.
• 91% of provider IT executives expecting delayed digital transformation projects as budgets are reallocated to cover operational cost increases.
• 39% of healthcare IT leaders predict higher costs for software licensing, cloud computing, and managed services
• 16% of IT vendors foresee increased prices for essential hardware like servers and networking equipment.
• 84% of respondents expect higher claims costs for payers linked to the rising prices of medical treatments and drugs. Nearly half (48%) of payer executives predict that insurance premiums will increase within the next year as a result.

The findings underscore the broad-reaching consequences of tariffs on healthcare costs and supply chain stability.