Category Archives: Supply Shock

Hospitals begin to grapple with tariff fallout

Posted on by • Posted in 2026 Mid Term Election Issues, 2028 Election Issues, Health System, Hospital, Hospital Industry, Operating Expenses, Rural Health, Rural Health Clinics (RHC), Rural Hospital, Shortages, Supply Chain, Supply Costs, Supply Shock, Tariff Fallout, Tariffs • Leave a comment
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Hospitals across the country are starting to reckon with the effects President Trump’s tariffs are having on medical supplies like syringes and PPE, and in some cases freezing spending and making other contingencies.

Why it matters: 

A global trade war could bring a return to pandemic disruptions if imported goods that health systems purchase in high volumes from China can’t be replenished. And there’s still the prospect of Trump’s tariffs on pharmaceuticals.

  • Ultimately, experts warn, supply disruptions and price hikes could drive up the price of patient care.

“Tariffs have the potential to add a layer of complication to [hospitals’] ability to get all of those medical goods, the drugs and the devices that they need to deliver care,” said Akin Demehin, the American Hospital Association’s vice president of quality and patient safety policy.

State of play: 

So far, there have been no widespread shortages or price spikes.

  • What most concerns the providers is a reliance on medical gear from China. Enteral syringes used to deliver drugs or nutrition through feeding tubes have no alternative sources and are subject to a 245% tariff, according to group purchasing organization Premier.
  • “With the consumables — the gowns, the gloves, masks … hospitals go through an enormous volume of those every year. Certainly there is some risk there,” said Kyle MacKinnon, senior director of operational excellence at Premier.

The pandemic spawned more domestic manufacturing of medical gear — and an anticipated reduction in dependence on overseas suppliers. But many of the startups have since disappeared, the New York Times reported, leaving the health system once again vulnerable to supply shocks amid threats like measles outbreaks and avian flu.

Between the lines: 

The situation could be further complicated by tariffs on pharmaceuticals that could weigh particularly hard on imported generics.

  • Cancer and cardiovascular medications, as well as immunosuppressives and antibiotics, are of great concern to hospitals, per a letter the American Hospital Association sent earlier this year to Trump. MD Anderson Cancer Center in Houston instituted a hiring freeze due to uncertainty, in part, from the tariffs’ impact on drug prices.
  • Medical devices are also facing a high level of exposure with roughly 70% of U.S. marketed medical devices manufactured exclusively outside the U.S., Premier wrote.
  • The American Hospital Association on Wednesday pointed to data that found 82% of health care experts expect tariff-related expenses to raise hospital costs by at least 15% over the next six months.
  • 94% of health care administrators expected to put off equipment upgrades, in response.

Reality check: 

Many hospitals may still be insulated from the worst effects because of long-term purchasing contracts.

  • Universal Health Services CFO Steve Filton said during an earnings call that three-quarters of the company’s supply chain had fixed contracted prices, Fierce Healthcare reported.
  • The company had begun to see “fees or stipends” on invoices with vendors with fixed contracted prices but had been ignoring them. “At the moment, it feels like there’s not a great deal of pressure,” he said.
  • But a dramatic reduction in goods from a major trading partner will eventually hit multiple players needing to replenish inventories, experts predict.

What to watch: 

Hospitals are among trade groups lobbying for tariff exemptions for critical medical supplies, including drugs. One question is whether pharmaceutical manufacturers can limit their exposure by “reshoring” more intellectual property in order to pay more U.S. taxes, Leerink Partners wrote in an investor note on Wednesday.

  • As supplies that have been stockpiled by hospitals begin to run low or as contracted prices expire, the true costs will begin to be felt.
  • “We especially worry about the potential impacts to vulnerable and to rural health care providers who already are operating on thin margins, and for whom changes in the cost of those kinds of goods could have a disproportionate impact,” Demehin said.

To solve the economic crisis, we will have to solve the health-care crisis

Posted on by • Posted in 2020 Election Issues, Clinical Research, Clinical Research Funding, Coronavirus, Crisis, Crisis Management, Demand Shock, Health Policy, Infection Control, Infectious Virus, Leadership, Pandemic, Pharmaceutical Industry, Public Health, Public Safety, Supply Shock, Vaccine • Leave a comment

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Image result for To solve the economic crisis, we will have to solve the health-care crisis

In Washington, the focus has now turned to the economic response to the coronavirus pandemic, with experts and politicians proposing their preferred policy tools — ranging from tax cuts to corporate bailouts to direct payments of cash. Each is worth debating, but the focus is misplaced. This is not an economic crisis; it is a health-care crisis.

The distinction may sound academic. But understanding it is actually vital to designing the policies that should follow.

In an economic crisis, you could imagine a situation in which people lose their jobs and are unable to spend money. That’s called a demand shock, which is what happened during the global financial crisis of 2008. Or producers could raise prices (for various reasons), making it harder to buy their goods. That’s a supply shock, and it describes the oil crises of 1973 and 1979. But what is happening now cannot be addressed primarily by economic responses, because we are witnessing the suspension of economics itself.

Today, even if you have money, increasingly you cannot go into a shop, restaurant, theater, sports arena or mall because those places are closed. If you own a factory that hasn’t already closed for health reasons, you may still have to shut it down because you can’t get key components from suppliers or you can’t find enough stores open to sell your goods.

In these conditions, cash to consumers cannot jump-start consumption. Relief to producers will not jump-start production. This problem is on a level different and far greater than the recession of 2008 or the aftermath of 9/11. If it were to go on for months, it could look worse than the Great Depression.

This is not an argument against any of the economic measures being proposed. People need to be able to eat, buy medicine and pay their bills. New York Times columnist Andrew Ross Sorkin has canvassed experts and concluded that the best approach would be a zero-interest “bridge loan” to all businesses and self-employed people as long as they keep most of their workers on staff. It is probably the right course of action, massively expensive but cheaper than a full-blown Great Depression.

But even that might not work if we do not recognize that first and foremost the United States faces a health crisis. And that crisis is not being solved. China is now reporting no new domestic infections. South Korea, Taiwan and Singapore have also made progress in “flattening the curve” — the phrase of the year — because they have prioritized dealing with the health-care crisis over enacting a grand economic stimulus.

The United States is still dangerously behind the curve. A headline in Thursday’s Wall Street Journal is, “Coronavirus Testing Chaos Across America.” The article details how the country still has “a chaotic patchwork of testing sites,” with testing proceeding “far slower than experts say is necessary, in part due to a slow federal response.” The U.S. testing rate remains shockingly low, well behind the rates of most other rich countries and far behind those of the Asian countries that are handling this crisis best. Across the United States, hospitals are warning of a dire shortage of beds, medical equipment and supplies. And the worst is yet to come. With infections doubling every two to three days, the U.S. health-care system will face what New York Gov. Andrew Cuomo correctly described as a “tsunami.”

The Trump administration is still acting slowly and fitfully. Experts predicted weeks ago that cities would need thousands more hospital beds, and yet the Navy is still performing maintenance on two hospital ships and figuring out staffing. The president says he will invoke “defense production” powers only if necessary. What is he waiting for? He should direct firms to start production of all key medical equipment in short supply. The armed forces should be deployed immediately to set up field testing and hospital sites. Hotels and convention centers should be turned into hospitals. The federal government should announce a Manhattan Project-style public-private partnership to find and produce a vaccine. After decades of attacks on government, federal agencies are understaffed, underfunded and ill-equipped to handle a crisis of this magnitude. They need help, and fast.

And here’s another idea: President Trump could forge an international effort to unite the world against this common threat. If the United States, China and the European Union worked together, prospects for success — on a vaccine, for example — would be greater. China in particular produces most of the supplies and medical ingredients the world needs. Trump should remove all of his self-defeating tariffs so that American consumers don’t have to pay more for these goods and China can ramp up production. This is a war, and in a war you try to find allies rather than create enemies.