Tariffs and the Healthcare Supply Chain: Dealing with Uncertainty

By Matt Phillion

It’s been a wild ride for organizations across all industries observing the rise and fall of tariffs in 2025. Most supply chain leaders simply don’t have informed answers, while resource-strapped healthcare organizations are scrambling to try to work with their suppliers to identify risks and potential impacts. These measures have met with varying success as we navigate uncharted territory.

“There’s always something new, whether it’s challenges with COVID or a significant disruption with core commodities,” says John Wright, COO of Advantus Health Partners. “Now, with the tariffs, the biggest challenge we face is the uncertainty. Everyone wants to know the answer to what it all means, but the puck keeps moving and we don’t know where it’s going to land.”

The answer shifts on a daily basis, which is the biggest challenge right now, Wright explains.

“There’s an opportunity cost with trying to figure it out,” he says.

Fortunately, supply chain issues are a topic the industry has had to reckon with very recently.

“I think we’re building on what we learned especially coming out of COVID,” says Wright. “It was important with a global shortage to know here things were coming from on a global scale: What does the supply chain really look like? What do your level two, three, four suppliers look like?”

On a surface level, the greater level of understanding the industry developed during COVID help during the tariff situation because of a greater perspective on things like countries of origin and forecasting availability.

The bullwhip effect

The tariffs stand the chance of causing additional problems we haven’t seen quite yet, however.

“One concern is the bullwhip effect,” says Wright. “If organizations overreact and decide to start doing impulsive bulk buying, then you create a disruption in the supply chain industry.”

The industry runs very much on a just-in-time model right now, with many manufacturers producing to demand.

“Any significant disruption in the demand curve can affect availability and pricing. It’s a double-edged sword, as you’re trying to calculate the financial impact but must also consider the disruptive impact it may have in terms of availability. We didn’t have that double-edged sword during COVID.”

Wright doesn’t foresee the industry reaching that level of disruption this time, however.

“Part of that, frankly, is coming out of COVID, a lot of health systems made the decision to start building safety steps or have leftover inventory after COVID that is still viable today,” he says. “That gives something of a cushion, and a bit of domestic capacity. Not a lot, but a little.”

The worry is less about supply and more about cost, Wright explains.

“We don’t know where the greatest impact is going to be,” he says. “You’re trying to make a decision about what you’re going to bulk buy. You can’t buy everything, so really we’re in a holding pattern about what the impact is going to be.”

One key takeaway from the last few years has been the need to identity alternate products in the event of a shortage.

“We know of acceptable alternatives identified for critical supplies. There are unique things that are specific to capital equipment, for example, but we’re pretty well situated overall,” says Wright.

The biggest level of activity right now, and that which invaluable in terms of what the industry can do to prepare for the tariffs, is gaining insight and data and understanding country of origin.

“Not just the assembly country, but key inputs and components that make up the finished product. Getting down to the SKU level is very important,” says Wright. “Being able to tie that back to your contracts and know what protections you have. Is tariff language specifically called out? Are price protections specifically identified? You can use all that collective insight to accurately forecast what’s really at risk financially.”

This level of insight isn’t brand new. It was another change of focus that came out of COVID, Wright notes.

“There’s been a lot of new entries into the market from a data viability focus, a lot of resiliency-focused organizations,” says Wright.

A lot of manufacturers are not necessarily forthcoming with that information when asked, as they don’t want to create exposure or risk their customers moving away from them, bulk buying, or doing something disruptive, so healthcare organizations generally have to go to third party organizations for this information.

“I think that increased visibility is the key,” says Wright.

The more granular level of supply chain information has always been of interest, Wright says, but as more and more organizations are asking for it, there’s more pressure toward transparency and a greater expectation that it will be in contract language, for example.

“With enough leverage being applied from the end user perspective, manufacturers are pretty much obligated to provide it,” he says. “And we’ll have much more insight up and down the global supply chain.”

The next step is to make sure you’re using that data in a meaningful way.

“Just because I know there was a flood in a village in Thailand that makes a component to a piece of equipment, that doesn’t mean I’m going to realize a disruption,” says Wright. “What concerns me is: Do folks overreact to the fact that they have that information and then create an artificial disruption when one might not have been realized? That’s what we need to be mindful about avoiding. Having that insight gives us more ability to make informed decisions, but we have to be careful about how we weigh the data we have.”

Giving supply chain its due

There can be an assumption that supply chain maintenance is a support service function when it could benefit from being looked at as even more, Wright says.

“My personal opinion is that a lot of health systems didn’t see it as a strategic asset,” he says. “But those who did are seeing a benefit from that now. They have a professional team that can react to these disruptions in a meaningful way and mitigate the impact to the organization.”

This was a meaningful learning coming out of COVID: There were systems that struggled and others that navigated the supply chain challenges better, and that was a direct reflection of the skillsets of those organizations’ supply chain expertise.

“It comes down to continuing to mature your relationship with your supply partners,” says Wright. “Historically there’s always been an arms’ length, adversarial relationship between provider organization, supplier, and manufacturer. But we need to embrace each other, be transparent, be vulnerable around our priorities and challenges.”

When you move from a transactional relationship to one that is more strategic, you build a level of trust so that you can learn about a potential disruption before it ever hits your loading dock, Wright explains.

“This affords you the time to work with your supplier, to find substitute products. You gain insights because of that deep relationship that can oftentimes mitigate a disruption,” says Wright. “If it’s just a transactional relationship, you’re often left scrambling when a disruption hits.”

Not all suppliers are ready for that kind of relationship, but it’s possible, particularly by working with fewer strategic partners which then allows you to build a deeper relationship with better information sharing.

“You dance with the one who brought you,” says Wright. “Those strategic relationships matter and have a positive impact. They won’t abandon me if I tell them there’s a lack coming up.”

That transparency works both ways: Clients can benefit from working with an open supplier who will be clear about potential disruptions rather than one who won’t say anything until the disruption actually occurs.

“Everything comes back to communication,” says Wright. “If we have regular, open dialogue, we’ll be able to mitigate most situations before they happen.”

Even with the greatest relationships between organizations and their partners, the lack of certainty at the moment can prevent organizations from being able to react properly.

“The suppliers and manufacturers don’t know what they’ll be accountable for in terms of tariffs. We’re working together in a situation where neither of us have the answer,” says Wright. “I think what we’re trying to do is continue to be prepared, to have that dialogue, to understand where products are coming from, so we can calculate the impact when that impact is known.”

For now, preparing for the unknown is the best step, though it draws energy away from projects that could benefit organizations—and patients.”

“Unfortunately, we’re burning calories on that when those could be used to improve other aspects of the supply chain,” says Wright. “It’s that opportunity cost. We now have to take folks off of meaningful projects and put them to work with no understanding what the outcome may be.”

Matt Phillion is a freelance writer covering healthcare, cybersecurity, and more. He can be reached at matthew.phillion@gmail.com.