Insights from The Health Management Academy CSCO Summit
By James Bouchard, Partner, Center of Excellence, LogicSource
LinkedIn: James Bouchard
LinkedIn: LogicSource, Inc.
Last week, I had the opportunity to present at The Health Management Academy’s Spring 2025 Chief Supply Chain Officer Summit alongside Legacy Health’s Chief Supply Chain Officer, Ginger Sharp, CMRP. We joined a group of leading healthcare supply chain executives to discuss the current state of U.S. tariffs and their impact on the healthcare sector. What followed was a candid and insightful exchange on how health systems are responding to a rapidly evolving and often ambiguous trade environment. Here’s what I learned:
1. Health System Readiness Varies Widely
Healthcare organizations are taking very different approaches to tariff planning, largely depending on their size and supply chain maturity. On one end of the spectrum, some large systems are standing up dedicated cross-functional tariff response teams. On the other, many are still operating in a reactive manner, handling tariff-related issues on a supplier-by-supplier basis. Several health systems are beginning to assess their tariff exposure using calculators, either developed internally to evaluate total spend or provided by their GPOs to analyze only GPO-related purchases, though many have yet to conduct this type of analysis. The variation highlights the need for scalable best practices that can support organizations at all levels of sophistication.
2. Expectations of Cost Increases Are Clear
Supply chain leaders broadly agree that tariffs will drive meaningful cost increases, with most now estimating a 3 to 6 percent impact. Earlier projections from healthcare supply chain professionals suggested potential increases as high as 15 percent, but the recent reduction of China-specific tariffs to 30 percent has tempered those expectations. While these estimates remain directional, there is growing agreement that even the most conservative views should assume for tariff-driven inflation.
3. Tariff Policy Volatility Is Undermining Long-Term Decisions
A recurring frustration voiced by both buyers and suppliers is the constant change in tariff policy coming out of Washington. This unpredictability is making it nearly impossible for suppliers to justify long-term capital investments or shift production locations. It is also dampening M&A activity due to heightened risk concerns and valuation instability.
4. No Immediate Supply Chain Disruptions
Unlike the chaos experienced during COVID-19, health systems have not reported any major product shortages or domestic manufacturing shifts in response to tariffs. Likewise, significant price increases have not materialized so far. However, supply chain teams are watching the situation closely as global production shifts and geopolitical uncertainty continue to evolve.
5. Education Remains a Critical Gap
Our presentation was also a valuable opportunity to educate the group on lesser-known tariff nuances that can affect cost. For example, tariffs are assessed based on the importer’s cost of goods rather than the final price paid by the buyer. Additionally, freight and insurance charges are not subject to tariffs, so it’s important that these costs are clearly itemized to prevent overpayment. We also emphasized the critical role of the HTS (Harmonized Tariff Schedule) code and country of origin in determining whether tariffs apply and at what rate.
6. Contract Language and Force Majeure Provisions Under Review
Most attendees expressed confidence that existing price protection clauses would help limit immediate tariff-related cost increases. While standard force majeure language typically does not reference tariffs, some suppliers are now arguing that tariff changes should qualify under those provisions, though the outcomes of such arguments are unclear at this time. Looking ahead, many suppliers are pushing to revise contract language to explicitly include tariffs as a qualifying event under force majeure provisions, a move that would presumably shift more risk to buyers. Supply chain leaders identified this as a critical area for legal teams to monitor and review closely and should not interpret this observation as legal guidance or advice.
Conclusion: Planning and Collaboration are Key
One of the most encouraging themes to emerge from the session was the spirit of openness and collaboration demonstrated by both health systems and suppliers. Participants engaged in candid dialogue, shared best practices, and tackled tough questions with a shared commitment to finding solutions.
While the 2025 tariff landscape remains unpredictable, the tone of the discussion was forward-looking and constructive, underscoring a collective willingness to address challenges together. This optimism was grounded in action; leaders are already taking steps to strengthen contract language, enhance data visibility, and build the capabilities needed to manage future disruptions. The clear message from the summit was that, although no single playbook exists, proactive education, thoughtful planning, and strong supplier partnerships will be essential to successfully navigating the road ahead.