Latest / The Strategy Catalyst Dispatch / Tariffs and Strategic Planning Under Policy Volatility

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Tariffs and Strategic Planning Under Policy Volatility · The Strategy Catalyst Dispatch

• 0:05
  Jerome: Welcome to the Strategy Catalyst Dispatch, A podcast from the Health Management Academy.
• 0:11
  Jerome: I'm your host, Jerome Bani, executive Director of Strategy Catalyst.
• 0:16
  Jerome (2): Each episode
• 0:16
  Jerome: we'll explore the trends and insights shaping healthcare strategy.
• 0:20
  Jerome: Let's dive in.
• 0:28
  Jerome: Today we're examining an issue generating growing concern and operational strain across health systems.
• 0:34
  Jerome: The renewed tariff agenda and its strategic implications, we'll explore how tariffs are disrupting medical supply chains, complicating capital infrastructure investments, and raising the risk of pharmaceutical shortages.
• 0:45
  Jerome: We'll also look at how leading organizations are responding from mitigation strategies and supplier negotiations to longer term resiliency planning.
• 0:53
  Jerome: The current policy environment remains unsettled.
• 0:56
  Jerome: Implementation timelines are unclear and regulatory specifics are still in flux, but the downstream impacts are already evident.
• 1:03
  Jerome: 45% of health systems have activated crisis teams to prepare for economic instability, including tariff exposure.
• 1:09
  Jerome: 82% of healthcare leaders anticipate hospital costs rising by at least 15% in the next six months.
• 1:16
  Jerome: 94% of hospital administrators are delaying capital upgrades.
• 1:20
  Jerome: Providence Health is projecting 10 to 25 million in additional annual costs, and while 70% of executives express concerns about tariff related risk, just 11% report having a defined mitigation strategy.
• 1:32
  Jerome: In short concern is widespread, but formal planning has not kept pace.
• 1:36
  Jerome: The scale of exposure is significant.
• 1:38
  Jerome: In 2024 alone, the US imported 75 billion worth of medical devices and supplies.
• 1:43
  Jerome: Nearly 70% of medical devices marketed domestically are manufactured exclusively overseas.
• 1:49
  Jerome: At the same time.
• 1:50
  Jerome: We're seeing transaction volumes decline and deal sizes shrink As tariff anxiety spills into the m and a landscape.
• 1:56
  Jerome: In today's episode, we'll hear from three leaders navigating this challenge firsthand.
• 2:00
  Jerome: James Bouchard, chief Commercial Officer at Logic Source, ginger Sharp, vice President of Supply Chain at Legacy Health.
• 2:07
  Jerome: And Harold Dillo, vice President of Supply Chain at TriHealth.
• 2:11
  Jerome: Together, they'll share what we're seeing on the ground, what's working, where the pressure points are, and what others should be doing.
• 2:17
  Jerome: despite the alarming numbers, most execs who we've spoken to, aren't in crisis mode.
• 2:21
  Jerome: There's a measured awareness that this situation requires caution, but not overreaction.
• 2:26
  Jerome: Many organizations feel temporarily protected by existing GOP agreements, but that protection is limited and time bound.
• 2:33
  Jerome: The strategic imperative in the moment is in panic, it's preparation, and that starts with understanding how and where the pressures are emerging.
• 2:41
  Jerome: let's begin by looking at the first signs of friction and how health systems are responding.
• 2:45
  Jerome: When the tariffs were first discussed, many of us anticipated some level of impact, but if few expected policy environment to become as volatile, fast moving and far reaching it has proven to be that uncertainty has created some huge challenges.
• 2:58
  Jerome: Another significant hurdle is burnout and ongoing staffing challenges.
• 3:02
  Jerome: it's a real strain on already stretch teams.
• 3:04
  Jerome: Here's Ginger Sharp at Legacy Health.
• 3:06
  Jerome: Speaking to this point.
• 3:08
  Ginger: I do think the constant changes is very frustrating.
• 3:12
  Ginger: and then, you know, my team is like, we're already burnout.
• 3:16
  Ginger: there's one more thing to deal with.
• 3:18
  Ginger: we, initially were thinking, oh my goodness, this is gonna be, you know, full-time, two people on this.
• 3:23
  Ginger: we've just said we don't have the capacity to do that.
• 3:26
  Ginger: We have to just do that as part of our work, and so we'll just continue to reprioritize like we would.
• 3:30
  Ginger: Anything else?
• 3:32
  Jerome: Ginger captures the internal bandwidth limitations many health systems are feeling, and it ties to cost pressure.
• 3:37
  Jerome: Health systems are still expected to deliver cost savings, but ongoing inflation now compounded by tariffs is making the goal increasingly difficult to achieve.
• 3:46
  Jerome: There's also the reality that clinical input often slows down vendor shifts.
• 3:49
  Jerome: While switching vendors is a familiar cost saving move, large product categories often require clinical buy-in, which adds complexity and time to the decision making process.
• 3:58
  Jerome: Most health systems don't have enough supply chain staff to evaluate every target impact.
• 4:04
  Jerome: So what's the response?
• 4:05
  Jerome: Many health systems are taking a hard line approach, an aggressive stance with suppliers.
• 4:09
  Jerome: Here's hero, Dillo of TriHealth describing his direct response.
• 4:13
  Harold Dillow: I mean, we, we got a letter in the mail saying that it was gonna increase on June 1st, and we sent a letter in the mail saying, we wholesale reject any and all price increases due to tariffs.
• 4:23
  Harold Dillow: So that's how we responded out of the gate.
• 4:27
  Jerome: Now let's talk about some surprising factors and anecdotes from the field.
• 4:31
  Jerome: One of the biggest frustrations I'm hearing is skew confusion.
• 4:34
  Jerome: It's incredibly difficult to tell where products are manufactured.
• 4:38
  Jerome: Ginger has some thoughts on this,
• 4:41
  Ginger: The other thing I learned is that you can't tell where the products are manufactured and the companies will say the same thing, I mean, they probably could get down to the skew level, but typically they're saying, okay, we manufacture some of these in Germany, some in Mexico, some in China.
• 4:57
  Ginger: I can't tell you where they're manufactured.
• 5:00
  Ginger: We're not gonna figure that out.
• 5:01
  Ginger: So we're gonna give you a blended tariff cost increase or a tariff line.
• 5:04
  Ginger: So that's been, um, interesting as well.
• 5:07
  Jerome: and that leads to another key point.
• 5:09
  Jerome: Is this a tariff line or a permanent price increase?
• 5:12
  Ginger: So a number of companies are trying to be transparent, putting a tariff line on there.
• 5:17
  Ginger: Another, we just think they're, you know, hey, um, doing a price increase.
• 5:20
  Ginger: And so that is actually worse in my mind because then if the tariffs go away, the price increase may stay.
• 5:28
  Jerome: We are also seeing hidden costs slipping through automated systems.
• 5:31
  Jerome: Some tariff related fees are going unnoticed due to limited visibility and automated EDI processes leading to unexpected add-on charges that aren't flagged until after payment.
• 5:40
  Jerome: And then there's a complexity of custom packs.
• 5:42
  Jerome: Custom procedure kits pose a unique challenge.
• 5:45
  Jerome: If even one item in a kit is subject to tariffs, the entire pack may be affected.
• 5:49
  Jerome: So health systems have to be extra diligent here.
• 5:54
  Jerome: Let's shift gears and mitigation tactics.
• 5:56
  Jerome: One strategy that often comes up is stockpiling, it's typically used to guard against supply disruptions.
• 6:01
  Jerome: The situation now is hopefully just a financial shock.
• 6:04
  Jerome: However, there's growing concern.
• 6:05
  Jerome: That cost issue could eventually become availability issues too.
• 6:09
  Jerome: Harold offers some valuable advice.
• 6:12
  Harold Dillow: I think the key is really, you know, if you're gonna stockpile, do it in such a way that you understand your demand and that you can use the product, you know, you're not buying more than you would use anyways, PPI vendors a lot of times will say, Hey, here's a bulk buy opportunity, you know, to meet their quarter end or some sales target they have.
• 6:31
  Harold Dillow: And, not my favorite thing in the world.
• 6:34
  Harold Dillow: But if they're bulk buy matches up with.
• 6:37
  Harold Dillow: Our, let's say average demand over the next two months, and we can get a good price discount then.
• 6:42
  Harold Dillow: Okay, maybe that makes sense.
• 6:44
  Jerome: That's a crucial point about understanding your demand.
• 6:47
  Jerome: It's not just about buying in bulk, it's about smart inventory management and for those systems without an existing stockpile, it might be difficult or too costly to build now, especially as prices rise and availability tightens.
• 6:58
  Jerome: Another operational tactic we've heard about is a supply chain help desk or concierge service.
• 7:03
  Jerome: Ginger explains how legacy health is implemented One.
• 7:06
  Ginger: we put a communication out to all leadership and said, Hey, if you're hearing anything from your vendors or you get word of something, or they give you a price increase notice, send it to our concierge.
• 7:17
  Ginger: We have like a.
• 7:18
  Ginger: A help desk, if you will, on the supply chain side.
• 7:20
  Ginger: So send it to our team and then we'll vet it So we have a standard process.
• 7:24
  Ginger: We're collecting all those notifications and a central repository and monitoring.
• 7:29
  Ginger: And then we pulled in our, um, GPO, and they have told us that, you know, if something is on a contract, you're protected.
• 7:37
  Ginger: Like they put language in their, Contracts, you know, not to allow tariff increases.
• 7:42
  Ginger: So trying to vet you know, it's adding another layer, but it's a good layer.
• 7:45
  Ginger: We're hoping that will really help us.
• 7:47
  Ginger: And then, pushing back our stance has been from our CFO down that we're not paying tariffs.
• 7:54
  Jerome: That's a smart way to centralize information and vetting close alignment with vendors is proving critical.
• 7:59
  Jerome: Harold emphasizes the importance of aligning with your GPO and prime distributor.
• 8:03
  Harold Dillow: the main thing is just really, really close alignment with, Your primary vendors.
• 8:09
  Harold Dillow: Right.
• 8:09
  Harold Dillow: So for us, our GPO is really important to be aligned with them.
• 8:14
  Harold Dillow: And then, Cardinals our, is our prime distributor in med-surg supplies.
• 8:19
  Harold Dillow: What is the impact to our health system?
• 8:22
  Harold Dillow: You know, you can read the news and it seems it's seemingly changing, daily or weekly.
• 8:27
  Harold Dillow: It's hard to keep track.
• 8:28
  Harold Dillow: GPOs with the amount of resources and things that they have, and we use Vizient.
• 8:33
  Harold Dillow: they have, you know, an army of people that stay on top of this.
• 8:35
  Harold Dillow: So they have provided some really good.
• 8:38
  Harold Dillow: market briefs that summarize current state.
• 8:42
  Harold Dillow: Aligning with that, making sure you're getting that information, understanding it, and then really how do you distill that down to how that impacts your individual health system, I think is that, I mean that's the crux of it all.
• 8:56
  Harold Dillow: and that's where your prime distributor should come into play.
• 8:59
  Harold Dillow: since they're likely the largest, supplier of products that.
• 9:02
  Harold Dillow: That a health system would have.
• 9:04
  Harold Dillow: they should be able to provide, an impact file, so to speak, of exactly what, is impacted and, and any financial, repercussions from that.
• 9:15
  Jerome: Despite these strategies, there are challenges.
• 9:17
  Jerome: One is uncertain ROI on stockpiling and other mitigation efforts.
• 9:21
  Jerome: Common strategies like stockpiling or sourcing from alternative suppliers can carry significant upfront costs such as warehousing expenses and capital outlays.
• 9:30
  Jerome: but given how quickly tariff policies can change or even be rolled back, there's some hesitation to make big, long-term moves.
• 9:37
  Jerome: Staying ahead of supplier behavior and pricing games is another challenge.
• 9:41
  Jerome: Health systems should be conducting internal research to identify high spend items vulnerable to tariffs.
• 9:46
  Jerome: And when possible, closely examine the origin of those products.
• 9:51
  Jerome: It's crucial to push suppliers for transparency around their manufacturing locations and capabilities.
• 9:55
  Jerome: Since many operate in multiple countries, some vendors are already using tariffs to justify price increases that exceed the actual tariff rates.
• 10:03
  Jerome: Betting the buyers won't notice or push back.
• 10:06
  Jerome: Ginger highlights the need for tougher negotiation tactics.
• 10:10
  Ginger: As hospitals potentially have funding cut too.
• 10:14
  Ginger: We may have to be, tougher negotiators and look at things differently.
• 10:19
  Ginger: you know, we can't just keep doing business the same way.
• 10:21
  Ginger: And what's been really frustrating is that these for-profit companies are like, oh, we're getting hit with tariffs.
• 10:27
  Ginger: We're gonna pass it on to you.
• 10:29
  Ginger: And our response has been, so we can't just pass this on to the patient.
• 10:33
  Jerome: And Harold offers another astute negotiation strategy.
• 10:37
  Harold Dillow: But I can tell you, you know, another negotiating tactic could be, to delay, right?
• 10:42
  Harold Dillow: I mean, so instead of negotiating a price down, see if you can delay it longer.
• 10:45
  Harold Dillow: Because again, something could change, right?
• 10:48
  Harold Dillow: So that's why it's a little disappointing and frustrating on our side that they've taken such an aggressive approach to this.
• 10:55
  Jerome: James Brouchard from Logic Source also has seen some suppliers willing to absorb a significant portion of the tariff impact With some delaying increases for up to six months or absorbing up to 50% of the actual tariff burden.
• 11:07
  Jerome: Some systems are reducing tariff impact by consolidating spend with a single supplier.
• 11:12
  Jerome: Rather than splitting volume across vendors In return, that supplier may offer greater pricing relief and absorb more of the tariff burden.
• 11:20
  Jerome: James has some advice on this front,
• 11:23
  James Bouchard: I think the most resilient suppliers are going to be the ones that.
• 11:32
  James Bouchard: Either have a massive market share hold and they're able to find, internal ways to drive efficiency to help their customers offset, tariff impact.
• 11:46
  James Bouchard: And I also think, we're likely to see domestic manufacturers of a lot of healthcare equipment and healthcare supplies.
• 11:56
  James Bouchard: they're poised for a substantial growth and.
• 12:00
  James Bouchard: and large increase in market share because everybody is now looking at where can I buy these supplies from the United States, which frankly was an objective of the Trump administration, right?
• 12:14
  Jerome: here's more from James on vetting these new or alternative suppliers.
• 12:19
  James Bouchard: We really should understand, the history of that supplier where they just stood up right over the last two years, or frankly two months, as a way to offer a quick solution to.
• 12:32
  James Bouchard: These tariff issues or, you know, have, have they been a reputable organization for an extended period of time and they have, a customer base that's both loyal and satisfied with their support.
• 12:44
  James Bouchard: I think we should look at the, the age and, and health of, of those companies.
• 12:49
  James Bouchard: We should look at, their ability to provide equivalent.
• 12:54
  James Bouchard: Product, and that's very difficult sometimes in a healthcare system, right?
• 12:59
  James Bouchard: That's why you bring a lot of different people together and, and you have, you know, a consensus of a bigger group.
• 13:05
  James Bouchard: That should be a priority in, in assessing whether you can buy a similar product from one of these alternative suppliers.
• 13:14
  James Bouchard: you also should absolutely be looking at cost and other contractual commitments that they're willing to make to you you shouldn't be making long-term commitments.
• 13:25
  James Bouchard: You, you shouldn't be making major volume commitments.
• 13:29
  James Bouchard: And as long as a supplier is willing to allow that flexibility in the contract, then I, I think you're in a better position also, to feel more comfortable with that relationship.
• 13:40
  Jerome: Beyond cost and contract terms, it's important to evaluate how the supplier moves product, whether through self-distribution, major logistics partners or third party carriers, And how reliable their delivery timelines have been.
• 13:53
  Jerome: Systems should be cautious with new vendors, prioritizing contracts that allow for short term, low volume commitments to preserve agility.
• 13:59
  Jerome: As tariffs evolve.
• 14:01
  Jerome: And don't forget to check in with other health systems who've worked with the supplier to see how well they've performed under recent pressure.
• 14:07
  Jerome: Now, for a bit of a silver lining, tariffs can sometimes offer an unexpected chance to reassess existing contracts and drive efficiency.
• 14:14
  Jerome: Here's what Ginger Ed to say.
• 14:17
  Ginger: What's been interesting is that we'll have these vendors who say, you know, Hey, we're gonna hit you with these tariffs, and then we'll assign an analyst to go dig into that and we'll find, you know, these five products.
• 14:26
  Ginger: Were not on a contract.
• 14:28
  Ginger: We missed that.
• 14:29
  Ginger: So it's kind of an opportunity to clean things up and, move things to the right place.
• 14:35
  Jerome: That's a great perspective, turning a challenge into an opportunity for optimization.
• 14:41
  Jerome: Let's shift gears to the impact on capital infrastructure.
• 14:45
  Jerome: we're seeing health systems pulling back on capital investments amid mounting financial uncertainty.
• 14:51
  Jerome: Tariffs are just one of several policy threats alongside Medicaid and three 40 B that are reshaping long-term planning.
• 14:58
  Jerome: When it comes to construction, tariffs on materials like steel are already directly raising build costs.
• 15:03
  Jerome: And broader macroeconomic volatility is amplifying that risk.
• 15:08
  Jerome: Many systems had their budgets planned before the full policy picture emerged, forcing them into ad hoc revisions.
• 15:14
  Jerome: the outlook now, frankly, is for a stagflationary environment, elevated inflation and unemployment, and that only complicates financing and investment decisions.
• 15:24
  Jerome: James Bouchard shares a strategic approach for the construction space.
• 15:28
  James Bouchard: the other, core strategy that you could consider, specific to, the, the construction space.
• 15:35
  James Bouchard: So again, talking about.
• 15:37
  James Bouchard: hospital build out or new construction.
• 15:40
  James Bouchard: Resetting or reassessing the spec, right?
• 15:44
  James Bouchard: Understanding, the structure of your design and the composite of the fixtures and furniture, and, Physical construction materials being used for build out and determining if there's an alternative spec or alternative, way to structure, your building to buy more product.
• 16:09
  James Bouchard: Locally or by different materials less impacted by these tariffs, right?
• 16:14
  James Bouchard: You, you don't always need to, purchase steel from China and deal with compounded tariffs.
• 16:21
  James Bouchard: And, you know, there's other options out there that in speaking with your architect and your design firm, you should be able to suss out, what the financial benefit might be of looking at a different specification.
• 16:35
  Jerome: let's turn our attention to pharmaceutical tariffs, which are looking increasingly likely to come.
• 16:40
  Jerome: president Trump's threat of 25% higher tariffs on imported drugs remains a very live issue.
• 16:45
  Jerome: president Trump recently told reporters aboard Air Force One during his return trip from the G seven meeting in Canada that US trade duties on pharmaceutical products are coming very soon.
• 16:56
  Jerome: The stated rationale is that these tariffs would incentivize drug makers to set up shop here in the us, create more jobs and improve national security by reducing our reliance on countries who might haul trade in the event of war or other emergencies.
• 17:09
  Jerome: Public health experts suggest that if the tariffs do take effect, they would likely mean higher drug prices and more drug shortages.
• 17:17
  Jerome: This comes at a time when us pharmaceutical imports have already more than doubled in value.
• 17:21
  Jerome: Soaring from 73 billion in 2014 to over 215 billion in 2024, according to US customs data.
• 17:28
  Jerome: Hospitals are already voicing serious concerns about critical medications like cancer and cardiovascular drugs, as well as immunosuppressives and antibiotics.
• 17:36
  Jerome: A sentiment echoed in a letter that the American Hospital Association sent to President Trump earlier this year.
• 17:42
  Jerome: We're already seeing real world impacts.
• 17:45
  Jerome: MD Anderson Cancer Center in Houston instituted a hiring freeze due to uncertainty in part on the tariff's, potential impact on drug prices.
• 17:53
  Jerome: Health systems are understandably bracing for the very real possibility of higher prices in deepening drug shortages.
• 18:00
  Jerome: Where do we see the immediate risk that would be with generics?
• 18:04
  Jerome: these drugs account for the majority of hospital administered medications and are the most vulnerable.
• 18:10
  Jerome: A staggering 80% of generics are finished in foreign countries.
• 18:14
  Jerome: Johnson and Johnson, CFO Joe woke openly speculated that generics could be hardest hit by tariffs because of the high reliance on international manufacturing.
• 18:23
  Jerome: Many generic manufacturers operate on razor thin margins and can't afford to pick up and relocate to the us.
• 18:29
  Jerome: Tom Krause, a SHP, vice President of Government Relations, has underscored how critical this is.
• 18:36
  Jerome: He explains.
• 18:37
  Jerome: Quote, hospitals are particularly dependent on sterile, injectable, generic drugs, as those tend to be very low cost, very thin margin products, so they're more susceptible to shortages.
• 18:48
  Jerome: Because of that, we view the risk of supply chain disruption or a shortage as the most immediate patient care risk, less so the cost implications.
• 18:55
  Jerome: End quote.
• 18:56
  Jerome: Mr.
• 18:57
  Jerome: Kra also pointed out that many key starting materials, the essential chemical ingredients for drug manufacturing are not exempt from the tariff policy.
• 19:04
  Jerome: This could significantly drive up input costs for US-based manufacturers who already operate on those thin margins, potentially forcing them out of the market entirely.
• 19:13
  Jerome: We saw a record 323 drugs in shortage in just the first three months of 2024, And 70% of those shortages were related to generics.
• 19:23
  Jerome: Mariana SoCal, an associate professor in health policy and management further warns that tariffs might push manufacturers to start cutting corners, sending cheaper, lower quality products that could raise more issues and further disrupt our supply chain.
• 19:36
  Jerome: Exacerbating an already serious problem with generic shortages.
• 19:40
  Jerome: When we look at branded drugs, the picture is slightly different though still concerning these drugs comprise 15% of US prescriptions, but account for staggering 90% of our drug spend.
• 19:50
  Jerome: The US already pays on average three to four times more than other developed countries for the same branded drugs leaving about a quarter of Americans unable to afford the branded medications they need.
• 19:59
  Jerome: As Mariana SoCal stated in a recent media briefing, one of the most immediate consequences of tariffs could be price increases on drugs in the us, which already pays more than other countries do High profit brand named drug makers could choose to absorb the cost of the tariffs rather than pass higher prices onto consumer.
• 20:17
  Jerome: They could also opt to relocate to the US to avoid tariffs, but in that scenario, they may simply incorporate some of the costs of relocation into the price of the products.
• 20:26
  Jerome: Some manufacturers have already started the reshoring process with companies like Eli, Lilly, Roche, and Novartis committing to investing a combined a hundred billion over the next five years.
• 20:38
  Jerome: reshoring may not solve the problem US manufacturers get many of their active pharmaceutical ingredients or APIs from India and the European Union, India in turn relies on China for many of the key starting materials to make their APIs and then supply most of our generic drugs, For many products, it would still be much cheaper for manufacturers to absorb the cost of the tariffs than go through the expense of and arduous regulatory process of building up entirely new manufacturing capacity in the us.
• 21:05
  Jerome: There aren't any guarantees about how policies may shift in the coming years as well.
• 21:09
  Jerome: So what should health systems be watching for?
• 21:11
  Jerome: In short, the primary risks are certainly increased shortages and higher acquisition costs for both generics and branded drugs.
• 21:17
  Jerome: A major strategic concern is how this policy uncertainty makes long-term supplier contracting incredibly difficult from an equity perspective, rising drug costs and shortages may force patients to rely on costly second line therapies or even forego treatment entirely.
• 21:32
  Jerome: This is especially troubling for vulnerable populations who can least afford it.
• 21:36
  Jerome: Finally, the financial pressure supply chain disruptions could translate into higher Medicaid Part D premiums and commercial insurance costs ultimately impacting health systems reimbursement and margins.
• 21:49
  Jerome: We've covered a lot of ground in this episode, so let's recap.
• 21:53
  Jerome: First, the numbers underscore the urgency.
• 21:56
  Jerome: We're talking about billions in imported medical devices and supplies.
• 21:59
  Jerome: predictions of significant cost increases upwards of 15% for hospitals and many already delaying critical equipment upgrades.
• 22:07
  Jerome: Second, the initial challenges are very real, the sheer uncertainty of policy.
• 22:11
  Jerome: Coupled with the already high levels of staff, burnout and supply chain teams creates a tough environment as Ginger sharp from Legacy Health articulated teams are already stretched thin.
• 22:21
  Jerome: And knowing where products are actually manufactured is proving to be a big hurdle.
• 22:25
  Jerome: Third, we explored some crucial mitigation tactics.
• 22:28
  Jerome: while stockpiling can be effective, it needs to be done smartly.
• 22:31
  Jerome: Aligning with demand, as Harold Dillo from TriHealth advised, the importance of close alignment with your GPO and prime distributors cannot be overstated.
• 22:40
  Jerome: There are eyes and ears on the ground for impact analysis.
• 22:43
  Jerome: Fourth on the negotiation front, it's clear we need to get tougher.
• 22:46
  Jerome: as Ginger suggested, health systems can't keep doing the business the same way when for-profit companies pass on costs that they then can't pass onto the patient.
• 22:56
  Jerome: Harold's suggestion of delay is also shrewd.
• 22:58
  Jerome: Move given the volatility of the policy environment recall James Bouchard's insight about some suppliers being willing to absorb a significant portion of the costs.
• 23:07
  Jerome: It's worth talking to them about it.
• 23:09
  Jerome: Also consider the strategic advantage of consolidating spend with a key supplier for better tariff absorption.
• 23:15
  Jerome: And when vetting new or alternative supplier, remember to look at their history, their ability to provide equivalent products and prioritize contracts with flexibility and short-term commitments.
• 23:25
  Jerome: Finally, the looming specter of pharmaceutical presents its own unique set of challenges.
• 23:30
  Jerome: We heard President Trump's announcement on June 17th that pharmaceutical tariffs are coming soon, and that triggered a drop of 4% in pharma stocks highlighting investor concerned over India based drug makers in particular.
• 23:43
  Jerome: It's also worth noting that earlier in May, president Trump signed an executive order compelling drug makers to match US prices to the lowest select OECD countries aiming for price cuts of 30 to 80%.
• 23:55
  Jerome: Lastly, it's worth noting that pharmaceutical tariffs now include a 25% duty on APIs from China.
• 24:01
  Jerome: 20 to 25% tariffs on APIs and drug intermediaries from India and China, and 15% tariffs on medical packaging, lab equipment, and pharmaceutical machinery.
• 24:12
  Jerome: The core message remains one of resilience over reaction.
• 24:16
  Jerome: This moment truly calls for discipline, execution, strategic vendor management, and perhaps more importantly, avoiding panic while preparing smartly.