Supply Chain

Health Systems Addressing Supply Chain Challenges in 2025

The year 2025 marks a pivotal moment for health systems as they grapple with unprecedented supply chain challenges. These challenges are driven by policy changes, economic pressures, and a series of global trade uncertainties, necessitating a reevaluation of traditional sourcing and procurement strategies in the sector.

Supply Chain Challenges and Strategic Responses

Health systems are actively responding to the evolving supply chain landscape with a focus on transformation and adaptation. This year, the focus extends beyond cost-saving measures to ensure resilience, reliability, and transparency in supply chain operations.

Pharmacy leaders have identified significant challenges, including the impact of tariffs, product shortages, and inflation, which have contributed to rising costs of supplies. These macroeconomic forces have compelled health systems to seek value and savings in procurement practices. Tariffs, in particular, have exacerbated the complexity of delivering patient care, raising hospital costs and potentially disrupting the availability of essential care delivery products.

Proactive Approaches and Innovations

Health systems are adopting proactive approaches to address these challenges. Mayo Clinic Supply Chain, for example, has established a task force to monitor and mitigate risks associated with U.S.-based tariffs. This task force collaborates with supply partners to assess the impacts of tariffs and strategize around sourcing lower-tariffed SKUs to maintain cost-effectiveness without compromising product quality.

Similarly, Stanford Health Care is focusing on financial management, supply reliability, and data transparency to navigate supply chain challenges effectively. The transformation involves leveraging value-based partnerships and preferred supplier collaborations to mitigate increasing costs and maintain high standards of patient care.

"Collaboration between clinical and supply chain teams is increasing in response to natural disasters and trade pressures," noted a health system executive.

The Role of Policy and Global Trade Dynamics

In the broader context, policy changes and global trade dynamics are significant influencers of supply chain strategies in 2025. President Donald Trump's administration has utilized tariffs as a tool to encourage domestic manufacturing, with recent announcements indicating a 50% tariff on all goods from the European Union. These measures are part of a broader strategy to strengthen the U.S. supply chain for essential medical and pharmaceutical products.

The administration's long-term goal is to reduce reliance on foreign-made medical products, a sentiment echoed by experts who argue that increased control over the supply chain is beneficial but will take time to achieve. This shift is supported by efforts to onshore production, although the complexity of the supply chain, with many medical goods manufactured domestically but sourcing components internationally, presents ongoing challenges.

Section 232 investigations have been conducted on various imports, including steel, aluminum, and pharmaceuticals, to assess their impact on national security and economic stability. These investigations, along with the use of the International Emergency Economic Powers Act (IEEPA), highlight the administration's aggressive stance on trade policy, despite legal challenges questioning the extent of executive authority in imposing tariffs.

Industry Insights and Future Directions

The healthcare sector is leveraging data-driven insights to optimize supply chain management. AdventHealth, named the top healthcare supply chain by Gartner, exemplifies this trend by focusing on clinical alignment and reducing unnecessary supply variation to control costs while maintaining quality patient outcomes.

  • AdventHealth led the 2024 Healthcare Supply Chain Top 25 ranking, followed by Stanford Health Care and Bon Secours Mercy Health.
  • Gartner's rankings consider factors such as peer opinion, bond rating, quality of patient care, and risk management.

Looking ahead, the integration of AI and digital tools is seen as a crucial development in enhancing supply chain resilience. These technologies are expected to bring clarity and agility to complex supply chain networks, addressing challenges posed by climate change, tariffs, and operational inefficiencies.

As the healthcare supply chain landscape continues to evolve, the focus remains on harnessing innovation and collaboration to ensure stability and efficiency. Health systems are encouraged to engage policymakers and advocate for strategies that support the resilience of the healthcare supply chain, ultimately benefiting patient care.