Navigating healthcare supply chains just got significantly more complex. The looming specter of increased tariffs threatens to dramatically impact both costs and availability of essential medical supplies for hospitals and physician practices across America.
Taking a deep dive into this critical topic, our latest episode breaks down exactly how tariff increases function and why they matter to healthcare providers right now. Despite common misconceptions, these import taxes aren't paid by foreign countries—they're paid by importers and ultimately passed along to you. A $100 item from China with a 25% tariff becomes a $125 item, potentially increasing your supply costs by 25-100% depending on sourcing.
The conversation explores practical strategies for weathering this economic storm. Supply chain expert Phil Church emphasizes the importance of understanding your vendor contracts, particularly price protection clauses and term dates, as many contracts allow price adjustments at the start of each calendar year. As budget planning season approaches, administrators must prepare for substantial cost increases rather than typical 3-5% annual adjustments.
Beyond the financial implications, we examine how cross-departmental communication becomes essential during supply disruptions. Materials management must function as a strategic resource, not merely logistics, while clinical teams need transparency about potential shortages to implement conservation strategies. For smaller facilities, joint purchasing agreements with similar non-competing organizations can leverage collective buying power to secure both better pricing and priority treatment from suppliers.
While this episode focuses on tariffs, the underlying message applies to any supply chain disruption—whether caused by economic policies, pandemics, or natural disasters. Healthcare organizations must build resilient systems capable of withstanding these challenges. Listen now to gain actionable insights you can implement immediately to protect your organization's financial health and clinical operations.
To learn more about this topic, access the full webinar recording or reach out to us directly with questions.
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Production © Strategic Healthcare Partners, LLC.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Aaron Henry (00:00):
supply chain best practices and potential tariff
implications for communityhospitals and medical practice.
That was a mouthful, jason.
How are you doing today?
Jason Crosby (00:11):
Aaron, it's great to be here.
It's great to recap anexcellent webinar we had
yesterday with our subjectmatter expert, phil Church,
excited to talk through it.
Aaron Henry (00:20):
Yeah, so for the podcast listeners, things are
going to be a little bitdifferent.
We're going to recap somedirect quotes, some moments from
the webinar, but we will have alink to the recording in our
show notes.
We do encourage you to go backand watch that and, yes, I say
watch it.
(00:40):
There is a PowerPoint that thatgoes along with it.
It.
There is a powerpoint that thatgoes along with it.
But the idea here is that we'regoing to recap, cover some of
the the highlights for you, justto whet your appetite a little
bit.
So, before we get started, Ithink the the thing that we
really uh need to focus on andmaybe help explain, because we
we hear it a lot in theheadlines, is tariffs.
(01:02):
Okay, we hear tariff andhopefully most of you who are
listening understand what atariff is, but I think it'd be
good to lay some groundwork tounderstanding tariff.
Now, tariff is a import tax, soit's a fee that's assigned to an
(01:23):
item being brought into theUnited States.
So if you're ordering somethingfrom Timu, it's probably coming
from China and there is $100 aunit and, honestly, the tariffs
keep changing.
So we'll go with an easy numbera 25% tariff that same hospital
(01:55):
gown.
Instead of being $100, is now$125.
And I think you've heard itsaid by some politicians that
the foreign country will be theone paying the tariff.
No, that's misleading.
It is the importer that paysthe tariff.
So the supplier will be payingthe $25, which makes their cost
(02:15):
$125.
And unless they are reallyreally nice and they eat the
cost of that, you're going to bethe one paying that extra money
.
So really that's what we be theone paying that extra money.
So really that's what we'retalking about.
In regards to tariffs, they'rea little more complicated than
that.
That's just a high-leveloverview of how tariffs work.
Typically, it's going to raisethe cost of goods in the United
(02:36):
States.
Jason, is that a goodroundabout explainer?
Jason Crosby (02:40):
Yeah, great setup, and so, hopefully, folks.
Now we're economists, right.
We tend to do this every coupleof years, don't we?
We were all physicians a fewyears ago, weren't we?
Now we're all MMT-basedeconomists here trying to figure
out what tariffs are.
But no good setup, Aaron.
Aaron Henry (02:59):
Jason, I'll tell you this, though On Facebook,
I'm an expert on everything.
Jason Crosby (03:03):
That's right, that's exactly right, tell you
what I think.
Tomorrow I'll be an AI expert,but today, yeah, let's pretend
to be economists, shall we?
Aaron Henry (03:13):
Now I will note that one of the things Phil
brings up is that it's not justtariffs, and I want to make that
clear for our audience here.
We're going to harp on tariffsa little bit, particularly at
the beginning, but there's goingto be COVID-like supply
(03:33):
shortages and at the root of itis tariffs that's causing this.
But there is supply chaindisruptions all over the place
lack of contingency planning, etcetera.
We're going to get into that.
Jason Crosby (03:42):
Yeah, just overall kind of setting this up.
He did a great job, I thought,of applying how such economic
policy can impact medicalimports and just the not the
cost side of it, but thesourcing side of it right, the
challenges we'll have to face.
We of course revisited, as youmentioned, covid era, the
(04:03):
disruptions there, the lessonslearned from it.
He then parlayed that into whatwe'll see on the small and
community hospital side ofthings and practices.
And then, lastly, where I thinkPhil really brings a lot of
knowledge and expertise is okay,now what?
How do we assess our vendorcontracts?
How do we stockpile supplies?
(04:24):
How do we talk to our vendors?
A what to do now perspective.
So, just to set up Phil, that'swhat our webinar entailed
yesterday.
So he did a really good job andI think we'll talk through some
of his primary points today,them up here to kind of start
(04:47):
things off.
As you mentioned, mike and Iwent back and forth on the few
and I thought he did a reallygood job Phil did on answering
the question why is thisimportant now?
And to today's audience, inthis case, hospital
administrators, physicianpractice administrators why is
this important now?
So let's take a listen.
Phil Church (05:02):
Because everything we're buying at this point could
in some way be subject to thesenew tariffs.
Even items, products, equipmentthat are quote made in the USA
may have raw materials comingfrom other countries, and then
(05:22):
they'll be tariffed as well,coming in.
So the pricing impacts thatwe're looking at can vary widely
, but it's helpful to know whatcountries your products that
you're using are coming from,how they're put together, where
(05:42):
they're put together, howthey're getting from point A to
point B, and that's part of whatwe're looking at here today.
Jason Crosby (05:52):
All right.
So, as you heard there, youknow again some input from Phil
on why and who this is going toimpact.
Today, again, he hit on somekey points, like you mentioned,
aaron, on supply chaindisruption, cost disruption
You're going to see that nowagain to the practices and
hospital settings.
So some good points there toPhil, points there to fill and
(06:14):
to further again kind ofdovetails into more specifics.
We asked him OK, this ischanging every day right and
like, you wake up and there's achange to a certain policy or
you know a certain rate to acertain country, you know who
knows right it just you got tohave your head on a stick here
(06:36):
to keep it moving.
So we asked him that questionhow best to keep up with these
fast and fluid changes.
And then, more importantly, andyou'll hear Mike ask this, how
do I sync that up with thepotential price impact for me?
And so if I've got my own GPOarrangement of contracts and
(06:56):
it's got my terms in there,taking those terms and applying
the rates that you mentioned atthe beginning, aaron, how do
those reconcile?
Let's, let's take a listen here.
Aaron Henry (07:08):
How do I keep up with it and how quickly is it
going to change actual pricingof my supplies, actual pricing
of my supplies.
Phil Church (07:15):
Yeah, and that's the key.
I've talked to GPOs and most oftheir pricing, they say, is
locked in through whatever theterm of the contract is.
And this is where yourmaterials folks slash finance
are going to need to be involvedin working with your GPOs
(07:37):
looking at your contracts,whether they're GPO or local
contract, looking at the priceprotection clauses, seeing when
those terms come due.
Most vendors increase theirpricing or their contracts run
out a lot of times at thebeginning of each year, even
though you've got multiple yearcontracts, a lot of times at the
(07:57):
beginning of each year, eventhough you've got multiple-year
contracts a lot of them.
If it's a five-year contract,that's due at the end of this
year, it might be term due thiscoming January and if that's the
case, that's probably whatwe're hearing from vendors that
they'll be passing along theseprice increases.
(08:19):
To what degree we don't know.
Jason Crosby (08:21):
All right.
So, as you heard there, againsome good input from Phil.
You know, aaron, we do this alot.
You're on the data side ofthings and so hearing a way to
kind of put perspective of Iknow I've got X cost to these
supplies right and I'manticipating, if most of these
are coming from China, and thepotential tariff impact.
(08:43):
Who knows what could be Xpercent?
Can I do the math today?
Aaron Henry (08:49):
Yeah.
Jason Crosby (08:50):
Yeah, I thought that was an interesting
perspective.
Aaron Henry (08:52):
Well, and it's kind of a perfect opportunity.
I think most organizations areprobably either in the middle of
budget season or about to kickoff budget season and 3% and 5%
cost increase over the nextcalendar year.
(09:18):
You're going to need a budgetfor 25 to 50, or, in some cases,
100% cost increase for some ofyour goods that are coming in
from overseas.
And Phil talks about this,about understanding your sources
.
Where are your vendors gettingtheir things from?
(09:38):
That's going to help you betterunderstand.
Is it coming from China?
Okay, what's the tariff flavorof the day on China?
Oh, it's coming from Germany.
What is the German tariff?
And yes, it's going to be a lotof extra legwork, but it's
going to pay off in terms ofbeing able to accurately budget
(10:00):
for these sort of things.
Jason Crosby (10:01):
Yeah, good point, good point and you know he
further went into we won'tnecessarily go into it here but
other ways, as Aaron mentioned.
As you mentioned in thebeginning, it's not just tariffs
we're concerned about today,right, but the cost increases
and Phil did go into a littlebit detail as to other ways that
vendors are going to pass alongcost they incur to your point,
(10:23):
aaron at the beginning to theprovider.
So if you're a physicianadministrator listening or
hospital CFO, there are otherways that the vendors are going
to pass along those costs to you.
To Aaron's point at thebeginning that Phil hits on, so
you may want to take a listen tothat as well.
That point you know.
Another interesting area thatPhil hit on, aaron is
(10:47):
highlighting the importance ofcollaboration between teams, and
obviously Phil comes from thematerials world I want to say 35
years or so of materials.
How then should materials workwith the clinical folks?
Right, we had a lessons learnedjust five years ago of
disruption and how the two cancommunicate.
(11:07):
So basically, a good lesson intransparency and better
communication from materials allthe way to the end user, which
is the clinician communicationfrom materials all the way to
the end user, which is theclinician right.
Aaron Henry (11:19):
If if COVID taught us anything, it's, it's about
how materials management isn'tjust a logistics, it is a
strategic resource and I thinkhospitals, if they haven't
shifted their thinking becauseof covid towards that, that was
a good as time as any secondbest time.
(11:42):
You should have learned fiveyears ago, but certainly you
need to start treating your,your procurement process all of
that as a strategic purchasingarm of the organization to help
you plan for the future.
For those rainy days and I seesome clouds on the horizon but
(12:32):
something else, phil hit on too.
Around this time, particularlywhen it million dollars from
that same supplier, they'regoing to get priority treatment.
Entering into joint purchasingagreements with other facilities
that are like you, that aren'tnecessarily your competitor, who
are in the same world as you,you might be able to leverage
(12:52):
some better pricing as well asgetting some priority service.
So I think that's a strategicthing that our clients need to
be thinking about.
Jason Crosby (13:00):
Yeah, and let's take a listen to Phil here on
his elaboration to that pointand internal team collaboration
among folks.
Phil Church (13:08):
I think we learn to communicate better with our
clinical teams, the end users ofthese products, which ones are
undergoing back orders orshortages or limited supplies
allocations, whatever that theyshould be aware of that.
(13:30):
There should be opencommunication about that to try
to preserve as best they can andI think by and large most
facilities, once they got thatout there and pushed that and
got administration involved thatthey push that communication
out continually to let them knowwhere you stand on products and
(13:53):
which ones to try to be youknow conserve as best as best
possible, not to say thatanybody's wasting anything.
But we did find certainpractices in most places where
you know they grabbed three orfour or something when one or
two could do right.
Try to be conscious of thatthat we're having, we're
(14:16):
undergoing problems and it'scosting more.
Jason Crosby (14:19):
And there's Phil there again hitting on some
important points aroundcommunication.
Right, we've been harping oncost and disruption.
Let's not forget there'smulti-team collaboration that
must occur to keep thingsrunning smoothly.
So good points there made byPhil, and further elaboration on
those that weren't around toyour point, aaron, maybe you
(14:40):
weren't around during COVID.
Okay, so Phil gives some goodadvice there, as well as to the
newbies, if you will, on whatyou can learn from an event that
you maybe didn't participatethrough right.
So, and lastly, you know we hita lot on what I think Phil did
a tremendous job on is sort ofrecommendations.
What do you do today?
(15:01):
Like, literally, it is, youknow, tuesday, it's Wednesday.
What can I do today, eventhough this is a fluid thing?
What can I do to best preparemyself, not only because of
terrorists, but just what Ishould do as general best
practices?
Anyhow, let's take a listenhere at Phil and some key items
he suggests.
(15:21):
Give me something that I cantake away and do something soon.
Phil Church (15:26):
Yeah, again, look at your contracts and understand
them.
If you don't understand whatit's saying, get in touch with
whoever wrote that contract onthe vendor side.
Talk to them about it, makesure you understand what your
options are, how you'reprotected or not.
Order what you can, what youcan afford and what you can
(15:49):
store and what's allowed for youby the vendor to order.
And then I think real key pointis assessing this Where's the
source of your supplies orequipment, parts, whatever we're
talking about?
Where are they coming from?
Need to know a little bit moreabout that, or a lot more about
(16:12):
that if we've never done itright.
Understand where they'remanufactured at.
Just because you buy Cardinalsurgical packs doesn't mean
they're not, and they're comingout of a distribution center in
Jacksonville or wherever doesnot mean that they're being
manufactured here in the US.
(16:32):
You know there's a big plant inMexico.
It's going to take peoplestarted building plants now to
bring manufacturing back intothe US.
It's going to take years forthat to get implemented.
In the meantime, we'reexpecting what we're talking
(16:54):
about today increases in costs.
So you really need tounderstand where your stuff's
coming from and what's apt to behit by this and to what degree.
Jason Crosby (17:06):
So, Aaron, some good points.
My takeaway.
I'll say if there was one thingI took away from Phil in what
to do it's contracts, contracts,contracts right, like pull your
we talk about with managed carepull your GPO contracts.
Talk to your vendors hementioned even bring them in the
office, have a conversationwith them and talk through the
(17:27):
terms and what they're doingwith them.
And talk through the terms andwhat they're doing.
I found that pretty insightful.
I don't know about you, but inmy eyes I kept thinking let me
look at the contracts.
Well, Phil went a little bitfurther and said you know what?
Ask the vendor on that contract.
What are they doing?
What are they seeing?
Some good points he made there.
Aaron Henry (17:52):
Yeah, yeah.
Even being able to get someadditional insights into the
supply chain process is, I think, going to be very valuable.
But I think Phil emphasizedwell about those relationships.
That is more than justcontracts having a relationship
with your vendor or vendors, andthey can better understand and
anticipate your needs too.
So I think it's more than justcontracts, it's more than just
procurement, it is aboutrelationships.
(18:12):
At the end of the day and Iwant to say this Jason, tariffs
could go away tomorrow.
You know it wouldn't surprise meif we woke up and, oh, tariffs
are off, but there could beanother pandemic, there could be
another major natural disasterthat disrupts those supply chain
(18:32):
.
It doesn't matter what it is.
It is more important than everbefore for organizations,
particularly those in healthcare, to plan for these sort of
contingencies.
Jason Crosby (18:44):
Yeah, good point, good point.
You don't need an event with aname on it, like tariffs, to get
you best prepared for any eventregardless of what that may be.
Yeah, that's a good point andyou know, again, we won't
necessarily replay all thewebinar here.
There's a good 40-minutediscussion or so by Phil, but he
also hits on you know whatordering to do's now and some
(19:05):
terminology you should be awareof, like allocations.
If you're not in the materialsworld but you need to review
contracts, he gives out somethings to look at in the
contract.
So take a listen.
It's worth the 40 minutes.
It was a really goodconversation by Phil.
As he mentioned too, we're goingto try and do this again, as
there are updates, who knowswhen?
30 days, 90 days, somethinglike that but we may do another
(19:26):
one and if so, you'll be luckyenough to hear Aaron and I once
again, as we try to do adifferent format this season of
recapping events.
So again, aaron, it was a greatwebinar yesterday.
I want to say if you have anyquestions on this it's a big
topic, it's an important topicReach out to us.
We'll get you in touch withsomeone that can help answer
(19:48):
some questions.
We'll get you in touch withsomeone that can help answer
some questions, but in themeantime, our next recording for
our next event be on thelookout for it.
I think it's a little bit moreon the analytics side with a
conference presentation thatsome of our folks are doing, so
we'll recap that excellent workas well.
Aaron Henry (20:07):
That should be fun.
I'm looking forward to it.
Well, jason, appreciate thetime today and for the listeners
.
We will see you all next time.
And that's it for this episodeof Beyond the Stethoscope Vital
Conversations with SHP.
I'm Aaron Henry.
Jason Crosby (20:28):
I'm Jason Crosby, still talking to the mic as if
it was my full-time job.
Aaron Henry (20:32):
This podcast is a production of Strategic
Healthcare Partners, wherehealthcare meets data and still
somehow ends up in a podcast.
Jason Crosby (20:40):
Our executive, producers are Mike Scribner and
John Crew, who keep this trainon the tracks even when Aaron
and I try to derail it.
Aaron Henry (20:47):
We're doing our best.
Speaking of doing our best, oureditor, Nyla Wiebe, deserves an
award for turning our verbalchaos into something somewhat
coherent.
Jason Crosby (20:57):
Kudos for sure.
Let's also give a shout out toour social media.
It's handled by Jeremy Millerat Boost by Design, so if you
liked it, give him some applause.
If not, let's blame Aaron.
Aaron Henry (21:07):
It wouldn't be the first time Our transcription is
by a robot, but it's beenlightly massaged into readable
English by your two hosts, bothof whom are supposedly human
Debatable.
Jason Crosby (21:18):
If you really like the transcription, dig through
our podcast archive or check outour services at shplccom slash
podcast.
Go ahead, click around, havesome fun while you're at it,
we'll wait for you and also comefind us on social media.
Aaron Henry (21:31):
We're on Facebook and LinkedIn.
You can send us a question,leave a comment, troll us a
little bit or, more importantly,tell Jason that his dad jokes
need some work.
That one stings a little bit.
Jason Crosby (21:44):
Thanks for hanging with us everybody.
We'll be back soon in yourfeeds, assuming no one pulls the
plug, or trips over, for thatmatter.
Aaron Henry (21:51):
But until then, stay curious, stay healthy and
keep asking the vital questions.
Maybe stay hydrated.
Jason Crosby (21:59):
Just a thought Bye y'all.
You know I'm pretty frustrated.
I've been looking for my Gonein 60 Seconds DVD.
It was here just a minute ago.
supply chain best practices and potential tariff
implications for communityhospitals and medical practice.
That was a mouthful, jason.
How are you doing today?
Jason Crosby (00:11):
Aaron, it's great to be here.
It's great to recap anexcellent webinar we had
yesterday with our subjectmatter expert, phil Church,
excited to talk through it.
Aaron Henry (00:20):
Yeah, so for the podcast listeners, things are
going to be a little bitdifferent.
We're going to recap somedirect quotes, some moments from
the webinar, but we will have alink to the recording in our
show notes.
We do encourage you to go backand watch that and, yes, I say
watch it.
(00:40):
There is a PowerPoint that thatgoes along with it.
It.
There is a powerpoint that thatgoes along with it.
But the idea here is that we'regoing to recap, cover some of
the the highlights for you, justto whet your appetite a little
bit.
So, before we get started, Ithink the the thing that we
really uh need to focus on andmaybe help explain, because we
we hear it a lot in theheadlines, is tariffs.
(01:02):
Okay, we hear tariff andhopefully most of you who are
listening understand what atariff is, but I think it'd be
good to lay some groundwork tounderstanding tariff.
Now, tariff is a import tax, soit's a fee that's assigned to an
(01:23):
item being brought into theUnited States.
So if you're ordering somethingfrom Timu, it's probably coming
from China and there is $100 aunit and, honestly, the tariffs
keep changing.
So we'll go with an easy numbera 25% tariff that same hospital
(01:55):
gown.
Instead of being $100, is now$125.
And I think you've heard itsaid by some politicians that
the foreign country will be theone paying the tariff.
No, that's misleading.
It is the importer that paysthe tariff.
So the supplier will be payingthe $25, which makes their cost
(02:15):
$125.
And unless they are reallyreally nice and they eat the
cost of that, you're going to bethe one paying that extra money
.
So really that's what we be theone paying that extra money.
So really that's what we'retalking about.
In regards to tariffs, they'rea little more complicated than
that.
That's just a high-leveloverview of how tariffs work.
Typically, it's going to raisethe cost of goods in the United
(02:36):
States.
Jason, is that a goodroundabout explainer?
Jason Crosby (02:40):
Yeah, great setup, and so, hopefully, folks.
Now we're economists, right.
We tend to do this every coupleof years, don't we?
We were all physicians a fewyears ago, weren't we?
Now we're all MMT-basedeconomists here trying to figure
out what tariffs are.
But no good setup, Aaron.
Aaron Henry (02:59):
Jason, I'll tell you this, though On Facebook,
I'm an expert on everything.
Jason Crosby (03:03):
That's right, that's exactly right, tell you
what I think.
Tomorrow I'll be an AI expert,but today, yeah, let's pretend
to be economists, shall we?
Aaron Henry (03:13):
Now I will note that one of the things Phil
brings up is that it's not justtariffs, and I want to make that
clear for our audience here.
We're going to harp on tariffsa little bit, particularly at
the beginning, but there's goingto be COVID-like supply
(03:33):
shortages and at the root of itis tariffs that's causing this.
But there is supply chaindisruptions all over the place
lack of contingency planning, etcetera.
We're going to get into that.
Jason Crosby (03:42):
Yeah, just overall kind of setting this up.
He did a great job, I thought,of applying how such economic
policy can impact medicalimports and just the not the
cost side of it, but thesourcing side of it right, the
challenges we'll have to face.
We of course revisited, as youmentioned, covid era, the
(04:03):
disruptions there, the lessonslearned from it.
He then parlayed that into whatwe'll see on the small and
community hospital side ofthings and practices.
And then, lastly, where I thinkPhil really brings a lot of
knowledge and expertise is okay,now what?
How do we assess our vendorcontracts?
How do we stockpile supplies?
(04:24):
How do we talk to our vendors?
A what to do now perspective.
So, just to set up Phil, that'swhat our webinar entailed
yesterday.
So he did a really good job andI think we'll talk through some
of his primary points today,them up here to kind of start
(04:47):
things off.
As you mentioned, mike and Iwent back and forth on the few
and I thought he did a reallygood job Phil did on answering
the question why is thisimportant now?
And to today's audience, inthis case, hospital
administrators, physicianpractice administrators why is
this important now?
So let's take a listen.
Phil Church (05:02):
Because everything we're buying at this point could
in some way be subject to thesenew tariffs.
Even items, products, equipmentthat are quote made in the USA
may have raw materials comingfrom other countries, and then
(05:22):
they'll be tariffed as well,coming in.
So the pricing impacts thatwe're looking at can vary widely
, but it's helpful to know whatcountries your products that
you're using are coming from,how they're put together, where
(05:42):
they're put together, howthey're getting from point A to
point B, and that's part of whatwe're looking at here today.
Jason Crosby (05:52):
All right.
So, as you heard there, youknow again some input from Phil
on why and who this is going toimpact.
Today, again, he hit on somekey points, like you mentioned,
aaron, on supply chaindisruption, cost disruption
You're going to see that nowagain to the practices and
hospital settings.
So some good points there toPhil, points there to fill and
(06:14):
to further again kind ofdovetails into more specifics.
We asked him OK, this ischanging every day right and
like, you wake up and there's achange to a certain policy or
you know a certain rate to acertain country, you know who
knows right it just you got tohave your head on a stick here
(06:36):
to keep it moving.
So we asked him that questionhow best to keep up with these
fast and fluid changes.
And then, more importantly, andyou'll hear Mike ask this, how
do I sync that up with thepotential price impact for me?
And so if I've got my own GPOarrangement of contracts and
(06:56):
it's got my terms in there,taking those terms and applying
the rates that you mentioned atthe beginning, aaron, how do
those reconcile?
Let's, let's take a listen here.
Aaron Henry (07:08):
How do I keep up with it and how quickly is it
going to change actual pricingof my supplies, actual pricing
of my supplies.
Phil Church (07:15):
Yeah, and that's the key.
I've talked to GPOs and most oftheir pricing, they say, is
locked in through whatever theterm of the contract is.
And this is where yourmaterials folks slash finance
are going to need to be involvedin working with your GPOs
(07:37):
looking at your contracts,whether they're GPO or local
contract, looking at the priceprotection clauses, seeing when
those terms come due.
Most vendors increase theirpricing or their contracts run
out a lot of times at thebeginning of each year, even
though you've got multiple yearcontracts, a lot of times at the
(07:57):
beginning of each year, eventhough you've got multiple-year
contracts a lot of them.
If it's a five-year contract,that's due at the end of this
year, it might be term due thiscoming January and if that's the
case, that's probably whatwe're hearing from vendors that
they'll be passing along theseprice increases.
(08:19):
To what degree we don't know.
Jason Crosby (08:21):
All right.
So, as you heard there, againsome good input from Phil.
You know, aaron, we do this alot.
You're on the data side ofthings and so hearing a way to
kind of put perspective of Iknow I've got X cost to these
supplies right and I'manticipating, if most of these
are coming from China, and thepotential tariff impact.
(08:43):
Who knows what could be Xpercent?
Can I do the math today?
Aaron Henry (08:49):
Yeah.
Jason Crosby (08:50):
Yeah, I thought that was an interesting
perspective.
Aaron Henry (08:52):
Well, and it's kind of a perfect opportunity.
I think most organizations areprobably either in the middle of
budget season or about to kickoff budget season and 3% and 5%
cost increase over the nextcalendar year.
(09:18):
You're going to need a budgetfor 25 to 50, or, in some cases,
100% cost increase for some ofyour goods that are coming in
from overseas.
And Phil talks about this,about understanding your sources
.
Where are your vendors gettingtheir things from?
(09:38):
That's going to help you betterunderstand.
Is it coming from China?
Okay, what's the tariff flavorof the day on China?
Oh, it's coming from Germany.
What is the German tariff?
And yes, it's going to be a lotof extra legwork, but it's
going to pay off in terms ofbeing able to accurately budget
(10:00):
for these sort of things.
Jason Crosby (10:01):
Yeah, good point, good point and you know he
further went into we won'tnecessarily go into it here but
other ways, as Aaron mentioned.
As you mentioned in thebeginning, it's not just tariffs
we're concerned about today,right, but the cost increases
and Phil did go into a littlebit detail as to other ways that
vendors are going to pass alongcost they incur to your point,
(10:23):
aaron at the beginning to theprovider.
So if you're a physicianadministrator listening or
hospital CFO, there are otherways that the vendors are going
to pass along those costs to you.
To Aaron's point at thebeginning that Phil hits on, so
you may want to take a listen tothat as well.
That point you know.
Another interesting area thatPhil hit on, aaron is
(10:47):
highlighting the importance ofcollaboration between teams, and
obviously Phil comes from thematerials world I want to say 35
years or so of materials.
How then should materials workwith the clinical folks?
Right, we had a lessons learnedjust five years ago of
disruption and how the two cancommunicate.
(11:07):
So basically, a good lesson intransparency and better
communication from materials allthe way to the end user, which
is the clinician communicationfrom materials all the way to
the end user, which is theclinician right.
Aaron Henry (11:19):
If if COVID taught us anything, it's, it's about
how materials management isn'tjust a logistics, it is a
strategic resource and I thinkhospitals, if they haven't
shifted their thinking becauseof covid towards that, that was
a good as time as any secondbest time.
(11:42):
You should have learned fiveyears ago, but certainly you
need to start treating your,your procurement process all of
that as a strategic purchasingarm of the organization to help
you plan for the future.
For those rainy days and I seesome clouds on the horizon but
(12:32):
something else, phil hit on too.
Around this time, particularlywhen it million dollars from
that same supplier, they'regoing to get priority treatment.
Entering into joint purchasingagreements with other facilities
that are like you, that aren'tnecessarily your competitor, who
are in the same world as you,you might be able to leverage
(12:52):
some better pricing as well asgetting some priority service.
So I think that's a strategicthing that our clients need to
be thinking about.
Jason Crosby (13:00):
Yeah, and let's take a listen to Phil here on
his elaboration to that pointand internal team collaboration
among folks.
Phil Church (13:08):
I think we learn to communicate better with our
clinical teams, the end users ofthese products, which ones are
undergoing back orders orshortages or limited supplies
allocations, whatever that theyshould be aware of that.
(13:30):
There should be opencommunication about that to try
to preserve as best they can andI think by and large most
facilities, once they got thatout there and pushed that and
got administration involved thatthey push that communication
out continually to let them knowwhere you stand on products and
(13:53):
which ones to try to be youknow conserve as best as best
possible, not to say thatanybody's wasting anything.
But we did find certainpractices in most places where
you know they grabbed three orfour or something when one or
two could do right.
Try to be conscious of thatthat we're having, we're
(14:16):
undergoing problems and it'scosting more.
Jason Crosby (14:19):
And there's Phil there again hitting on some
important points aroundcommunication.
Right, we've been harping oncost and disruption.
Let's not forget there'smulti-team collaboration that
must occur to keep thingsrunning smoothly.
So good points there made byPhil, and further elaboration on
those that weren't around toyour point, aaron, maybe you
(14:40):
weren't around during COVID.
Okay, so Phil gives some goodadvice there, as well as to the
newbies, if you will, on whatyou can learn from an event that
you maybe didn't participatethrough right.
So, and lastly, you know we hita lot on what I think Phil did
a tremendous job on is sort ofrecommendations.
What do you do today?
(15:01):
Like, literally, it is, youknow, tuesday, it's Wednesday.
What can I do today, eventhough this is a fluid thing?
What can I do to best preparemyself, not only because of
terrorists, but just what Ishould do as general best
practices?
Anyhow, let's take a listenhere at Phil and some key items
he suggests.
(15:21):
Give me something that I cantake away and do something soon.
Phil Church (15:26):
Yeah, again, look at your contracts and understand
them.
If you don't understand whatit's saying, get in touch with
whoever wrote that contract onthe vendor side.
Talk to them about it, makesure you understand what your
options are, how you'reprotected or not.
Order what you can, what youcan afford and what you can
(15:49):
store and what's allowed for youby the vendor to order.
And then I think real key pointis assessing this Where's the
source of your supplies orequipment, parts, whatever we're
talking about?
Where are they coming from?
Need to know a little bit moreabout that, or a lot more about
(16:12):
that if we've never done itright.
Understand where they'remanufactured at.
Just because you buy Cardinalsurgical packs doesn't mean
they're not, and they're comingout of a distribution center in
Jacksonville or wherever doesnot mean that they're being
manufactured here in the US.
(16:32):
You know there's a big plant inMexico.
It's going to take peoplestarted building plants now to
bring manufacturing back intothe US.
It's going to take years forthat to get implemented.
In the meantime, we'reexpecting what we're talking
(16:54):
about today increases in costs.
So you really need tounderstand where your stuff's
coming from and what's apt to behit by this and to what degree.
Jason Crosby (17:06):
So, Aaron, some good points.
My takeaway.
I'll say if there was one thingI took away from Phil in what
to do it's contracts, contracts,contracts right, like pull your
we talk about with managed carepull your GPO contracts.
Talk to your vendors hementioned even bring them in the
office, have a conversationwith them and talk through the
(17:27):
terms and what they're doingwith them.
And talk through the terms andwhat they're doing.
I found that pretty insightful.
I don't know about you, but inmy eyes I kept thinking let me
look at the contracts.
Well, Phil went a little bitfurther and said you know what?
Ask the vendor on that contract.
What are they doing?
What are they seeing?
Some good points he made there.
Aaron Henry (17:52):
Yeah, yeah.
Even being able to get someadditional insights into the
supply chain process is, I think, going to be very valuable.
But I think Phil emphasizedwell about those relationships.
That is more than justcontracts having a relationship
with your vendor or vendors, andthey can better understand and
anticipate your needs too.
So I think it's more than justcontracts, it's more than just
procurement, it is aboutrelationships.
(18:12):
At the end of the day and Iwant to say this Jason, tariffs
could go away tomorrow.
You know it wouldn't surprise meif we woke up and, oh, tariffs
are off, but there could beanother pandemic, there could be
another major natural disasterthat disrupts those supply chain
(18:32):
.
It doesn't matter what it is.
It is more important than everbefore for organizations,
particularly those in healthcare, to plan for these sort of
contingencies.
Jason Crosby (18:44):
Yeah, good point, good point.
You don't need an event with aname on it, like tariffs, to get
you best prepared for any eventregardless of what that may be.
Yeah, that's a good point andyou know, again, we won't
necessarily replay all thewebinar here.
There's a good 40-minutediscussion or so by Phil, but he
also hits on you know whatordering to do's now and some
(19:05):
terminology you should be awareof, like allocations.
If you're not in the materialsworld but you need to review
contracts, he gives out somethings to look at in the
contract.
So take a listen.
It's worth the 40 minutes.
It was a really goodconversation by Phil.
As he mentioned too, we're goingto try and do this again, as
there are updates, who knowswhen?
30 days, 90 days, somethinglike that but we may do another
(19:26):
one and if so, you'll be luckyenough to hear Aaron and I once
again, as we try to do adifferent format this season of
recapping events.
So again, aaron, it was a greatwebinar yesterday.
I want to say if you have anyquestions on this it's a big
topic, it's an important topicReach out to us.
We'll get you in touch withsomeone that can help answer
(19:48):
some questions.
We'll get you in touch withsomeone that can help answer
some questions, but in themeantime, our next recording for
our next event be on thelookout for it.
I think it's a little bit moreon the analytics side with a
conference presentation thatsome of our folks are doing, so
we'll recap that excellent workas well.
Aaron Henry (20:07):
That should be fun.
I'm looking forward to it.
Well, jason, appreciate thetime today and for the listeners
.
We will see you all next time.
And that's it for this episodeof Beyond the Stethoscope Vital
Conversations with SHP.
I'm Aaron Henry.
Jason Crosby (20:28):
I'm Jason Crosby, still talking to the mic as if
it was my full-time job.
Aaron Henry (20:32):
This podcast is a production of Strategic
Healthcare Partners, wherehealthcare meets data and still
somehow ends up in a podcast.
Jason Crosby (20:40):
Our executive, producers are Mike Scribner and
John Crew, who keep this trainon the tracks even when Aaron
and I try to derail it.
Aaron Henry (20:47):
We're doing our best.
Speaking of doing our best, oureditor, Nyla Wiebe, deserves an
award for turning our verbalchaos into something somewhat
coherent.
Jason Crosby (20:57):
Kudos for sure.
Let's also give a shout out toour social media.
It's handled by Jeremy Millerat Boost by Design, so if you
liked it, give him some applause.
If not, let's blame Aaron.
Aaron Henry (21:07):
It wouldn't be the first time Our transcription is
by a robot, but it's beenlightly massaged into readable
English by your two hosts, bothof whom are supposedly human
Debatable.
Jason Crosby (21:18):
If you really like the transcription, dig through
our podcast archive or check outour services at shplccom slash
podcast.
Go ahead, click around, havesome fun while you're at it,
we'll wait for you and also comefind us on social media.
Aaron Henry (21:31):
We're on Facebook and LinkedIn.
You can send us a question,leave a comment, troll us a
little bit or, more importantly,tell Jason that his dad jokes
need some work.
That one stings a little bit.
Jason Crosby (21:44):
Thanks for hanging with us everybody.
We'll be back soon in yourfeeds, assuming no one pulls the
plug, or trips over, for thatmatter.
Aaron Henry (21:51):
But until then, stay curious, stay healthy and
keep asking the vital questions.
Maybe stay hydrated.
Jason Crosby (21:59):
Just a thought Bye y'all.
You know I'm pretty frustrated.
I've been looking for my Gonein 60 Seconds DVD.
It was here just a minute ago.
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