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May 2025 • Vol.16 • No.3

How GPOs strive to help providers navigate through tariff turbulence Churning through choppy trade policy waves the new normal for now

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CONTENTS | MAY 2025

2 Supply Chain Resiliency as a Strategic Imperative To become more resilient, our industry must effectuate a paradigm shift. To activate this shift it requires a new mindset.

6 Mental Health within Post-Acute Care Settings Post-acute care patients’ physical and mental wellness are critical to their healing journey.

14 How GPOs strive to help providers navigate through tariff turbulence Churning through choppy trade policy waves the new normal for now.

33 Designing a DOGE for healthcare provider organizations But achieving it in a positive, productive and respectful way.

The Journal of Healthcare Contracting is published bi-monthly by Share Moving Media 350 Town Center Ave, Ste. 201 Suwanee, GA 30024 Phone: 770/263-5262 FAX: 770/236-8023 e-mail: info@jhconline.com www.jhconline.com

PUBLISHER John Pritchard

EDITOR Graham Garrison

ART DIRECTOR Brent Cashman

DIRECTOR OF BUSINESS DEVELOPMENT Anna McCormick

SENIOR EDITOR Daniel Beaird

CIRCULATION Laura Gantert

jpritchard@sharemovingmedia.com

amccormick@sharemovingmedia.com

ggarrison@sharemovingmedia.com

dbeaird@sharemovingmedia.com

bcashman@sharemovingmedia.com

lgantert@sharemovingmedia.com

The Journal of Healthcare Contracting (ISSN 1548-4165) is published bi-monthly by Share Moving Media, 350 Town Center Ave, Ste 201, Suwanee, GA 30024. Copyright 2025 by Share Moving Media All rights reserved. Please note: The acceptance of advertising or products mentioned by contributing authors does not constitute endorsement by the publisher. Publisher cannot accept responsibility for the correctness of an opinion expressed by contributing authors.

The Journal of Healthcare Contracting | May 2025



TRENDS

Supply Chain Resiliency as a Strategic Imperative To become more resilient, our industry must effectuate a paradigm shift. To activate this shift it requires a new mindset. BY PETE MERCER

Supply chain resiliency feels like one of those no-brainer topics – you’d be hard pressed to find someone who didn’t believe in the importance and value of building a resilient supply chain. However, making supply chain resiliency a reality for your organization is a totally different story. At a recent Medical Device Supply Chain Council event, Jesse Schafer, executive director of HIRC, discussed the founding of HIRC, why resiliency matters, and how healthcare organizations can make supply chain resiliency a strategic priority. In his opening remarks, Schafer said, “We’re talking about resiliency and efficiency and I’m going to challenge you that we are not doing both correctly. We are making unfair trade-offs between the two.”

May 2025 | The Journal of Healthcare Contracting

collaboration. Members align

Resiliency is a supply chain’s ability to

operationally to reinforce common

better predict, prevent, and recover from

industry norms that drive proactive

supply chain disruptions. Efficiency favors

risk management.

fewer relationships, lower inventory, and

Schafer and his team began by finding other healthcare leaders with

low cost markets. “The industry’s old mindset is to

the same vision. He said, “The accepted

source the cheapest suitable products,

practice by health systems during a

and focus on upfront cost measures,”

supply disruption had been to be the

Schafer said. “The new mindset must be

first to grab the last of a pallet of

to source from resilient partners, along-

product. Engaging a broad segment

side process efficiencies, with a focus on

of healthcare was critical to enabling a

total cost.”

paradigm shift from survival to all-boats-rise.”

Between the bookends of Resiliency and Efficiency is a balance. The balance

Schafer said that HIRC faced a two-

is mitigating risk at a reasonable cost.

part challenge at the beginning: building

Hyper resiliency is cost prohibitive. Low

a stronger supply chain that feeds every-

resiliency opens up excess risks.

Resiliency is a powerful benchmark. It can mean a lot of different things – sourcing diversity, inventory buffers, critical item identification, and advanced analytics. The formation of HIRC

one, and inviting suppliers to be part of

The Healthcare Industry Resilience Col-

the solution.

Supply chain resiliency is a strategic imperative

“Providers have spent years being

A resilient supply chain helps prevent the

ic and Corewell Health in 2019. HIRC

frustrated with suppliers over supply

bad … including supply disruptions, re-

works as a group of over 90 healthcare

disruptions while simultaneously leaving

scheduled surgeries, clinical retraining on

organizations to increase resiliency and

resiliency out of the sourcing criteria,”

substitute products, off-contract spend,

transparency in healthcare supply chains

Schafer said. “We needed a new mind-

and expedite shipping costs.

through collaboration, standards, and

set – to come to the realization that

best practices.

laborative was co-founded by Mayo Clin-

A resilient supply chain helps promote

resiliency must be measured, selected,

the good … including strong partner-

Schafer said, “Our vision is to elimi-

and reinforced. Starting with how can

ships, optionality and buffers, contingency

nate the impact of supply disruption on

we solve this together turned stones

planning, and control towers.

patient care.”

into bridges.”

“We can’t think of resiliency only as insurance. We need to embrace it as a strategic

The foundations of HIRC were

imperative for patient care,” Schafer said.

built on the need, and absence of, an for supply chain resiliency for the

Smart supply chains are resilient & efficient

healthcare industry. Mayo and

Resiliency emphasizes reliability. Effi-

The role of HIRC

Corewell launched this consortium

ciency emphasizes affordability. Both are

The mission of HIRC is focused on

as a way to foster industry-wide

essential to patient care.

patient care: improving resiliency and

organization to define the standards

The Journal of Healthcare Contracting | May 2025



TRENDS

transparency in the healthcare supply

It’s imperative that the resiliency

chain. HIRC works towards this mission

capabilities of our suppliers are

through a series of established standards

transparent and measurable. Schafer

and all-of-industry workgroups. Schafer

described the badge as a robust external

discussed some of the HIRC standards

assessment across 7 key domains and

and designations:

300 diagnostics. The scoring rubric

` Mapping – Through Mapping,

was built by over 350 healthcare

suppliers are invited to share a

supply chain leaders. The badging

snapshot of their operational footprint

process evaluates core competencies

with providers. Schafer said, “We need

including: demand planning, inventory

to understand the global exposure. If

management, logistics, supply chain

we don’t know that exposure, we’re

visibility, operational health, risk

going to get caught off guard.”

management, contingency planning and supplier management.

` BCM – The Business Continuity Maturity Risk Assessment is

“What is HIRC’s role? The HIRC man-

a short self-assessment which

tra is ‘stronger together’ and involves three

highlights whether a supplier has

main roles: convener, enabler, and ampli-

risk fundamentals in place. “By

fier,” Schafer said. “The primary output

normalizing sharing of a risk

improving decision-making and

is increased alignment between providers,

assessment, we enable a common

response during critical events. Schafer

suppliers and industry partners that drives

understanding and commitment to risk

said, “Transparency needs to become a

resiliency. Our partners, further enable and

improvement,” he said.

standard practice in the industry. HIRC

amplify through standards adoption.”

is helping to drive transparency as a

` Transparency Badge – The

tablestakes issue.”

Working towards resiliency

Transparency Badge is achieved by sharing geographic and risk self-

` Resiliency Badge – The Resiliency

Resiliency is a powerful benchmark. It can

assessment data with customers.

Badge sets the industry standard

mean a lot of different things – sourcing

Transparency is the foundation

for resiliency measurement and

diversity, inventory buffers, critical item

for effective risk management and

enables commercial differentiation.

identification, and advanced analytics. For HIRC, resiliency is about prioritizing authentic collaboration and elevating measurement, selection, and reinforcement of

Resiliency strategies If supply chain resiliency is an imperative, what are leading health systems doing to build resiliency? ` Select resilient trading partners ` Nearshoring ` Appropriate buffers and capacity ` Cybersecurity ` Increased end-to-end visibility ` Improved communication ` Increased input diversity ` Leverage technology and ` Flexible substitutions AI efficiencies

resiliency in key trading relationships. When organizations embrace these priorities, they are taking a key step towards resiliency. “There has to be a culture of partnership, collaboration, and transparency where we say ‘We are in this room to solve big problems; we are in this room to create shared value. What’s important is that collaboration unlocks the power of ‘stronger together’,” Schafer said.

May 2025 | The Journal of Healthcare Contracting



POST-ACUTE CARE

Mental Health within Post-Acute Care Settings Post-acute care patients’ physical and mental wellness are critical to their healing journey. BY JENNA HUGHES

As a result of the healthcare industry-wide shift toward value-based care, post-acute care providers such as skilled nursing facilities, long-term acute care hospitals (LTACHs), and home health agencies (HHAs) are increasingly emphasizing care for both a patient’s physical health and emotional wellbeing needs throughout the duration of a stay in a post-acute care facility. One such post-acute provider,

conditions, including respiratory failure,

from the ICUs of traditional, short-term

Louisville, Kentucky-based ScionHealth

sepsis, stroke, congestive heart failure, or a

acute care hospitals,” said Loren Perona,

operates approximately 70 long-term

combination of many acute conditions.

Vice President of Clinical Operations and

acute care hospitals (LTACHs) across the

“ScionHealth’s specialty hospitals

country, under the brands Kindred Hospi-

provide specialized care and rehabilitation

tals, Cornerstone Specialty Hospitals and

for medically complex patients who are

complicated by existing health problems,

Solara Specialty Hospitals. Patients come

recovering from serious injury or illness,

including COPD or diabetes, with many

to ScionHealth’s facilities with serious

with many patients coming to us directly

requiring treatments such as mechanical

Care Coordination at ScionHealth. Patients’ conditions in LTACHs may be

May 2025 | The Journal of Healthcare Contracting

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POST-ACUTE CARE

ventilation, dialysis, IV therapy, and more.

patient recovery rates through personalized

for patients who require a longer stay in

Lengths of stay at an LTACH may vary

care plans, reduced hospital readmissions,

a hospital.

depending on the patient’s care plan needs,

enhanced patient satisfaction, and a contri-

but the average length of stay is 25 days,

bution to overall greater health equity.

“We also take patients whom our skilled nursing facility partners cannot

compared with an average of a year or more

accommodate yet,” said Perona. “Patients

in settings such as skilled nursing facilities.

who come to our LTACHs may have

Growing mental health challenges

more advanced pharmaceutical needs, or

hospitals are treated by a physician-led,

Mental health care is a vital aspect of

they may require specialized respiratory

interdisciplinary care team that includes

post-acute care, especially for patients go-

therapy or additional nursing hours per

rehabilitation therapists, pharmacists, di-

ing through long stays at their facilities.

patient day.”

“All patients as ScionHealth specialty

etitians, nurses, respiratory therapists, case

For medically complex patients admit-

managers and more,” said Perona. “All the

ted to ScionHealth specialty hospitals,

key players meet with the patient and their

a timely transfer from an intensive care

family at least once a week to make sure

unit (ICU) to the LTACH may reduce a

Mental health in long-term residential care

that we’re supporting the plan of care that

patient’s risk of developing post-intensive

Long-term care residents in skilled nurs-

the physician has outlined for them.”

care syndrome, which is a collection of

ing facilities often stay in facilities longer and have more complex and evolving

Residents of skilled nursing homes without cognitive impairment comprise only a minority of facility populations and are more likely than in traditional hospitals to experience stressful events such as the loss of spouse, relatives and friends and reduced quality of life because of illness and injury.

emotional needs than those in other postacute care facilities. Depression, anxiety, and social isolation are common among nursing facility residents, according to the National Library of Medicine’s “Suffering and Mental Health Among Older People Living in Nursing Homes” report. Residents of skilled nursing homes

For patients with multiple condi-

physical and cognitive symptoms associ-

without cognitive impairment comprise

tions and many physical needs, con-

ated with a stay in an ICU, and improve

only a minority of facility populations and

sideration for patients’ mental health

patients’ whole-health outcomes.

are more likely than in traditional hospi-

and emotional well-being is a critical component of healing.

“There are two types of benefits to

tals to experience stressful events such as

a patient being admitted to a long-term

the loss of spouse, relatives and friends

Mental wellness initiatives can be

acute care hospital versus remaining in

and reduced quality of life because of

directly integrated into patients’ care

the hospital,” said Perona. “For patients,

illness and injury. Due to this, older

plans. According to The American Case

we can take them directly from short-

patients in long-term care may experience

Management Association (ACMA),

term acute care ICUs and continue to

increased rates of suffering that impact

integrating behavioral health tools such

provide the specialized acute care they

both their mental and physical health.

as psychosocial assessments and social

need relating to ventilator management,

The development of mental illness

determinants of health (SDOH) into

complex wound care, or cardiac care. Our

has become more common among older

post-acute care settings helps to create

LTACHs are licensed as specialty acute

adults living in long-term care (LTC)

a holistic care approach that supports

care hospitals.”

facilities. According to the National Library

overall patient recovery and reflects the changing healthcare environment. A focus on both emotional and physical well-being serves to improve post-acute care

Whereas short-term acute care

of Medicine, data indicates that the propor-

hospitals diagnose and stabilize patients,

tion of new nursing home admissions

the function of long-term acute care

with a mental illness other than dementia,

hospitals is to sustain and complete care

including major depression and serious

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POST-ACUTE CARE

mental illness, has overtaken dementia

exposure to risk factors for chronic condi-

diagnosis, about their disease, so that

alone in its prevalence.

tions. Long-term physical conditions and

they can better accommodate for them-

The National Library of Medicine, in a

mental health problems often co-occur,

selves as they get well.”

2010 study, outlined a need greater atten-

act synergistically, and can have negative

tion to LTC residents’ suffering related

effects on a patient’s level of care needed,

to anxiety, depression, and psychosocial

which may contribute to longer hospital

In control of healthcare

stressors. Caring for patient’s physical and

stays and increased costs and mortality,

To emphasize patient involvement in care,

mental health within skilled nursing facili-

according to the report. A multidisciplinary

interdisciplinary care conferences are very

ties provides ongoing wellbeing interven-

approach to care for mental illness is nec-

patient-centered at ScionHealth specialty

tion opportunities through counseling

essary to improve the physical, mental and

hospitals, focusing on talking with the

and therapy, support groups, cognitive

social outcomes of patients in care settings.

patient and their loved ones. Perona says

stimulation and social engagement, and

“the best caregivers are the ones who really

trained staff monitoring in LTC settings.

incorporate the patient into conversations and really understand what the patient needs in the moment and in the long-term.”

Mental health in a post-acute environment

emphasizes patient teaching,” she said. “If

The COVID-19 pandemic shed light for

patients understand what they’re supposed

many clinicians in the post-acute care in-

to be going through or what they might go

dustry on the demands of serious illness

through, they have a little bit more control

on patients and staff. For many health

in anticipating how things may play out,

systems, pandemic challenges led to a

and then they can expend their energy

distinct awareness of infection control

working toward a recovery goal. When we

and its impact on patient wellbeing.

set goals for patients or they set goals for

“Through it all, our staff always

“The pandemic demonstrated how

themselves, it helps their mental health a

much of a strain that complex diseases

“Thankfully, mental healthcare does

can have on patients and families, and it

not have as much of a stigma as used to,

reinforced our belief in the importance of

so conversations about it are now much

“You can imagine how good a patient

educating the patient and family about their

more open,” said Perona. “Patients want

feels when they meet a goal (being liber-

disease and care plan,” said Perona. “Our

to deal with their mental health and their

ated from the ventilator, walking with a

hospitals offer a patient-family conference at

needs and their emotions, and they’re

walker, swallowing independently, etc.)

the very beginning of their stay. We also give

often much more articulate and forth-

that a patient may have wondered if they

a bedside shift report every shift, and fami-

coming about what they need. The advent

were ever going to achieve,” said Perona.

lies are more than welcome to attend. We

of telehealth helps us have much more

Perona said ScionHealth caregivers

talk with the patient about what happened

access to psychologists and psychiatrists

do whatever they can to help patients

during the shift, and what’s going to happen

if needed for a patient. If a visit can’t take

feel well-informed and in control of

or needs to happen during the next shift.”

place in person, we can often arrange for

their recovery.

The prevalence of physical multi-

telehealth visits, which are very effective.”

morbidity (the presence of two or more

“Our primary goal for our patients

lot. Then, when they achieve a goal, we celebrate that with them.”

“There is a better chance of patients becoming well if they are able

chronic diseases, including mental health

is to discharge to home, if possible,

to be in control of their destiny,” said

disorders), is expected to rise, according

and we want them to be able to sustain

Perona. “Being in control of their care

to a 2023 National Library of Medicine report.

wellness after they leave our facility,”

journey helps patient’s mental acuity

This rise is due to both a growing aging

said Perona. “We are constantly teach-

and mental health to work through the

ing them and their families about their

healing journey.”

population and increased environmental

May 2025 | The Journal of Healthcare Contracting

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How GPOs strive to help providers navigate through tariff turbulence Churning through choppy trade policy waves the new normal for now BY R. DANA BARLOW

Editor’s Note: For additional and ongoing reports on tariff activities, follow the Dail-eNews.

If there’s any optimism for healthcare providers amid the tension, turmoil and uncertainty surrounding the back-and-forth tariff issuances between nations that threatens to disrupt the global, national, regional and local supply chains, might the nation’s group purchasing organizations (GPOs) be in a prime position to channel stability? Realistically, yes and no. GPOs, by and large, observe, monitor and sift through economic activities, analyze their effects and impact on provider and supplier operations, and develop and share strategies and tactics for member organizations to work through, if not prevent, backorders, stockouts and other crises and disruptions. “As the sourcing and contracting partners to hospitals and healthcare providers, traditional healthcare group purchasing organizations have a unique line of sight over the entire healthcare supply chain and are strategically positioned to help members make informed sourcing decisions amid economic tension,” said Angie Boliver, president and CEO, Healthcare Supply Chain Association (HSCA), the Washington-based trade association representing GPOs. “GPOs work closely with their manufacturing and distribution partners and leverage this perspective to track a wide range of economic and supply chain analytics on a global scale, offering members an anticipatory view of possible supply chain issues and recommended strategies to mitigate any potential impacts. Foresight also enables GPOs to preemptively identify alternative manufacturers to mitigate the impact of a disruption.”

TARIFF TURBULENCE

Boliver is a group purchasing industry

into a strict one-source option, including

expert and public affairs and public policy

wholesaler constraints and requirements,

expert with more than two decades of expe-

will not benefit providers in a volatile

rience that included serving as a senior legal

market of price increases and product

counsel and executive in strategic commu-

availability concerns. The GPO is vital

nications and public relations for one of the

in foreseeing these trends and providing

largest GPOs at the time by membership

resources for members to adjust to a ‘new

and annual purchasing volume (APV).

normal’ in terms of costs, product availability, and switch to more diverse supply chain options.”

Yet another new normal? Ash Chawla, RPh, chairman and CEO,

Ash Chawla

PDM Healthcare, sees the tariff situation

When it comes to the political risk environment and resulting tariffs, the GPO has an even greater role as an advocate

as “continuously evolving” so today’s

for its members, according to Chawla.

current climate may be very different a

“The role of the group purchasing

“The GPO should help members

few weeks or months down the road, but

organization remains as always to guide its

strategize for political risk, with a holistic

he still believes that the tariff turbulence

members through dynamic and unprec-

view on the entire industry, not only

should not come as a surprise to manu-

edented industry environments,” Chawla

a certain sector or product time,” he

facturers, customers or leaders in any

indicated. “We have seen this guiding role

noted. “The GPO can assist members

industry, healthcare or otherwise.

of the GPO most recently during the

by identifying policy trends, monitoring

“President Trump openly declared

COVID pandemic in terms of procure-

changing regulations and engaging with

throughout his 2024 campaign that he

ment of PPE, telehealth support and fi-

elected officials on behalf of members.”

would use tariffs to manage the economy

nancial management. The same principles

and bring business and manufacturers

apply to the tariff turbulence.”

What to do … now

back to the U.S.A.,” Chawla told The Jour-

Chawla translates that role as offering

nal of Healthcare Contracting. “However, it is

alternatives and options to keep the sup-

John Strong, a noted healthcare sup-

a political risk and creates a very uncertain

ply chain pipeline fluid.

ply chain consultant who once led two

and volatile business environment. The

“The most important function of a

national GPOs as the chief executive (the

timing of the tariff enactments, which

GPO is to offer its members a robust

original Premier Health Alliance and later

countries and products will be affected,

vendor contract portfolio – this includes

Consorta, which is now part of Health-

whether they are reciprocal, and how long

not only negotiating favorable pricing

Trust Performance Group) and serves as

they will be in place remains unknown.

but also ensuring that there are multiple

co-founder, Access Strategy Partners Inc.,

This uncertainty grows as policies are

sources available for purchase, with flex-

swiftly set up a five-point strategic plan

changed or stopped with little notice,

ibility in purchasing and ease of vendor

with tactical measures that could be car-

either by the Trump administration or by

change for members if certain vendors

ried out right away.

court decisions.”

suddenly become unable to supply due

Westlake, OH-based PDM currently

to tariffs or other market conditions,”

“Although I don’t run a GPO any longer,

is one of the five largest “parent” GPOs

he continued. “This may include a move

here’s what I would have my staff doing

based on APV.

to more direct purchasing by providers

right now,” Strong asserted.

Chawla feels that because many

off their wholesaler and prime vendor

businesses and healthcare facilities seem

contract constraints and the rise of U.S.-

and connections to the extent

unprepared for the political risk, then

based vendors that are nimble and able

possible to determine what

GPOs should serve as a valuable resource

to quickly supply products. The concept

news we’re hearing is more

during this uncertainty.

of tying providers, especially hospitals,

of a negotiating position

Use my Washington office

May 2025 | The Journal of Healthcare Contracting

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TARIFF TURBULENCE

versus something that is

proactively doing to limit the

Another resource Vizient provides

likely to happen. “We’re seeing

impact of tariffs for them, on a

to its members is its biannual “Spend

a lot of positioning right now,

regular basis. “Find out if they are

Management Outlook,” which provides

and understanding what is likely

willing to accept different products

spend and price projection by category

to occur is obviously helpful.

that may not be subject to tariffs.”

across healthcare supply. Vizient expand-

Healthcare manufacturing and pharma trade associations are

ed the resource to encompass pharmacy, Vizient, the nation’s largest par-

medical/surgical, laboratory, physician

seeking exemptions for tariffs. This

ent GPO based on APV, maintains a

preference, capital and indirect spend-

bears watching.”

comprehensive program to help members

ing, and forecasts the anticipated rate

Work with contracted

manage through crises and disruptions,

of growth in expense for most products

distributors to identify

according to Dan Kistner, senior vice

and services most utilized by its clients,

private label products that

president and general manager of catego-

according to Kistner.

could be affected by tariffs

ry management and strategic programs.

and inventory them; discuss

“Continuous surveillance of potential

strategies for eliminating or

supply disruptions – due to manufactur-

published some ‘no-regret’ actions that

mitigating strategies to cover

ing issues, business decisions, weather

commonly used disposable

and other natural disasters, regulatory

providers can take now, such as: ` Reviewing hospital and budget

medical products and

enforcement actions or policy changes –

most likely to be impacted.

is an essential part of the Vizient supply

“Understanding the country of

assurance program and greater spend

allows for transparent communication

origin for these products is key.

management strategy,” Kistner noted.

and guidance for expense management

Not all countries may be impacted

“An example is the Novaplus Enhanced

and engagement of physician and

equally by certain tariffs. Don’t

Supply Reserve program. Since its incep-

clinical stakeholders

assume anything.”

tion, the program has provided over 4

Work with contracted

million doses of essential drugs to Vizient

manufacturers the same way.

and non-Vizient provider clients mean-

“Find out what products could be

ing there were over 4 million patient care

subject to tariffs, inventory them,

instances that were not disrupted due to

“Lastly, we are also strong advocates

and seek alternatives or mitigation

a supply interruption. While the corner-

for increased visibility in the supply chain

strategies for tariffs.”

stone of the program has been pharmacy,

– from raw materials and active pharma-

Don’t accept weak excuses

this program is now expanded to other

ceutical ingredients (API) to manufac-

for price increases “because

product categories like contrast media,

turing and assembling,” he continued.

of tariffs.” “Ask for proof and

respiratory and anesthesia items.”

“We work with numerous stakeholders

“Specific to tariffs, we also recently

assumptions to support proactive planning

` Creating leadership alignment that

` Ensuring resiliency measures are in place ` Identifying savings initiatives that could offset potential price increases

negotiate the amount of any

During times of supply disruption

including suppliers, providers, research

increases. The Wall Street Journal

or market uncertainty, Vizient provides

organizations and others to better un-

reported on Monday, March 17,

its clients with continuously updated

derstand all of these links in the supply

2025, that major U.S. retailers are

market briefs, answers questions from

chain to minimize the negative impact any

already negotiating to mitigate the

the field with FAQs and hosts webinars

disruption might have on patient care.”

impact of tariffs. GPOs, health

for on-the-ground insights from provid-

systems and hospitals with their own

ers, according to Kistner. “This was our

contracts should all be doing the

approach with the 2024 Hurricane Helene

‘Canary in the coal mine’

same thing already.”

impact of the IV solutions market and

Premier, the nation’s second-largest

Communicate with members

what we are continuing in response to the

parent GPO based on APV, recognizes

and let them know what you are

current focus on tariffs,” he added.

that things always happen and has

May 2025 | The Journal of Healthcare Contracting

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TARIFF TURBULENCE

spent nearly two decades developing

“It’s at a normal level for the last year,

and operating its own comprehensive

which is stability we haven’t seen in quite

pandemic as motivation for accelerating

program, according to Andy Brailo,

some time,” he indicated. Premier also

these programs.

Chief Commercial Officer.

follows the overall Consumer Price Index

“To some degree, I think the pan-

(CPI), which has been down. But they also

demic was a dry run for what we’re facing

is a muscle that we’ve honed over the

extend beyond those two indices. For exam-

right now,” he noted, so Premier execu-

last eight, 10, 12, 15 years,” Brailo told

ple, they look at the transportation market

tives have submitted comments and feed-

JHC. “It’s all about being proactive versus

and tracking the shift away from just-in-time

back to the government trade organiza-

reactive. We’ve got a playbook that spans

distribution to what they paraphrase as

tion on how to balance policy with tariffs

manufacturing, sourcing, advocacy and in-

the higher holding “just-in-case” method

to offset the “whipsawing” changes.

cludes data and technology. This is really

“to backstop supplies and take advantage

Basically, Premier requests that

important because on the tech side of it,

of the current market conditions. Think

the government clearly define which

when you weave this all together it really

about squirrels and chestnuts,” he added.

healthcare products are subject to tariffs,

does help us and help our members pre-

Premier also has invested in domes-

implement those tariffs gradually to allow

dict these disruptions – and more impor-

tic manufacturing, partnering with such

manufacturers and providers time to ad-

tantly, keep the care continuous and avoid

companies as DeRoyal Industries, Exela

just – particularly those that cannot pivot

those unexpected hits. That playbook

Pharma Sciences and Prestige Ameritech.

quickly. “We also think it’s important that

allows us to be able to be nimble and get

“These are giving us domestic resiliency,”

the FDA consider their approval timelines

answers out to our members quickly.”

Brailo noted, “In fact, it’s not only creating

amid shifting supply sources,” Brailo as-

“I think from our vantage point, this

Brailo points to the global COVID-19

serted, “and we also must increase supply

“ To some degree, I think the pandemic was a dry run for what we’re facing right now.”

chain transparency to be able to track and trace products and raw materials to their country of origin and make that information available through public reporting.” While Brailo recognizes and acknowl-

Brailo indicates that Premier mem-

domestic resiliency and security, but it’s

edges that such information may be part

bers are helping the company shape this

also creating opportunity for workers

of a company’s competitive advantage,

strategy. “We’re working hand-in-glove

in those marketplaces.” Brailo adds that

but production remains quite complex

with them through our account manage-

Premier isn’t alone on the domestic front,

today where materials may be sourced in

ment team and through our committees,

noticing that their supplier partners are

one area of the world, refined in another,

so we’re getting near real-time feedback

pivoting toward domestic manufacturing

produced in another part and then fin-

to shape our strategies,” he said. “In

as well, which they encourage.

ished somewhere else before distribution.

fact, just last week we had our strategic

Sourcing with the right contractual

“From the raw materials to the finished

advisory committee together, and they

language, terms and conditions and

fill to the final goods side of this creates

were giving us their insights in real time,

proper advocacy contributes, too, ac-

a complex in which you start thinking

such as what are they hearing from the

cording to Brailo. Premier provides the

about how and where do all these tariffs

suppliers? What are they seeing in the

FDA with a “watch list” that highlights

actually hit companies,” he added.

marketplace? At the end of the day, we’re

certain products and product categories

Through teams of sourcing analysts

also using industry data, and our most

for review. Premier’s business continu-

and field support agents, Premier works

comprehensive database coupled with

ity team also has developed clinical and

with members to share feedback and real-

public data.”

conservation guides that came in handy

time information on activities and trends

One of the metrics that Premier uses

during the IV solution shortages because

in a way that Brailo describes as a “canary

is the global supply chain pressure index,

they helped members find alternative

in the coal mine” and an “early morning

according to Brailo.

products and sources.

Doppler radar.”

May 2025 | The Journal of Healthcare Contracting

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TARIFF TURBULENCE

Brace for tariff turbulence Amid tariff-driven trade volleys, is GPO contract compliance a two-way street? By R. Dana Barlow As the tariff-driven trade war emanating from Washington continues, American consumers fully anticipate paying higher prices at automobile dealerships, dining establishments, gas pumps, grocery stores and other retail outlets, but healthcare supply chain leaders ponder whether they are protected from price hikes for now – or at least until current product and service contracts expire. For some, the prospect remains a slippery slope. If group purchasing organizations (GPOs) negotiate product and service contracts with price locks or built-in annual increases, how will the tariff volleys between nations affect contract pricing during the contract duration? Might healthcare providers be able to ride out the waves and likely expect price adjustments when it’s time for renewal or do all the contracts include some kind of leniency language that allows companies to adjust pricing to current market conditions, regardless of volatility? Fundamental questions linger. John Strong, a renowned healthcare supply chain consultant who once led two national GPOs as the chief executive and currently serves as co-founder, Access Strategy Partners Inc., acknowledges ongoing challenges that at press time continued to simmer. “Obviously, fixed price contracts for the term of an agreement are most desirable,” Strong assured. “Inflation is coming down, and there is little excuse for automatic price increases. It is important to remember that force majeure clauses in contracts may not protect you from tariffs. Tariffs are an ‘act of man’ versus an ‘act of God,’ such as a storm destroying a manufacturing plant.” Strong tells The Journal of Healthcare Contracting that provider and supplier executives should remember and search for five important pieces of information. They are: ` Identify those products that really are or will be subject to tariffs ` Confirm the actual amounts of the tariff ` Country of origin ` Work collaboratively with your suppliers to determine when price increases, if any, should come into effect, and try to “spread them out” so everyone along the supply

chain (including the manufacturer) is absorbing part of the tariffs Remember that products already landed in the U.S. can still be subject to tariffs. Tariffs are typically applied when imported goods enter U.S. customs territory. Even if the products are physically in the country, they must go through customs clearance, during which duties, taxes, and fees – including applicable tariffs – are assessed. “I don’t believe that anyone is ‘OK for now,’” Strong observed, “and everyone should be planning and working to understand the impact of tariffs on their contracts … something that they have likely not faced in the past. If this is a GPO contract, make it their responsibility to understand and negotiate what is happening. This should be a role assumed by national GPOs for their members. Now is the time to figure this out and communicate about what the impact could be. It is also a great time for GPOs to demonstrate their negotiating prowess. No one should accept price increases until tariffs impact the cost of goods.” ‘Firm for the term’ One high-ranking executive from Premier, the secondlargest national parent GPO in the nation based on annual purchasing volume (APV), expresses confidence in their framework for members that they are covered for now. “When we talk about how we’re protecting our members, our contracts are firm for the term,” assured Andy Brailo, Premier’s Chief Customer Officer. “What I mean by that is 95% of our contracts have price protection language that exists for part or for the full term of the agreement. These questions came up from our members. Our contract language template includes protections from taxes, tariffs and other surcharges. So, think about a couple of years ago when fuel prices went up. You can’t pass on a fuel surcharge as that’s in our contractual language. And with a tariff imposed on a manufacturer we all know this does not necessarily mean it’s an automatic pass-through pricing to our members. “The other thing our members have asked us about is would a tariff be considered a force majeure event for suppliers, and it’s not,” Brailo continued. “So that keeps our language pretty tight. But we’ve hardwired those protections into our

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TARIFF TURBULENCE

contracts to help the members budget because the uncertainty right now is what’s challenging a lot of our members and we’re trying to be a calming force of stability for them even in this period of uncertainty.” One executive at Vizient, the largest national parent GPO based on APV, emphasizes that their efforts extend beyond tariffs and economic volleying. “While there is an emphasis on tariffs at this moment, we work to monitor and respond to all disruptive factors,” said Dan Kistner, Vizient’s senior vice president and general manager of category management and strategic programs. “Our goal is always to contemplate, to the extent possible, factors that may impact the supply and/or price of products and services used by our customers. Over the last few years, we have had to work to address numerous issues including the pandemic, natural disasters, mergers and other factors to help providers navigate these challenges while managing cost and minimizing the impact on care.” Kistner adds that no matter the disruption or potential disruption, Vizient works to provide insights through educational outreach to its clients to help them prepare for changes. Still, Strong outlines critical points for GPOs to cover and for their provider members to seek input. “GPOs should be working with their contracted distribu-

tors and manufacturers first, and then proactively provide guidance to their providers and members,” he indicated. “Taking the time to understand tariff’s impact on large volume purchases is critical. “Some contracts may have provisions for inflation and market volatility,” Strong continued. “The question should be how much tariffs are impacting price and margin, and who is covering a part of the tariff cost. For example, will a manufacturer in China help offset the cost of goods sold (COGs) to a distributor for a private-label product they manufacturer? Likewise, can the distributor help offset the price to the customer by absorbing at least part of the cost of the tariff?” While Strong recognized the complexity of all of this economic turmoil he urges provider executives to keep an open mind. “You cannot prepare adequately until you understand how much tariffs will impact a contract — either directly with a manufacturer, or in the case of a distributor’s privatelabel goods. Word on the street is that some suppliers are already talking price increases because of tariffs. If that’s the case with your suppliers, they should stand down and wait until the tariffs are actually imposed, and providers and GPOs should understand if the goods are actually subject to tariffs — and why.”

Global, national economic shifts may take toll on sourcing options By R. Dana Barlow Ever since the global COVID-19 pandemic detonated the long-running healthcare supply chain strategy of larger, rigid, standardized, single- and dual-vendor contracting with just-in-time and/our stockless distribution, providers have scrambled to embrace demand forecasting and more flexible contract sourcing that enabled options from alternative vendors. This year’s tariff-induced trade war threatens to pummel those prospects, too, leaving so many questions unanswered by providers and suppliers alike, with group purchasing or-

ganizations (GPOs) caught in the middle as if they’re holding the net between the fiscal volleys. “It is too early to say with certainty how tariffs will impact sourcing, but HSCA expects that the supply chain will need time to adapt to the shifting economic landscape in the short-term future,” acknowledged Angie Boliver, president and CEO, Healthcare Supply Chain Association (HSCA), the national trade organization representing the GPO industry segment in healthcare. “Given the natural lag between these policy actions and the targeted outcomes, there will likely be

May 2025 | The Journal of Healthcare Contracting

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TARIFF TURBULENCE

gaps in supply as manufacturers work to ramp up domestic capacity. Meanwhile, our reliance on foreign sources to meet the needs of the healthcare ecosystem will remain in effect. GPOs will play a critical role in helping members navigate the supply chain during this transition period.” Dan Kistner, senior vice president and general manager of category management and strategic programs, concurs about the lingering and looming uncertainty. “Given the dynamic nature we presently are experiencing, it is difficult to estimate the totality of the impact,” Kistner observed. “While the discussion and focus on tariffs is warranted, they are not the only potential disruptors of the healthcare supply chain. In order to more effectively manage disruptions, we need greater transparency, including where items are sourced, manufactured and their quality throughout all of those processes.” Tracking, tracing and transparency about country of origin for all products – from raw materials to finished goods – remains paramount. “Historically, our efforts to improve the quality and reliability of the supply chain have been hampered by limited insight into the origination and/or manufacturing point,” Kistner insisted. “Industry stakeholders should have visibility to where all products are made and where all critical components are sourced. That is the only way to understand the impact of disruptions, whether they be tariffs or hurricanes, and to help ensure a more reliable supply chain.” Provider organizations should work with their GPOs to map their potential vulnerability points and factor in various duration scenarios, according to Andy Brailo, Chief Customer Officer, Premier. Brailo grants the industry a modicum of credit having emerged from the pandemic. “We think that those suppliers that learned lessons during the pandemic about having backstock and multiple manufacturers with some near-shore and on-shore will have implemented some different options and may show a little more flexibility they go forward,” he said. “They’re going to have to pivot. “But the challenge is that we don’t know how long something will last,” Brailo continued. “We’re pretty sure China is going to be challenged with tariffs for a while, but what about the other countries? Those companies that didn’t make this production shift had a dry run for this during the pandemic. We know about what happened, even with the challenges we faced with friendly trading partners. Healthcare has such a broad machine production capacity. We have to encourage that we’ve got the right time frame

for the hospitals and the suppliers to be able to make those pivots if they haven’t done so. But those that have will clearly be in a more advantageous position.” Brailo fully agrees that while the pandemic may be in the rear-view mirror, the industry cannot return to any type of pre-pandemic status quo nor rest on whatever emerged post-pandemic as a new status quo. “Smart organizations have figured that out,” he insisted. This involves identifying supplier locations, geographic concentrations and countries of origin as well as product utilization. Working with domestic manufacturers and sharing information as transparently as possible between trading partners remain two key tactics worth implementing. Through investment and collaboration, they are addressing global challenges domestically and directly, he adds. Providers and suppliers just need to keep a clear head and eyes open, according to John Strong, a veteran healthcare supply chain consultant with extensive experience leading two different GPOs and who currently serves as cofounder, Access Strategy Partners Inc. “While the volleys back and forth can be frightening, it is important to remember that many of them are negotiating tactics -- and no one may be affected at all by a threatened tariff,” he said. “Sourcing needs to continue, and contractors need to better understand where products are coming from, and if they will be impacted by a tariff. Other than steel and aluminum, there have not been any other tariffs imposed on products at this point. [Editor’s Note: At press time, the Trump administration’s broadly sweeping tariff declaration in early April had not yet occurred.] Beware of suppliers positioning for price increases before you know the extent of a tariff, and what countries are going to be impacted. It is important to remember that you are not paying a tariff until you actually purchase the goods. Alternative products may not be subject to a tariff and you can avoid the tariff by making strategic product changes. “You want proof that a tariff is going to impact a product, along with what country(ies) will be impacted by a tariff and the extent to which any products are impacted,” Strong continued. “Remember that everyone across the healthcare supply chain should be working in the customer’s interest to mitigate the impact of tariffs. This includes manufacturers, distributors and GPOs. If they are not or cannot assist you now, perhaps it is time to start shopping. Trade associations have already started lobbying the federal government for exemptions to tariffs for healthcare products.”

May 2025 | The Journal of Healthcare Contracting

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TARIFF TURBULENCE

Tariffs, trade war intentions send mixed signals to healthcare in quest for stability

One of the apparent motivations behind Washington’s use of tariffs around the world is to convince, encourage or force American companies to return their manufacturing operations to domestic facilities and to lure foreign companies to invest in domestic production of their products here. Historically, it’s no secret that many American companies moved their manufacturing to other countries for access to cheaper labor and production facilities as well as closer proximity to raw materials and other resources. Distribution and transportation costs may be higher in this scenario, but apparently not enough to negatively

Angie Boliver

affect their return on investment – revenue and net profit. Returning production to domestic channels may reduce distribution and transportation costs, but they likely would be offset by higher labor, production and quality regulation costs. This debate represents an economic and political conundrum. Short of reaching some semblance of balance, healthcare providers and suppliers with group purchasing organizations (GPOs) in the middle are being stretched between the pros and cons of consolidating domestically vs. diversifying globally still.

“HSCA supports efforts to strengthen domestic capacity in the supply chain and our member GPOs often work with manufacturers to promote domestic and near-shore manufacturing, which is vital to ensuring access to essential products. However, shortages due to manufacturing issues or natural disasters drive home the importance of having a multifaceted approach to sourcing. In 2024, for example, rainfall due to Hurricane Helene shut down IV fluid production at Baxter International’s North Cove facility

in North Carolina, leading to shortages of several critical parenteral products. The emergency prompted Baxter and the FDA to designate a number of temporary foreign importation sources to meet hospital demand. In emergency events like Hurricane Helene, geographical diversification and redundancy can help avoid shortages and save hospitals money in the long run.” Angie Boliver, president and CEO, Healthcare Supply Chain Association (HSCA), Washington

May 2025 | The Journal of Healthcare Contracting

“As we have seen over several decades, supply disruptions come in all shapes and sizes. Taking actions to limit tariff exposure does not protect against the other events that could disrupt supply and/or increase product prices. Therefore, implementing multiple strategies, which may include diversification of suppliers, is likely needed to increase the overall resiliency and reliability of the healthcare supply chain.” Dan Kistner, senior vice president and general manager of category management and strategic programs, Vizient Inc., Irving, TX “No one really knows yet how wide and vast the tariffs could be, but the president has been clear that he wants to eliminate ‘product gateways’ whereby China ships goods to Mexico for example, and then they become ‘Mexican imports’ into the U. S. It appears that some of the tariffs are designed to stop this. The U. S. should be looking at re-onshoring the manufacture of goods for many reasons, including our health and security. While ‘bringing back manufacturing’ to our shores may bring about short-term pain, this is a solid strategy for many supply chains, including healthcare. Healthcare procurement needs to look at long-term value and cost strategies and stop pandering to the lowest price for goods at a single point in time. Stability of the supply chain is key in times like this, and as an industry we are probably not well prepared.” John Strong, consultant, co-founder, Access Strategy Partners Inc. and former GPO executive, Fontana, WI “I live in Atlanta, but I grew up in the Northeast where manufacturing lifted up the blue-collar workforce. When I was living in that area, I saw factories move and I saw the blue-collar workforce get diminished there. Now that personal passion is shared by our CEO Mike Alkire and by our company.

The Journal of Healthcare Contracting | May 2025

We’ve been a strong advocate for diversity in manufacturing and what I mean by that is hedging to some degree and not having it all concentrated in one part of the globe. Domestic production is critical. We firmly believe that true supply chain resiliency necessitates a strategy to have domestic production. “I think that tariffs on any healthcare items should be reinvested into this domestic supply chain to provide tax incentives to boost domestic manufacturing. Authorized trusted trade partnerships can use [tariffs] to explore some of the things that have hindered domestic manufacturing. For example, there are certain things that are really difficult to manufacture here because of our environmental rules, which isn’t a bad thing, but how can that impact new innovations? How do we reinvest into the science of manufacturing? We’ve got to expedite the FDA approval process for domestic supplies. There should be differentiated reimbursement for manufacturing supplies domestically. The government should be purchasing domestic healthcare supplies for the VA. “We also really do need real-time inventory data management systems so that we can all have transparency on country of origin and raw material sourcing. “Finally, true resiliency is not accidental. It’s stakeholders along the way making concerted actionable efforts to focus on not just the short-term, but what impact does the short-term have on the intermediate and the long-term? We’ve got to be thinking that way. We’ve got to be thinking about what’s going to happen two years from now, five years from now, and how do we get there? We have to make incremental steps. We need to focus on those incremental steps that are going to solve the long-term challenges. That’s the key to this.” Andy Brailo, Chief Customer Officer, Premier Inc., Charlotte, NC

Dan Kistner

John Strong

Andy Brailo