Empowered Patient Podcast Operational Efficiency Needed to Overcome Impact of Tariffs and Reimbursement Cuts on Struggling Hospitals with Ralph Keiser ArcheHealth
Ralph Keiser, CEO of ArcheHealth, highlights the severe financial pressures that hospitals are confronting as a result of rising costs and declining reimbursements. Reductions in reimbursements are threatening hospitals that serve underinsured populations. Costs are increasing due to tariffs on medical device components and the general price inflation on medical supplies and drugs. ArcheHealth is focused on helping hospitals improve operational efficiency to lower the expense of delivering care.
Ralph explains, "The tariff index is going to come mostly around medical devices and device components. So plastics, metals, packaging, things that the device manufacturers use to deliver their products to hospitals and health systems, those will likely get passed through. It won't be huge incremental costs, so there will be additional costs due to tariffs. It depends on a couple of things. Do you have a strong contract that sort of embargoes your current price? Then maybe in the next contract term you'll see that pass through or the contract so the supplier to pass through, you'll see them. We're monitoring month by month the current or last month's spend was on these items, and do we see a chart impact by manufacturer by line."
"One thing that I want to make sure we talk about, too, isn't just shared impact. So the cost to a hospital for devices and drugs averaged 8.9% more in 2024. So just by nature of the market raising its prices for goods that hospitals use to cover patient care, those moved up without tariffs 8.9% last year. We think we're tracking increases that are happening despite the tariff overlay or on top of the tariffs. We still think that the pressure on hospitals is due to the price of therapeutics, and is going to continue to go up, tariff or not. And so I want to mention that because this is the ongoing impact of the cost of MedTech and drugs that gets passed through to the consumer."
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