Is your practice ready for the Trump tariffs?

Neil Baum, MD

Breaking News—Tariffs will raise the cost of electronics, groceries, clothing, and toys and, yes, impact the health care industry. Doctors, including myself, are not soothsayers; however, we can anticipate what the very near future may bring to our industry. In this blog, I will list a few examples of the impact of tariffs and what we might do to mitigate the ripple effect of tariffs on our medical practices.

President Donald J. Trump campaigned that he would implement tariffs when elected. Few physicians were concerned or aware that tariffs would affect the health care industry. The Trump administration's recent tariff announcements on April 2 have caused uncertainty in the health care industry. President Trump made good on his threat of tariffs during that afternoon at a White House event (at 4:00 EST after the market closed!), setting the stage for higher prices for numerous industries, including health care. These tariffs will certainly impact most medical practices, especially those that depend on medical devices, equipment, instruments, and even disposables that are manufactured overseas and shipped to the U.S. as these are not exempt from tariffs, and this is reflected in a precipitous drop in health care stock prices that occurred on April 3 and 4.

While pharmaceuticals have been temporarily exempted from the latest round of reciprocal tariffs on global imports, the sector may not be evident for long, as the administration is considering a separate investigation into pharmaceuticals that could lead to import duties.

Meanwhile, medical devices manufactured overseas and shipped to the U.S. are not exempt and have already negatively impacted stock prices. India's pharmaceutical sector has been spared from the tariffs, which is good news for a country that exports pharmaceuticals to the U.S. However, the overall situation remains uncertain, and the potential impact on health care costs, innovation, and access to care is still being evaluated.

For example, sterile and non-sterile gloves that are used in nearly every medical practice will see a rise in costs. The tariffs on Chinese gloves are set to rise to 50% in 2025 and 100% in 2026. Surgical caps, gowns, and shoe covers will cost more, and office practices and hospitals must anticipate these cost increases and budget for these added expenses. Medical instruments, particularly those from China, Mexico, and Canada, are expected to increase due to higher import costs for components and materials, potentially leading to higher prices for patients and health care providers.

Tariffs have the potential to negatively affect our patients. Tariffs will increase health care costs, which will then be passed on to patients in one of two ways: increased cost of care or decreased care. Higher health care costs could disproportionately hit low-income and chronically ill patients reliant on affordable imports, such as the rising cost of generic drugs. Generic antibiotics like amoxicillin or common steroids like hydrocortisone rely heavily on Chinese pharmaceuticals. This could raise out-of-pocket costs or strain hospital budgets, potentially reducing access to essential medications and ultimately affecting patient outcomes.

Tariffs are expected to impact physicians' pocketbooks. The recent stock market decline caused by Trump's tariffs has raised concerns about the potential effect on physicians' 401(k) retirement accounts and their ability to retire comfortably. Experts suggest that younger Americans could view market dips as investment opportunities or as a time to jump in and invest in the market. However, those physicians nearing retirement may need to consider moving their investments into less risky options like bonds, annuities, and income-producing equities.

Financial advisors recommend diversifying portfolios across various investments, such as stocks, bonds, mutual funds, and other options, to mitigate the risks associated with market uncertainty. Additionally, physicians must stay informed about their retirement accounts and communicate with their financial advisors to ensure they have a well-diversified portfolio. The exact impact of Trump's tariffs on individual 401(k) accounts will depend on factors such as the duration of the tariffs, the portfolio's composition, and the time until retirement.

Taking action

I hope this article highlighted some of the potential impacts on our profession. So, what can we do to mitigate these ramifications associated with tariffs? I doubt that few physicians and hospitals are prepared for tariffs' impact on health care. But there are action steps we can take to soften the blow of tariffs.

Preparation and being one-ahead are basic principles used by magicians. The one-ahead principle can help create a surprise moment that causes jaws to drop from the spectator and the audience. This same principle can be applied to health care.

Let's examine examples that demonstrate the importance of preparing for and staying ahead of problems that are likely to impact nearly every physician's efficiency and productivity.

Power failure rendering your internet\EMR impotent

Imagine that you have lost connection to the internet in your medical office. When the internet is not working in a medical office, it can significantly disrupt operations by hindering access to critical patient information, electronic health records (EHRs), prescription management systems, and appointment scheduling tools. Potentially delaying treatment decisions due to the inability to quickly research medical data can lead to potential delays in patient care and increased administrative burdens for staff.

To help minimize the havoc that loss of internet connectivity can cause your practice to grind to a halt, you must be one ahead and take the steps should this occur. This requires careful planning and testing of your system should this situation occur.

Your first step is to call your internet service provider (ISP) to report the issue. You provide them details such as when the outage started and any troubleshooting steps you've already taken.

Then, check social media platforms and forums where other users might report similar issues. This can provide additional insights into the scope and duration of the outage and an estimate of when power will be restored.

It is important to have a plan in place for these troubleshooting steps. This plan can help you determine whether the issue is with your ISP or within your internal network, guide you toward the appropriate solution, and reduce downtime.

Finally, discuss with your staff that in the event of a power failure, you may have to temporarily revert to paper charts and convert the data to the EMR when the power has been restored.

Another example of being prepared is temporary staff shortages.

To manage temporary employee shortages in a medical office, consider strategies like cross-training existing staff to fill gaps, utilizing temporary staffing agencies, prioritizing patient appointments, communicating clearly with patients about potential delays, optimizing staff schedules, leveraging technology to streamline tasks, and proactively addressing the root causes of staffing issues to prevent future shortages, while always ensuring high-quality patient care remains the top priority.

The easiest solution for temporary gaps in employees in a medical office is to cross-train staff members to perform tasks outside their usual roles. This allows them to cover absent colleagues in different areas like the front desk, clinical support, rooming patients from the reception area to the exam room, or working with patients to enter their demographic, insurance, and health questionnaire data into the EMR. You should regularly evaluate staff performance during annual staff evaluations to identify areas for improvement and potential opportunities for cross-training.

A more expensive and less effective option is to utilize temporary staffing agencies to quickly fill gaps with qualified medical assistants, nurses, or administrative staff when needed.

Other action steps to mitigate the negative impact of Trump's tariffs on medical practices might consider the following strategies:

1. Diversify supply chain: The supply chain plays an important role in ensuring medical facilities have the necessary equipment, medications, and supplies to deliver effective patient care. One strategy is to have relationships with multiple suppliers, both domestic and foreign, to ensure a steady supply of essential medical equipment and pharmaceuticals and avoid shortages. This strategy can reduce the reliance on products subject to tariffs and minimize disruptions caused by supply chain issues.
2. Negotiate with suppliers: Proactively communicate with suppliers to discuss potential price increases and explore options for maintaining current prices. This may involve agreeing to longer-term contracts, purchasing larger volumes, or finding alternative suppliers.
3. Implement cost-saving measures: Review practice overhead expenses and identify areas where cost savings can be achieved without compromising patient care. This might involve streamlining administrative processes, investing in energy-efficient equipment, or leveraging technology like artificial intelligence to automate administrative tasks, such as patient reminders to reduce no-shows, online scheduling, and answering patients' FAQs.
4. Monitor reimbursement rates: Look at reimbursement rates from insurance providers, as these can significantly impact practice revenue. If an insurance provider reduces reimbursements or takes more than 90 days for payment, consider dropping that company or negotiating with them to change their behavior.

Bottom Line: While the direct impact of Trump's tariffs on physicians' incomes might not be immediately apparent, there are potential indirect effects that could influence health care costs, subsequently impact your patients, and affect physicians' earnings. Physicians must stay informed about these developments and consider how the tariffs might impact their practices and earnings. This may involve discussions with vendors, managing overhead expenses, investing in marketing, and communicating with your financial advisors to develop strategies for mitigating the potential adverse effects of tariffs.

If you have any suggestions or actions you have taken to deal with tariffs, please let me hear from you at doctorwhiz@gmail.com.

Neil Baum, MD, a Professor of Clinical Urology at Tulane University in New Orleans, LA. Dr. Baum is the author of several books, including the best-selling book, Marketing Your Medical Practice-Ethically, Effectively, and Economically, which has sold over 225,000 copies and has been translated into Spanish.