Hospital supply chain leaders say cost pressures are accelerating across multiple categories at once, with organizations simultaneously balancing inflationary pressures, geopolitical instability, technology demand and rising pharmaceutical complexity.
While healthcare supply chains have stabilized compared to the height of the pandemic, executives say a new set of pressures is driving some of the fastest-rising costs they’ve seen in years.
At Major Health Partners in Shelbyville, Ind., technology and freight costs are climbing most rapidly, according to Don Barton, chief technical officer and director of supply chain management.
“The rapid expansion of AI infrastructure and data centers has significantly increased demand for servers, GPUs, memory and storage components, driving up prices for nearly all enterprise hardware and IT-related purchases,” Mr. Barton said.
He said large-scale investments from major technology companies into AI infrastructure are tightening global semiconductor supply, increasing costs for hospitals attempting to modernize IT infrastructure and cybersecurity environments.
At the same time, freight and shipping expenses have risen due to fuel volatility linked to geopolitical tensions involving Iran and concerns around instability in the Strait of Hormuz, he said. Those increases are affecting carrier surcharges, overnight freight and transportation costs across healthcare supply chains.
The conflict has already driven sterile glove manufacturers to raise prices by as much as 40% as raw material costs climb, with analysts warning that sustained disruption could lead to shortages in the coming months. Damage to production facilities has also reduced roughly one-third of the global helium supply, raising concerns for imaging services that rely on the gas for MRI machines. Nearly all pharmaceutical manufacturing depends on petrochemical-derived inputs, further tying both drug availability and logistics costs to energy market volatility.
Other systems are seeing a combination of commodity shortages and technology-related constraints driving up expenses.
Michael Alfaro, director of materials management at Ventura, Calif.-based Community Memorial Healthcare, said his organization is navigating “a dual-front cost escalation.”
“Persistent raw material shortages continue to drive up baseline commodity consumables like nitrile gloves, while acute RAM and data chip constraints are simultaneously inflating the cost of medical devices and IT hardware,” Mr. Alfaro said.
He added that suppliers are increasingly passing along the costs associated with broader global supply chain friction. In response, Community Memorial has implemented forward-purchasing strategies to lock in pricing ceilings and secure inventory earlier in an effort to maintain operational continuity.
For some health systems, pharmaceuticals remain the most significant area of price escalation.
“We’re seeing the fastest increases in pharmaceuticals, driven by specialty therapies like CAR-T and oncology drugs alongside increasingly complex patient profiles,” Ryan Koos, senior vice president and chief supply chain officer at Phoenix-based Banner Health, said.
He added that surgical supplies and physician preference items, especially implants, continue to rise in price because of new technologies and ongoing inflationary pressure. Prices for general medical-surgical and indirect spending categories are also increasing due to tariff impacts, labor costs and the need for organizations to hold more inventory as a safeguard against future disruptions.
The tariff environment is adding a significant layer of cost uncertainty across all three categories. The Trump administration’s 100% tariff on patented drug imports is expected to increase costs for branded medications, with duties taking effect July 31 for large manufacturers. Roughly 80% of active pharmaceutical ingredients used in U.S. generics are sourced from China and India — and while generics currently carry a carve-out, the administration has said it will reassess that exemption within a year, leaving supply chain teams preparing for continued volatility across both branded and generic categories.
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