Tariffs and Trade Policy: Navigating Uncertainty in Medical Equipment Planning

As global trade uncertainty reshapes capital project economics, HBS helps healthcare leaders plan with precision and confidence. Here, HBS’ Nik Fincher, and planning partners from Handle Global, Renovo and Plan Medical, weigh in on what this means for healthcare organizations.

In the world of healthcare capital projects, predictability is paramount. Yet for equipment planners, vendors, and providers, the current climate is anything but predictable. New and proposed tariffs on goods imported from China and other countries are introducing a wave of uncertainty that’s forcing healthcare organizations to rethink how they budget, buy, and build. Beckers Hospital Review estimates that 75% of medical devices sold and marketed in the United States are made in other countries. As the ripple effects begin to touch everything from embedded chips to stainless steel components, the stakes for strategic planning have never been higher.

As Nik Fincher, Executive Vice President of medical equipment planning at HBS, puts it: “We’ve faced disruptions before: Y2K, the 2008 crash, Covid. But the blend of global trade volatility and domestic political uncertainty is different. It’s about equipping clients to make the right call—at the right time—with the right partners in an increasingly complex environment.”

Tariff Effects on Healthcare Equipment Budgets

Medical equipment typically accounts for 18–24% of a capital project’s construction budget, depending on the complexity of the facility. And almost none of it is made in the U.S.

From CT scanners to infusion pumps, all major systems contain foreign-manufactured components. Many rely on embedded chips or specialty metals, both of which are now impacted by tariffs. These components can create ripple effects on costs and the supply chain. As the team at Modern Clinical Planning recently noted in a detailed breakdown of the situation, healthcare systems are being forced to confront the reality that no aspect of their equipment pipeline is insulated from trade policy. Read the article here.

What makes the situation even more complicated is that it's not just equipment being affected; it’s also the supplies and consumables tied to that equipment. Hospitals are caught managing increased costs on both the capital side and the operational side.

The Contingency Dilemma: Spend It or Guard It?

In recent months, HBS surveyed industry contacts to learn how providers are responding. The answers fell into three camps:

1. Guarding contingency funds tightly.

   
   

   Organizations are less willing to release contingency dollars early in the project. Some are even increasing their contingency by 3–5% as a buffer against volatility.

2. Doing nothing…yet.

   
   

   With no clear direction on how long tariffs will last or whether they’ll expand, many organizations have chosen not to act. But that indecision could prove costly if delays hit critical milestones.

3. Asking, “What can we do?”

   
   

   In some cases, providers feel powerless to adapt. The rules are changing, but without consistent guidance, they’re unsure how to protect their investments.

“We work with our clients to develop a risk matrix,” says David Newton, a Senior Vice President at Handle Global, which helps healthcare operators navigate capital planning and spending. “We assign a score for all key vendors to assess the likelihood and potential impact of a specific risk, whether it be tariff-related or revenue-related.”

While tariffs and economic volatility are top of mind these days, the fragility and uncertainty of the supply chain has always been a part of the equation. And, as Newton reminds us, “It’s always been our job to help our clients navigate those waters. And to identify ways to address or off-set unforeseen contingencies.”

Buy Early, Activate Late: A Strategic Approach

HBS’s recommendation? If you can buy early, especially on equipment likely to be impacted, do it. Then delay warranty activation until installation. “It’s unlikely prices are going to drop anytime soon,” Fincher says. “The best-case scenario is that costs go up less than expected. The worst case is you wait too long and can’t get what you need in time.”

While it might seem natural that tariffs would spark renewed interest in refurbished medical equipment, the data says otherwise. “We haven’t seen organizations rushing to consider refurbs,” Fincher notes. “But intuitively, this should create opportunities for that segment, especially when brand reputation and functionality align.”

Matt Forrest, VP of Business Development at Renovo, a healthcare technology management company, is seeing an uptick in adaptable solutions for clients who are looking at market uncertainty and volatility in a holistic way: “While tariffs may drive up the cost of OEM [original equipment manufacturer] equipment and parts, we focus on mitigating that impact through flexible sourcing, alternative parts strategies, and refurbished options when appropriate. We also help our clients extend the useful life of their existing equipment and make smarter capital planning decisions to reduce overall cost exposure.”

When Time Is Money: The Lead-Time Crisis

Cost may dominate headlines, but lead times have emerged as the top concern. Many health systems are still planning based on pre-tariff and pre-Covid benchmarks, which no longer apply. And for organizations with seismic deadlines (like those in California facing a 2030 compliance mandate), any disruption could derail broader timelines.

“Our clients ask us whether we’re factoring tariff-related lead times into schedules. That’s where we add value,” says Fincher. “We’re tracking real-time data from vendors across the country. When you’re managing over 130 active projects and moving close to a billion dollars in equipment each year, we don’t just follow trends—we shape solutions with data-backed foresight.”

Newton confirms this shift. “We’re seeing more and more consolidation in vendor lists and sourcing as well as more intense and detailed modeling,” he says. “For those who can, we encourage them to buy early, especially on longer-lead items, but the idea is to provide the data and information they need to make an informed decision.”

Planning Amid Political Whiplash

With the 2024 election in the rearview and the 2026 midterms on the horizon, the political outlook is unclear. The future of these tariffs could depend on who controls Congress. Or on the cost of chip manufacturing in Taiwan. Or the availability of rare earth minerals.

Some systems are hedging, hoping policy will shift. But Fincher urges clients not to gamble on politics. “We’ve seen what happens when decisions get delayed too long. The organizations that do best are the ones relying on strong planning partners and trusted data.”

Patrick Kelly, CEO of secondary market healthcare equipment organization Plan Medical, sees some level of opportunity for organizations willing to do things a little differently, and major challenges for those that won’t. “Hundreds of rural hospitals are in danger of closing across the country and many others are working with razor-sharp margins. Any increase in cost is going to make things more difficult for them to continue operations,” he says.

“When Covid happened, all the supply chains were in jeopardy, so everyone looked at secondary market. We now have a lot more experience with how this works globally. When it comes to capital planning, most organizations haven’t looked at selling off their assets to the secondary market or acquiring that way, either because they didn’t have to previously or because they didn’t know where to look. We’re now seeing an even greater increase and renewed interest in the secondary market in the United States, both in selling existing equipment and acquiring updated ones. I expect that to continue as long as volatility and uncertainty are on the horizon,” Kelly adds.

A Crisis and an Opportunity

Despite the uncertainty, there’s no clear evidence of a slowdown in healthcare development. Instead, systems are becoming more strategic. They’re scaling back monumental designs in favor of right-sized renovations. They’re triaging needs based on community impact, financial health, and procurement feasibility.

From Fincher’s perspective, the takeaway is this: “We can acclimate to higher prices. What we can’t adapt to is instability. The best protection is collaboration. It takes a village to get a project done: architects, engineers, contractors, planners. What is your village telling you? And are you listening?”