News Archive • Pathstone Partners Healthcare Consulting Chicago

Navigating Tariff-Induced Supply Chain Challenges in Healthcare

Key Takeaways

Tariffs on imported healthcare products are introducing significant financial strain and operational uncertainty for hospitals, affecting everything from medical supplies and pharmaceuticals to IT infrastructure and construction materials.
With limited ability to absorb or offset rising costs, hospitals must take proactive steps to maintain financial stability.
Pathstone Partners supports health systems by challenging unjustified supplier price increases, analyzing vendor responses to tariff pressures, and guiding strategic contract negotiations.
Pathstone also helps identify and vet alternative suppliers, execute sourcing events, and implement contingency plans to preserve continuity of care and long-term supply chain resilience.

I. Introduction

The U.S. healthcare system depends on a globally integrated supply chain not just for medical equipment and supplies, but for virtually every facet of operations, including pharmaceuticals, IT systems, laboratory instruments, construction materials, purchased services, and more. Historically, healthcare products received strategic exemptions from tariffs — but new policies highlight the potential for tariffs to negatively impact these products. The current administration has implemented, or plans to implement, tariffs on key trading partners. Further, executive orders indicate pharmaceutical tariffs may be implemented within the coming weeks or months. For hospitals and healthcare systems, this policy shift introduces real risks: increased costs, supply delays, and reduced access to lifesaving and life-sustaining products.

II. The Global Supply Chain of Healthcare Products

The U.S. imported $36.7 billion in medical equipment in 2024¹, with much of its healthcare infrastructure relying on global partnerships. Several countries play critical roles in the healthcare supply chain, and as of June 2025, varying levels of tariffs apply to their exports, according to the Reed Smith Tariff Tracker:

China: Supplied nearly $2.31 billion, primarily for face masks, gloves, and syringes in 2023¹, and remains the dominant source for active pharmaceutical ingredients (APIs) used in both U.S. and global drug production². The U.S. currently has a 20% tariff with China, with a 34% tariff set to start 8/12/25¹⁰.
India: Provides around 40% of the U.S. generic drug supply, which accounts for 90% of prescriptions filled, while relying heavily on Chinese API imports³. A 27% tariff on Indian goods is expected to start 7/9/25¹⁰.
Mexico: Exported $12 billion in medical equipment, including syringes, diagnostics, and surgical tools¹.
Canada: A key supplier of prescription medications and raw materials, often offering lower-cost alternatives to U.S.-produced drugs. Canadian and Mexican goods that fall under USMCA rules (fully sourced from USMCA countries) are exempt from tariffs; otherwise, a 25% tariff applies to products from Canada and Mexico¹⁰.
Other Key Suppliers: Germany, Ireland, and Japan also play important roles — exporting advanced surgical instruments, hosting major medical technology manufacturing hubs, and supplying high-tech diagnostic equipment, respectively¹.

This global network ensures innovation, availability, and affordability across the U.S. healthcare landscape — but also introduces potential vulnerabilities in times of geopolitical or logistical disruption.

III. Understanding the Complexity of the U.S. Healthcare Supply Chain & the Influence of Tariffs

Hospitals operate within one of the most intricate supply chains in any industry. Medical products often require highly specialized manufacturing processes and must meet strict FDA and international regulatory standards, which significantly limit sourcing flexibility.

Mark Pascaris, Senior Director and Analytic Lead for Nonprofit Healthcare at Fitch Ratings, cautioned that new tariffs could undermine the modest financial recovery many nonprofit hospitals have achieved in recent years. “This adds yet another headwind for not-for-profit hospitals, which are already navigating post-pandemic pressures, workforce shortages, and persistent inflation,” Pascaris said⁸.

Given that medical supplies and pharmaceuticals make up 20% or more of hospital operating expenses⁹, tariffs could affect a broad range of items. Tariffs on critical inputs like diagnostic reagents, telecom hardware, or steel and HVAC components could drive up costs, delay major projects, and disrupt operations. These impacts are far-reaching: a price hike in imported IT equipment may impact cybersecurity readiness, while construction material tariffs could stall facility upgrades or expansions. Even software platforms used in electronic health records may be built on globally sourced technologies, leaving hospitals exposed to cost increases and longer implementation timelines.

However, unlike many other sectors, shifting suppliers or relocating production is neither quick nor simple. It involves considerable time, cost, and logistical coordination — especially in a market where pharmaceuticals remain among the top U.S. import categories⁴. Even if some manufacturing is reshored to the U.S., Pascaris warned that hospitals may still face “permanently elevated costs and potentially fewer choices.”⁸

The COVID-19 pandemic underscored these healthcare supply chain challenges, exposing deep vulnerabilities in the global healthcare supply chain and leading to widespread shortages. More recently, the disruption of a single manufacturing plant in North Carolina — which impacted roughly 60% of the nation’s IV solution supply — demonstrated how localized events can have nationwide consequences.

For hospitals, these realities make clear the need for resilient, diversified, and well-managed supply chains to ensure continuity of care and protect against future shocks.

IV. Impact of Tariffs on Healthcare Contracts

Rising tariffs on imported medical goods are adding new financial strain for U.S. hospitals. Increased costs on essential supplies like gloves and syringes — many of which are sourced from China — are difficult to absorb, especially given long-term reimbursement contracts that prevent providers from adjusting prices. The costs of both pharmaceuticals and medical devices are also expected to be impacted by impending tariffs. In particular, complex and varied items such as surgical kits may be affected by the inability for providers to easily switch out kit items.

To manage these pressures, some manufacturers are shifting production to lower-tariff countries such as Malaysia. However, these changes take time and can introduce new sourcing complexities and delays⁵. Hospitals may experience a 6–12 month delay in feeling the effects of new tariffs due to fixed-price contracts with suppliers, which may shield them from immediate cost increases. However, as these contracts come up for renewal, hospitals are likely to face significant pricing hikes. In some cases, the magnitude of the increase may trigger force majeure clauses, allowing suppliers to renegotiate or exit contracts due to unforeseen economic hardship.

V. Sampling of Supplier Projected Tariff Financial Impacts & Strategic Responses

To better understand how suppliers in the market are adjusting to policy changes, the projected revenue between Q4 2024 and Q1 2025 as well as announced tariff mitigation strategies were compared for key healthcare suppliers.

The chart below illustrates how leading healthcare suppliers have revised their 2025 revenue projections in response to recent U.S. tariff changes. Each bar represents the estimated impact on a specific company, comparing revenue forecasts from Q4 2024 (prior to tariff implementation) with updated estimates from Q1 2025, after companies began adjusting to the new cost landscape.

Companies are also categorized by their tariff response strategy outlined in their Q1 2025 earnings calls: absorbing the added costs, passing them along to hospitals, adopting a mixed strategy, or having low exposure. The strategic decisions made by the suppliers are already influencing hospital budgets, contract terms, and supply chain planning—and will continue to do so heading into the second half of the year. Hospitals are particularly vulnerable based on their utilization of those suppliers who have announced they will pass increased costs onto the health systems.

The most significant projected revenue declines are seen among distributors and medical device manufacturers, reflecting increased import costs on surgical supplies, equipment components, and consumables. Pharmaceutical manufacturers tend to show smaller shifts, often due to more diversified sourcing or the fact that pharmaceutical tariffs have not been formally announced.

Suppliers expected to either fully or partially pass tariff-related costs to hospitals are among those with the steepest projected revenue declines. This suggests that companies pursuing downstream cost-shifting are still facing significant short-term financial pressure and indicates that price increases alone may not be enough to offset the broader impact of tariffs. In contrast, companies absorbing costs or reporting low exposure tend to show smaller revenue shifts, reflecting stronger internal cost controls or more resilient sourcing models that allow them to protect their customers.

*Source: Data compiled from Q4 2024 and Q1 2025 earnings reports and press releases from leading healthcare companies operating in the U.S. market. Each bar reflects a single company’s reported revenue projection change.

Hospitals are facing a difficult financial reality: higher supply costs without the ability to raise prices lead directly to shrinking margins and increased pressure on operating income⁶. Lawmakers have also expressed concern, warning that tariffs on critical medical products could lead to care rationing or treatment delays — outcomes that risk directly impacting patient safety⁷. Understanding how each supplier is responding to tariffs can help hospitals anticipate upcoming changes in spending, adjust contract strategies, and proactively manage supply chain risk heading into the second half of the year.

VI. Navigating the Path Forward

As tariffs and global supply chain disruptions continue to raise the cost of medical goods, hospitals and health systems face a growing need to balance financial sustainability with uninterrupted, high-quality care delivery. Addressing these pressures requires coordinated, data-driven action — and that’s where Pathstone Partners can help.

Push Back on Proposed Price Increases with Existing Suppliers: In the coming months, suppliers under current agreements may propose price increases on existing products or services, using tariffs as justification. Many suppliers already have cushions built into operating margins to better absorb the tariffs, while health system operating margins may be so slim as to not be able to absorb any price increases. Pathstone can push suppliers to act as true partners for health system clients in absorbing some of the tariff pressure.
Proactively Manage Supplier Relationships: Based on market review, Pathstone can tell which publicly traded suppliers project significantly decreased revenues or plan to pass the cost of the tariffs onto the hospitals. In conjunction with the hospital team members, Pathstone can provide insight into how a given supplier is managing the situation, informing supplier conversations, business reviews, and contract negotiations.
Identify and Vet New Suppliers in Response to Market Shifts: In response to shifting international trade dynamics, new domestic suppliers may enter the market, and existing suppliers may acquire each other or consolidate. New suppliers providing the same product or purchased service may present an opportunity to test the shifting market. Pathstone can conduct RFPs to test the market and understand the value offered by new suppliers.
Force Majure: If raw material prices increase considerably, suppliers may be unable to meet contractual pricing requirements, leading to an inability for the supplier to turn a profit. Hospitals may face backorders in these cases. In response, Pathstone can work with clients to quickly implement agreements with new suppliers to minimize patient care disruptions.
Evaluate Secondary & Tertiary Suppliers: In response to fluctuations in availability across the market, there may be an opportunity to negotiate and eliminate volume requirements or exclusivity clauses in supplier agreements. If suppliers are unable to meet contractual requirements, hospitals may need to implement agreements with additional suppliers. Pathstone can help health systems balance low prices offered by an exclusive supplier with the need for multiple suppliers to meet demand.

VII. Conclusion

Tariffs are reshaping the economics of healthcare supply chains, especially for hospitals. As costs rise and supply disruptions increase, healthcare systems must act decisively to protect financial health and patient access.

Pathstone Partners helps hospitals move from reactive responses to proactive strategies — building more resilient, cost-effective supply chains without compromising care quality.

Footnotes:

Why Healthcare Consultants are Valuable for Hospitals

In the intricate world of healthcare, hospitals face the constant challenge of balancing providing exceptional quality patient care, mitigating financial pressures, and matching the pace of medical innovation. Healthcare consultants offer vital support, providing expertise and strategies to navigate financial complexities. Let’s explore why the contributions of a healthcare consulting firm are so valuable to healthcare organizations.

Navigating the Complex Healthcare Landscape

The healthcare industry is dynamic and multifaceted, requiring a deep understanding of regulatory requirements and hospital financial structures. Healthcare consultants bring this specialized knowledge to help navigate these unique challenges. They offer expertise in areas such as:

Financial Management: They help hospitals manage costs effectively, freeing up funds to invest in enhanced patient care and innovation. A consultant might also identify an opportunity to increase revenue on a given service line through more appropriate billing and coding, or may point out an alternate supplier with reduced pricing for existing services.
Operational Efficiency: Consultants assess current clinical and non-clinical workflows and processes, identifying bottlenecks and inefficiencies that hinder productivity.
Technology Integration: Consultants can help hospitals integrate new technologies and optimize use of software modules already owned. They may identify areas to rationalize and eliminate duplicative technology purchases across campuses and departments.

The Imperative of Financial Oversight

Maintaining financial stability is crucial for hospital systems. Healthcare consultants play a key role in ensuring hospitals prevent runaway spend growth. To manage overall system finances, healthcare consultants can work to:

Improve Margins: Consultants work to enhance revenue and reduce expenses across categories, leading to improved financial margins. Margins can be improved through negotiating more favorable supplier contracts. Pathstone Partners has improved margins by over $500 million across the combined client portfolio.
Reduce Operational Costs: By streamlining processes and optimizing resource allocation, consultants identify areas where internal costs can be reduced. Pathstone Partners, for example, focuses on streamlining operations and lowering operational costs for healthcare providers.
Non-Labor Cost Reduction: Consultants also focus on the optimization of non-labor costs through negotiated price reductions with suppliers and reduced utilization of goods and services. Typical target areas for non-labor cost reduction include laboratory supplies, clinical supplies, clinical purchased services, information technology, and pharmacy.
Labor Cost Reduction: Consultants provide labor solutions that help with structure optimization, contract labor, premium pay reduction, and overtime reduction.
Data-Driven Insights: Consultants use data analysis to track spending, identify cost drivers, and provide actionable insights for financial improvement.

Fostering Innovation in Healthcare

Innovation is essential for healthcare to evolve and adapt to changing needs. Healthcare consultants play a role in driving innovation in the following ways:

Implementing New Technologies: Consultants help hospitals identify, select, and implement innovative technology solutions. Target new technologies may automate existing manual tasks and enhance data collection / revenue cycle management. These innovations can enable staff to focus on higher-level responsibilities and ensure clinicians practice at the top of their licensure.
Improving Processes: By redesigning workflows and implementing best practices, consultants enable healthcare providers to embrace innovative approaches to patient care and operational management.
Introducing New Models of Care: Consultants support the adoption of new models of care delivery that can lead to improved patient outcomes and efficiency.

Areas of Focus Consultants work with a variety of healthcare facilities including:

Acute Care Facilities
Academic Health Systems
Regional Health Systems
Pediatric Health Systems
Non-Acute Care Facilities
Community Health Systems

The Value of an Objective Perspective

Healthcare consultants offer an objective perspective that can be invaluable to executives making critical decisions. They can offer an unbiased opinion on:

- Process Analysis: They analyze workflows, identifying areas of improvement that might be overlooked by internal staff.

Supplier Relationships: Consultants can help hospitals challenge long-standing supplier partnerships and ensure they are receiving maximum value from current supplier contracts.
Strategy Development: Consultants work with hospital leadership to develop strategic plans that align with an organization’s goals and values. Their impartial strategic review can set an organization up for the best chance of success.

Learn How Pathstone Partners Can Make an Impact

Healthcare consultants are essential partners for hospital systems, helping them navigate the complexities of healthcare with expertise, objectivity, and a commitment to reducing costs while maintaining quality patient care. By partnering with a healthcare consultant like Pathstone Partners, hospitals can achieve operational excellence and financial stability, and position themselves for a successful future.

Navigating NIH Funding Cuts: How Hospitals Can Adapt and Optimize Costs

The recent developments surrounding NIH indirect funding cuts and blocked grant review meetings have placed hospitals, health systems, and research organizations in a precarious position. With federal funding reductions looming and grant disbursement delays continuing, healthcare organizations must find ways to adapt to maintain research efforts and financial stability.

Current Challenges: NIH Indirect Funding Cuts and Grant Review Delays

The National Institutes of Health (NIH) has proposed capping indirect funding for federal research grants at 15%, significantly reducing funds allocated for essential support costs such as:

Facility maintenance (electricity, janitorial services, etc.)
Administrative staff salaries
Other non-research expenses that keep clinical studies operational

Additionally, a temporary federal block on grant review meetings has delayed NIH’s ability to process new grants, restricting the disbursement of federal funds. While some scientific review meetings have resumed as of February 26, many grant review processes remain frozen, leaving hospitals and research institutions uncertain about future funding.

The Impact on Hospitals and Health Systems

If implemented, the 15% cap on indirect funding would reduce total federal spending on research support costs by over $4 billion. This change will force hospitals and health systems to:

Cut spending on research support services or shift funds from other areas
Reduce research efforts, leading to furloughs or job cuts
Disrupt clinical trials, directly impacting patient care and ongoing research initiatives

For many institutions, this funding shift could mean the difference between continuing life-saving research and having to scale back due to financial constraints.

How Healthcare Organizations Can Mitigate Risks

To navigate these funding reductions, healthcare organizations must prioritize cost-saving strategies across key operational areas. Pathstone Partners recommends the following:

Implement System-Wide Non-Labor Cost Reduction Strategies

Evaluate high-spend categories such as Pharmacy, IT, HR, and Purchased Services to identify cost-saving opportunities.

Accelerate Speed to Value (S2V) Initiatives

Address suppliers with significant year-over-year (YoY) spend increases and renegotiate contracts with upcoming expirations.
Identify under-utilized service agreements and optimize vendor relationships.

Maximize Value Beyond Price Reductions

Leverage utilization, standardization, and revenue-enhancement strategies to improve margins.
Assess make-or-buy opportunities to optimize resource allocation.

Conduct a Comprehensive Labor Cost Review

Analyze staffing patterns and pay structures to identify cost-reduction opportunities.
Implement efficient workforce management strategies to minimize unnecessary expenses.

Pathstone Partners: Driving Cost Optimization in Uncertain Times

As hospitals and research organizations brace for potential funding reductions, proactive cost management will be essential to maintaining financial stability and research capabilities. Pathstone Partners specializes in helping healthcare organizations streamline costs, optimize operations, and maximize financial resilience in the face of evolving funding challenges.

Learn more about how Pathstone can support your organization in navigating federal research funding cuts.

IV Fluid Shortage in 2025: Be Prepared with Pathstone

Pathstone Partners’ Strategies for Supporting Hospitals

The recent announcement by the FDA regarding the ongoing shortage of IV fluid containers highlights the significant challenges facing hospitals and healthcare providers. With shortages expected to persist through March 2025, hospitals are grappling with how to meet patient needs amidst constrained supply. At Pathstone Partners, we understand the complexities of such supply chain disruptions and are committed to providing solutions that ensure continuity of care and operational efficiency.

Here’s how Pathstone Partners would help hospitals navigate this critical issue:

Standardization: Exploring Alternative Sourcing Methods

Pathstone’s team would begin by evaluating the hospital’s current sourcing practices. Many hospitals rely on long-standing vendor relationships, but in times of shortages, testing the market can reveal alternative suppliers with available stock.

Review existing vendor agreements for flexibility.
Obtain quotes from multiple vendors to identify potential alternatives.
Navigate contractual constraints and provide guidance if exclusivity clauses are present.
By diversifying supply options, hospitals can mitigate the risk of disruptions tied to a single vendor.

Utilization: Reducing Waste and Maximizing Resources

Another critical step is to analyze current IV fluid utilization processes to identify opportunities to minimize waste. For example, unused IV fluids removed from stockrooms and later discarded represent preventable losses.

Conduct a process review to identify waste points.
Develop staff education programs to optimize IV fluid use.
Introduce protocols for more efficient stock rotation and usage tracking.
These measures not only conserve valuable supplies but also foster a culture of resource mindfulness among staff.

Strategic Alliances: Partnering with Nearby Health Systems

In times of scarcity, collaboration is key. Pathstone would assist hospitals in exploring partnerships with nearby health systems to share resources and secure more favorable vendor agreements.

Identify geographically close health systems open to collaboration.
Facilitate the creation of mutual aid agreements to share IV supplies when needed.
Explore joint contracts with vendors, leveraging combined purchasing volumes to negotiate better terms.
This approach fosters resilience and resource-sharing across the healthcare ecosystem.

Pathstone’s Commitment to Innovation and Support

The IV fluid shortage underscores the importance of adaptive strategies in healthcare supply chain management. At Pathstone Partners, our expertise lies in helping hospitals navigate complex challenges with tailored, actionable solutions. From sourcing alternatives to fostering alliances, we ensure that hospitals remain equipped to meet patient needs without compromising care quality.

The Pathstone team is proud to be a trusted partner for hospitals nationwide, delivering innovative strategies that turn challenges into opportunities. Together, we can create a resilient and efficient healthcare system. If your hospital is navigating supply chain challenges, connect with Pathstone Partners to learn how we can support your team.

Pathstone Partners: Giving Back to Make a Difference in 2024

Our Giving Back Ideology

At Pathstone Partners, the commitment to improving lives goes beyond healthcare consulting. In 2024, the team embraced its Giving Back ideology through meaningful initiatives that supported vulnerable populations and made a positive impact in the community.

Supporting Global Healthcare with Project CURE

This year, Pathstone held its biannual service event with Project CURE in Chicago. The team came together to sort through medical supplies, prepare shipments, and load containers. As the world’s largest distributor of donated medical relief, Project CURE ensures these supplies reach underserved communities in need of quality healthcare. Pathstone’s efforts directly contributed to this vital mission, helping bridge gaps in global healthcare access.

Spreading Holiday Cheer with Little Brothers Friends of the Elderly

Pathstone partnered with Little Brothers Friends of the Elderly, an organization dedicated to reducing loneliness among older adults. The Pathstone team embraced the holiday spirit, spending hours decorating festive paper bags. These beautifully crafted bags will hold goodie items, delivering joy and companionship to seniors during the holiday season.

A Commitment to Community

Through initiatives like these, Pathstone Partners exemplifies its commitment to making a difference, not just in the healthcare industry but also in the broader community. By giving time and effort to meaningful causes, the team demonstrates how collective action can uplift lives and create lasting impact.

Pathstone Partners is proud to partner with organizations like Project CURE and Little Brothers Friends of the Elderly. These collaborations reflect the company’s dedication to creating a better world, one initiative at a time. Stay tuned for more updates on Pathstone’s community involvement in the coming year!

Pathstone @ Preeminent Healthcare Conferences in 2024

A Year Of Industry Leadership

In 2024, Pathstone Partners actively participated in several high-profile conferences and events, sharing insights and connecting with industry leaders. These events reinforced Pathstone’s role as a thought leader in healthcare consulting and showcased the team’s innovative approaches to cost savings and operational efficiency.

AHRMM SME Podcast: Elevating Organizational Change

Managing Partner Joseph Jang joined the AHRMM Subject Matter Expert Podcast to discuss strategies for driving organizational change through cost savings. His expertise illuminated actionable ways healthcare organizations can tackle financial challenges while maintaining high standards of patient care.

Health Connect Partners (HCP): Supply Chain Leadership in Dallas

In May, Senior Directors Dan Ehle and Andy Poorman attended the HCP Hospital Supply Chain Conference in Dallas, Texas. The event provided an excellent platform to exchange ideas with supply chain healthcare professionals, exploring cutting-edge solutions for optimizing supply chain operations.

Becker’s Healthcare National Conference: Insights from Chicago

Pathstone Partners played a key role at the Becker’s Healthcare National Conference in Chicago, Illinois, in March. Joseph Jang and Senior Director Colin King connected with healthcare professionals, sharing expertise on tackling challenges in cost management and operational improvements.

IDN Summit: Sharing Expertise in Orlando

At the IDN Summit & Reverse Expo in April, Joseph Jang presented Pathstone’s groundbreaking knowledge on driving hospital cost savings and improving margins. The event, held in Orlando, Florida, emphasized collaborative strategies for overcoming financial pressures in the healthcare sector.

AHRMM Spring Summit: Insights on Transformation Excellence

In April, Joseph Jang represented Pathstone Partners at the AHRMM Spring Summit on Transformation Excellence. He shared valuable insights on how supply chain teams can elevate cost management efforts, driving impactful results for healthcare organizations.

HCP Hospital Supply Chain: Fall Conference in Las Vegas

Capping off the year, Dan Ehle and Andy Poorman attended the HCP Hospital Supply Chain Conference in Las Vegas. The event offered an incredible opportunity to engage with healthcare supply chain leaders, exploring innovative ideas to tackle the industry’s most pressing challenges.

Showing Innovation In A Growing Field

Pathstone Partners’ active presence at these events underscores their dedication to staying at the forefront of healthcare innovation. By participating in discussions with industry leaders, the Pathstone team continues to refine and expand its solutions to meet the evolving needs of healthcare providers.

As Pathstone Partners reflects on the knowledge and connections gained in 2024, the team looks forward to continued collaboration with industry peers and clients. These conferences not only strengthen Pathstone’s commitment to excellence but also inspire new strategies for reducing costs and optimizing operations in healthcare

One of Inc. Magazine’s Fastest-Growing Private Companies in 2024

Driving Growth Through Dedication

Pathstone Partners, a healthcare consulting firm based in Chicago, Illinois, is proud to announce its recognition by Inc. Magazine as one of the Fastest-Growing Private Companies in the United States for 2024. With an impressive 3-year revenue growth rate of 84%, Pathstone has joined an elite group of organizations celebrated for innovation, impact, and a steadfast commitment to excellence.

Pathstone’s milestone reflects the remarkable achievements of its talented team, which has grown to over 35 professionals dedicated to streamlining operational costs and optimizing healthcare services nationwide. Collaborating with over 250 hospitals across the U.S., Pathstone has achieved more than $500 million in margin improvements, delivering measurable value to healthcare providers of all sizes, from academic health systems to community health organizations.

Transforming Healthcare Operations

Pathstone Partners has built its reputation by offering tailored solutions for both non-labor and labor-related operational challenges, including:

Non-labor services: Streamlining laboratory and clinical supplies, purchased services, IT systems, and pharmaceuticals.
Labor solutions: Optimizing workforce structures, reducing contract labor costs, managing overtime, and enhancing productivity.

By focusing on creating sustainable cost-saving strategies, Pathstone has become a trusted partner for organizations navigating the complexities of the healthcare industry.

A Commitment to Excellence

Earning a spot among the fastest-growing companies is not just a reflection of financial success—it is a recognition of Pathstone’s ability to adapt, innovate, and create meaningful change for its clients. As Pathstone continues to expand its footprint across the United States, its commitment to empowering healthcare providers remains stronger than ever.

Looking Ahead

Being recognized by Inc. Magazine is a significant accomplishment, but for Pathstone Partners, it’s just the beginning. The firm remains dedicated to its mission of helping healthcare organizations reduce costs, optimize operations, and improve patient outcomes.

As Pathstone continues to grow, the company looks forward to building on this momentum, leveraging its expertise to create even greater value for clients and the healthcare industry as a whole. Together, we are building a brighter future for healthcare, one success story at a time.

What is Revenue Cycle Management (RCM) In Healthcare?

It is extremely important for RCM in healthcare to run smoothly

Healthcare Revenue Cycle Management (RCM) is the financial process that organizations use to manage the administrative and clinical functions associated with different steps of patient care from start to finish. The process starts when a patient schedules a visit for medical services and finishes when all claims and patient payments have been collected. In summary, revenue cycle management in healthcare serves as the strategy for streamlining processes, ensuring steady collections, and making healthcare providers financially viable.

With RCM in healthcare, the goal is to discover any possible problems in the revenue cycle and solve them before they become a bigger issue. It is extremely important for RCM in healthcare to run smoothly to keep your entire system working properly.

How Does the Revenue Management Process Cycle (RCM) Work in Healthcare?

There are seven main steps in the revenue management cycle for healthcare. These include:

Patient eligibility check and insurance authorization
Medical coding and billing
Claims creation, validation, and submission
Error/denial check and correction
Statement to patient (EOB and/or bill)
Payment collection from patient
Continuing data analysis

Why is Revenue Cycle Management (RCM) Important for Healthcare Providers?

While healthcare providers are largely focused on the quality of patient care, there remains a level of concern regarding reimbursement and collections. The process from initial delivery to full payment is complex and implementing effective RCM is essential for to minimize the number of errors, increase the likelihood of payment, avoid aging accounts receivable, and improve overall profitability in health systems. Often there is a significant delay between services and payment collection, making it difficult to see the exact view of cost, spend, and revenue.

Managing revenue is essential for any business and focusing on improving the revenue cycle plays an important role in increasing claims efficiency while reconciling costs against revenues to optimize cash flow. In addition, the healthcare revenue cycle process houses important patient information and data leaks could have substantial legal ramifications. Ultimately, the goal of revenue cycle management in the healthcare industry is to develop a process that helps organizations get paid the full amount for services as quickly as possible by identifying points of friction and resolving them.

Benefits of Focusing on the Revenue Cycle in Your Health System

There are many benefits to efficiently managing your revenue cycle such as improved patient satisfaction, maximized monetary benefit, reduced administrative burden, and simplified processes.

Improved Patient Satisfaction: Revenue Cycle Management (RCM) enhances the patients’ experience with the entire hospital billing process through increased transparency in cost of service, added support throughout entire care process, and minimized number of forms for tracking patient data.
Reduced Administrative Burden: Revenue cycle management in healthcare serves as the entity for streamlining the processes. Outsourcing and automating the revenue cycle alleviates the administrative burden of the providers, allowing for a greater focus on delivering quality care to patients.
Maximized Monetary Benefit: “According to a report from Sage Growth Partners, more than a third of health systems have faced more than $10 million in bad debt annually. The situation is worsening due to unpaid bills and every year up to $125 billion is lost in unpaid and underpaid claims”. Effectively implementing RCM results in lower denial rates, which leads to increased cash flow and faster speed to payment. The process brings accuracy to the system and leaves little room for errors during insurance verification, coding, and claims processing, in turn maximizing collections.
Simplified Processes: Successfully managing your revenue cycle drives efficiencies through workflow automation, which improves scheduling processes, coding and billing, and payment processing. Removing the complexities in the workflow leads to improved operational efficiency of the providers, ensuring they meet their revenue targets.

What is Digital Health Technology?

Health Care Financial Consultant Digital Health

The importance of digital health technology

Digital health encompasses the use of various technologies such as such as mobile health (mHealth), health information technology, and telehealth to enhance to overall efficiency between doctors and patients across healthcare systems. The scope of digital health creates opportunities for physicians to gain a holistic view of their patients’ health and for patients to have greater access and ownership to their information.

The importance of digital health technology has increased over time, especially with the COVID-19 pandemic. In addition to increasing access to health information for both providers and patients, digital health also enhances patient-doctor relationships, increases patient disease prevention methods, and creates a shift toward value-based care.

What are the Benefits of Digital Health?

Better Patient-Doctor Relationships

Through digital health, patients can access information about their own health as well as have a stronger relationship with their provider. For example, many hospital systems have digital health portals where patients can message their providers and receive answers back relatively quickly, rather than needing to wait for their next appointment. With digital health portals, patients can also meet with their doctors via video chat, which is especially important during the COVID-19 pandemic. Providers can provide real time updates to their patients regarding lab work and testing all without the patient needing to come into the office.

Improves Access to Information

Using digital health technologies, patients can actively manage their own health and monitor any irregularities that they may experience. Through digital health, patients also have access to information related to the following:

Disease prevention
Physical therapy
Occupational therapy

Having such information at their fingertips allows patients to make more informed decisions about their health.

Promotes Lifestyle Changes Among Patients

The amount of education individuals have access to because of digital health is immense and can lead to lifestyle modifications for patients who may be at risk for common diseases, such as heart disease or diabetes. Physical and occupational therapy can also be achieved through digital health platforms which are paramount to a patient’s recovery.

What Impact Does Digital Health Have on Value-based Care?

Value-based care has been discussed frequently as an alternative to fee for service care. Through digital health technologies, the shift towards value-based care is now being made in the United States.

Value-based care creates a model where providers are rewarded for giving the highest quality care to patients rather than providing care at a lower standard which leads to readmission rates and complications. This type of approach can be used to expand a patient’s care management and ensure that the patient is not suffering because of a lack of quality providers.

Digital health allows for multidisciplinary care management that could be lacking in value-based care. Multidisciplinary care management consists of constant communication between providers, something that digital health has a crucial role in. Digital health technology paired with value-based care gives patients the opportunity to decide for themselves which providers are best equipped to handle their health.

What is the Future of Digital Health?

Digital health is still relatively new in the United States but with continued healthcare services moving towards a digital model, patients will be able to take their care into their own hands. This means that individuals across generations will be more educated about their health and will be able to make informed decisions regarding their own care. Advances in digital health are numerous and the United States will see many more in the future.

As the demand for digital health continues to grow throughout hospitals and healthcare systems, so does the challenges of finding a cost effective solution. At Pathstone Partners, our expert consultants specialize in providing information technology solutions for healthcare systems across several different markets.

From contract negotiations to software rationalization efforts, we take a comprehensive approach to improving outcomes and reducing inefficiencies for health systems. Contact us online to sit down with our experience consultants to learn about our healthcare consulting services how we can help with digital health technology.

Guide to Different Types of Healthcare Contracts

Health Care Financial Consultant Contracts

Contracts are the glue holding every operation together within the healthcare industry.

They connect employees and employers, suppliers and buyers, ensuring each party remains protected. Whether dealing with hiring, your supply chain or equipment, contracts can be long and complex and require time and effort to ensure they’re structured in your best interest. Understanding the different types of contracts and how they work is the first step to an effective contract management operation.

Supply Chain Contracts

Healthcare organizations depend on countless materials and products to complete daily tasks. Some of the most common products used throughout healthcare centers and hospitals include syringes, defibrillators, sterilizers, gloves and masks.

You can create supply chain contracts to secure these raw materials, products and services from reliable suppliers. These written agreements guarantee the supplier will provide specified goods or services for a pre-determined period at a fixed cost. They also outline delivery schedules, consequences for failing to adequately buy or supply and termination conditions.

Types of Supply Chain Contracts in Healthcare Facilities

Healthcare professionals use expensive instruments daily, and they might have equipment lease contracts rather than buying items outright. This strategy provides additional flexibility and security to obtain the required tools at a more convenient price. However, there are other solutions healthcare providers might employ to get the resources they need. Common types of supply chain contracts found within healthcare facilities and organizations also include:

Purchase orders: A purchase order is a binding contract the buyer produces detailing what they want to purchase from a supplier. This document includes information like quantity, payment terms and delivery.
Service agreements: These contracts are lists of all the services a supplier agrees to provide. It also outlines pricing, timelines and the rights afforded to each party.
Distributor agreements: Distributor agreements are formed between suppliers and merchants. The seller, or distributor, agrees to market and sell specified providers’ products for a fixed fee.

Labor Contracts

Standard labor agreements are legal contracts outlining the terms and conditions of employment at an organization or company. These documents vary by company and position and provide explanations of employee responsibilities and duties, employment terms, compensation and benefits and conditions of termination.

Commonly used labor contracts in every industry include:

Union contracts: A single, written agreement between the employer and a group of employees agreed upon using collective bargaining. These documents detail wages, hours and scheduling, time off, working conditions, advancement and more.
Non-union contracts: Customized documents that employers and individual employees negotiate. Individual employment agreements state conditions of employment and are often subject to governmental regulations.
Independent contractor agreements: Contractors are not employees and agree to perform specific services for a company in return for payment. These contracts outline the scope of work, compensation, deadlines and partnership length.

Special Healthcare Labor Contracts

Labor contracts are required for every employee within your organization. Which one you use depends on their position and union status and must meet all state and federal employment laws. However, there are special circumstances in which you must utilize other contract types, such as hiring a physician.

Many states prohibit medical facilities, like hospitals, from employing physicians directly. Detailed physician employment contracts or independent contractor agreements are often necessary.

They include schedule expectations, wages and benefits, on-call requirements and a restrictive covenant outlining non-compete conditions. If you are hiring for the role of medical director, a separate contract is also required and includes similar information.

Purchased Services Contracts

A lot goes into running and maintaining your healthcare facility. It takes time, effort and money to provide patients with the care and attention they deserve. Partnering with outside companies will ensure your operations are sustainable and run smoothly while saving you money. These partnerships are usually called purchased services and are part of your non-labor spending budget.

Purchased services agreements are the contracts between your organization and outside businesses. They include information regarding contract terms, scope of services, pricing structures and scheduling. Standard outside services many organizations choose to outsource include:

Laundry and linen
HVAC
Marketing
Rehabilitation services
Specialty equipment
Legal services

Types of Purchased Services Medical Contracts

Your healthcare business depends on the services you source from outside businesses and contractors. Outsourcing activities like coding, transcriptions and billing collections require managed services agreements (MSAs) and outsourcing agreements. These examples of healthcare contracts outline the promised service, payment structures, liability protections and timelines. They can also include penalties, fines and exit strategies.

Professional service agreements (PSAs) are another form of purchased services contract that aims to reduce company expenses. Facilities like hospitals often use PSAs to enlist the help of specialized physicians such as anesthesiologists, radiologists, hospitalists and many other professionals.

These professionals remain independent from the business while adhering to a contract tailored to fit the needs of your business or organization in return for payment. You can create them for a single service provider or a whole department, varying in term length, schedule type and responsibilities. These contracts tend to be more complicated, yet they can be extremely powerful when they are done right.

Informational Technology Contracts

As technology has continued to advance, it has become a staple of the healthcare world. Healthcare companies everywhere depend on cutting-edge technology and software to treat patients effectively and deliver reliable services.

Technology contracting is critical to these companies acquiring the resources they need. Most applications, software and information-based technology require licensing agreements detailing necessary fees, the duration of the agreement and prohibited activities.

Examples of Healthcare Informational Technology Contracts

The healthcare industry is extremely reliant on innovative technology to continue meaningful growth. With this, you may see various types of healthcare contracts, including:

Software licensing agreements: This is a legally binding contract between your healthcare organization and a technology company permitting the use of specific software. It defines where a purchaser can install the software, how to use it, how much it costs and how a party can terminate it.
Software development contracts: These agreements enlist the help of developers to design and implement custom programs and applications to expand business offerings and capabilities. A software development contract offers an overview of the project details and expectations, including the timeline, expectations, budget and other information.
Information technology outsourcing (ITO): ITO agreements are legal documents describing all the work to be handled by a third-party partner. You can establish relationships with vendors for infrastructure management, data center services and application development and maintenance.
Data use agreements (DUA): Providers use DUAs with patients when transferring protected health information, like limited data sets and identifiable data. This contract establishes both parties’ rights, responsibilities and obligations regarding permitted use, ownership and liability.
Application service provider (ASP) agreements: Healthcare companies can work with vendors to obtain the right to use their software or application. Instead of licensing and receiving a copy of the software, organizations rely on vendors to operate and manage the software on their behalf, often charging a usage fee or subscription.
Business process outsourcing: Organizations choose to streamline their technological supply chain by subcontracting specific jobs to third-party service providers. Popular online sectors that healthcare facilities create agreements for include finance and accounting, human resources and customer call centers.

Pharmacy Contracts

Drugs and medications are heavily regulated at the state and federal levels. Contractual agreements are used between healthcare organizations and pharmacies to protect each party’s rights and meet legal restrictions.

Pharmacy contracts are legal agreements between pharmacies and healthcare organizations. These detailed documents establish the terms and conditions regarding various operations, including purchasing, dispensing and paying for drugs and related services.

Types of Pharmacy Contracts

Pharmacy contracts will likely vary from pharmacy to pharmacy, and they are heavily dependent on provided services. Essential terms covered within these types of medical contracts include the scope of services, pricing, confidentiality, compliance and termination. Whether you run a pharmacy or work side by side with them, you should be aware of the following contracts you might encounter:

Manufacturer rebate agreements: Also known as vendor rebate agreements, these arrangements act as incentives to increase manufacturer sales while offering businesses reduced price points. This contract details the conditions a healthcare organization must meet before they receive a rebate check or future discount.
Group purchasing agreements: Specialty healthcare entities and pharmacies can enter into group purchasing organizations to secure supplier discount pricing. Organizations use these agreements to increase their buying power and negotiate with manufacturers, vendors and suppliers.
Pharmacy benefit management (PBM) contracts: These documents facilitate the relationship between pharmacy benefit managers and employers, health plans, labor unions, wholesalers and other organizations involved in healthcare. PBM contracts describe the manager’s role in processing and paying prescription drug claims and outline pricing areas and unique exclusions.

Choose Pathstone Partners to Handle Your Healthcare Contracts

Legal contracts come in all shapes and sizes within the healthcare industry, facilitating integral services that businesses and organizations rely on to succeed. Understanding how each operates and how to navigate through each situation accurately is crucial to your growth. It will ensure you’re capable of effectively helping and caring for customers and patients.

Pathstone Partners is devoted to providing your business with a broad spectrum of exceptional healthcare consulting services to manage all your medical contract needs. We have a long history of working with healthcare organizations of all sizes, identifying challenges and capitalizing on opportunities to enhance performance. Our healthcare consultants have unrivaled expertise to oversee contracts across all your business ventures. Get in touch with us to get started today.