The "Tarrific" New World
Tariffs have quickly become a significant factor in the global economy, leading to immediate cost increases, disruptions in supply chains, and financial setbacks for many local businesses. Therefore, focusing on resilience now is crucial for survival. Let's talk about the impact of trade wars and explore key areas of action for Bermuda's healthcare businesses, including hospitals, medical, dental, podiatry, laboratory, and veterinary practices, to navigate and succeed in this challenging environment.
What Is A Tariff?
A tariff, at its core, is a tax imposed by one country on imported goods and services from another, often used to influence trade, generate revenue, or protect domestic industries. True, Bermuda might not be directly subject to US import tariffs. Yet, the ripple effect of tariffs imposed on goods from other countries can significantly increase the cost of components or raw materials used by US suppliers that your practice might buy from.
Similarly, tariffs imposed by other countries on US goods could affect pricing if you source from those other countries. Retaliatory tariffs are now being considered or implemented by major economies on imports from the US. This widespread implementation means that healthcare businesses are likely to encounter increased costs, with the Bermuda landed cost increase potentially equalling or exceeding the tariff rate. This applies not only to items imported directly but also to goods imported into another country before being sold to a third, as well as items made in one country from materials sourced from outside that country.
What To Do?
It might be tempting to simply absorb these increased costs, especially for employees who may feel it's not their direct financial responsibility. However, the health of the organization directly impacts its employees through salaries and benefits, access to necessary business tools to make your workplace safer and more comfortable, emergency funds to make it through hard times, and staffing levels so you are not overworked and stressed. Your organization is your platform for growth and success. Therefore, addressing these cost increases is in everyone's best interest.
Beyond direct cost increases, tariffs introduce secondary risks, notably supply chain disruptions. Tariffs create global supply chain uncertainty and potential cost increases, regardless of their direct applicability. Obtaining certain items could become difficult. Suppliers may raise prices proactively, then continue with higher prices, reconfigure their supply chain, shipping routes, or manufacturing footprint (causing delays), stop making certain products or entire product categories, or even go out of business.
Another significant risk is the loss of revenues. If Bermuda becomes more expensive to live and do business in, businesses may downgrade employee insurance plans (reducing reimbursable services), lay off workers (reducing the number of insured persons), and individuals may leave in search of lower living costs and employment, reducing their local healthcare consumption.
To navigate these challenges, the focus must shift to adaptability and resilience – the ability to adjust to new conditions and to withstand or recover quickly from difficulties. This requires a multi-faceted strategy focusing on several key areas.
Strategic Focus Area 1: Supply Chain Optimization
Optimizing the supply chain is paramount. The era of effortless business with traditional partners might be over. Healthcare businesses should actively seek quotes from and build relationships with suppliers outside the US. This is because US-based distributors are currently subject to tariffs and are passing their increased costs to you. Evaluating new suppliers requires considering their quality, service, reliability, and costs.
Exploring suppliers in different regions
Each region presents various pros and cons:
Europe offers access to many quality and well-known brands with intermediate-strength recourse and no tariffs, but can have slow and costly service and shipping, language barriers, currency risk, lack of FDA approval (for some items), and some cultural differences.
Latin America offers access to some quality and well-known brands with no tariffs, but also presents slow and costly service and shipping, language barriers, currency risk, limited recourse, no FDA, and large cultural differences.
Asia offers variable quality and access to some well-known brands with no tariffs, but shares the challenges of slow and costly service and shipping, language barriers, currency risk, variable quality and limited recourse, no FDA, and large cultural differences.
More on the risks
Currency fluctuations pose a risk, impacting the cost of goods from different regions. Say an item costs 100 Euros. In the beginning of 2025, one had to spend $107 USD to buy that product. At the end of April, 2025, the same 100 Euros cost $117 USD. So, even if the price of goods does not change, currency fluctuations can affect the "home currency" price on pays for goods.
Additionally, acquired equipment must be maintained and supported. The costs associated with bringing in service engineers from different locations, including hotels, flights, and work permits, must be factored in.
Container shipping rates often change significantly, also contributing to the overall cost and uncertainty. Like it or not, one must manage this risk.
As if finding new suppliers was not challenging enough, additional uncertainties concerning logistics, lead times, service, and support will be present. You will be taking a chance and betting your business on it.
Given these complexities, a critical question arises: who has time and money to burn on navigating these issues independently?
In the perfect world
Healthcare businesses need an ideal supplier with the following attributes:
- Being a one-stop shop
- Providing access to quality and reputable brands
- Offering full recourse
- Not being subject to frivolous foreign tariffs
- Providing fast service and free delivery
- Eliminating language barriers and currency risk
- Offering FDA-certified equipment and reagents available
- Requiring no work permit
- Offering no cultural differences
In other words, you need someone offering reasonably priced, quality product as well as fast, efficient service without extra costs such as work permits, flights, hotels, meals and taxis.
While a single, readily apparent "ideal supplier" might not exist, the pursuit of such suppliers or solutions is essential.
Negotiate!
Alternatively, healthcare businesses can negotiate with their current suppliers. This involves discussing the potential tariff impacts with your suppliers, asking how they are mitigating costs, and negotiating longer-term contracts or bulk purchase discounts to lock in prices. Negotiating better terms by bundling purchasing and service contracts is also an approach. Some suppliers may be uniquely positioned with diversified sourcing (e.g., from Japan and Europe) and internal manufacturing, minimizing tariff impact. Direct imports and absorbing or hedging currency risk are also potential strategies. Flexible financial terms and guaranteed pricing for a given length of time can be negotiated for longer-term commitments or bundled contracts.
Group purchasing is another effective approach. Explore forming or joining a purchasing cooperative with other healthcare facilities in Bermuda (hospital, clinics, other practices) to increase bargaining power for common supplies (gloves, basic consumables, collection tubes, medications, dental supplies, veterinary supplies). The more partners involved, the more economies of scale apply to every partner.
Know what you have
Improving inventory management is also key. Implement stricter inventory control (e.g., Lean principles) where feasible. Track usage closely to minimize waste from expired supplies or overstocking. Consider software for better tracking. Just In Time ordering and minimizing expirations, while requiring development for some, might be readily available through certain suppliers. Advantages of a local supplier can include same or next day delivery directly to your practice, ordering single units, and returning short-dated or over-ordered items.
Order a review
Finally, a thorough logistics review is necessary. Analyze shipping costs. Can orders be consolidated? Are there more cost-effective shipping partners or methods available for importing into Bermuda? What other practices have to develop and build, you already have with a local supplier. Have you tried the following with your overseas supplier: not doing any customs clearance, not bothering to arrange any shipping at all, having them keep some local (in Bermuda) inventory for you, having them take responsibility for lost or damaged shipments, having ZERO logistical risk until the supply is in your hand at your practice, or asking them to pass on their shipping discounts to you?
Strategic Focus Area 2: Boosting Operational Efficiency
Boosting operational efficiency is not an option any longer. Process improvement is critical, involving mapping out workflows (patient receiving, processing, treatment/analysis, reporting/billing), identifying bottlenecks, redundant steps, and areas prone to errors. Implement Lean or Six Sigma principles. Optimize procedures where possible to maximize efficiency without compromising quality or turnaround time commitments.
Saving energy is another area for efficiency gains. Your equipment consumes significant energy. Conduct an energy audit. Consider LED lighting, ensuring equipment (refrigeration, sterilization equipment, analyzers, dental chairs, veterinary equipment) is well-maintained and energy-efficient. Optimize HVAC settings. For example, a 10-year-old refrigerator could consume significantly more energy than a comparable new model due to technological advancements and degradation. Regular, proactive maintenance on equipment reduces costly downtime, emergency repairs, and extends equipment lifespan. Evaluate your service agreements to ensure all your risks are covered. An all-inclusive service agreement that covers unlimited labor for all of your equipment might be less expensive than you think.
Strategic Focus Area 3: Administrative & Overhead Control
Controlling administrative and overhead costs is essential. Regularly get competitive bids for ancillary services like insurance, IT support, cleaning, hazardous waste disposal, and courier services. You do not have to be a government agency to have a tender. Embracing digitalization can significantly reduce reliance on paper forms, requisitions, and reports, improving efficiency and reducing costs. Consider fillable PDFs or secure online forms. Implement or enhance practice management systems and secure digital reporting to physicians and patients (where appropriate). Optimizing staffing levels to match workload and cross-train staff provides flexibility and efficiency. Streamlining billing processes, ensuring accurate coding and timely submission of claims, and implementing efficient follow-up procedures for outstanding payments are crucial for minimizing bad debt.
Strategic Focus Area 4: Reduce Capital Expenditure
Reducing capital expenditure is a strategic focus area. This involves seeking better value for money in equipment. Understanding the true costs, including distributor margins (which are often quite low on certain equipment, especially those that require ongoing service and consumables) is important across all types of medical equipment. Service costs can actually be lower locally compared to overseas providers, due to absent travel and accommodation costs. Also, consumable prices are often similar locally due to distributors' purchasing volumes and advantaged shipping logistics. Consider the installation fee for new equipment; some local providers may offer significantly lower or even no installation fees. Finally, more premium equipment may save you more on reduced labor costs and down time when compared with the initially higher price.
Strategic Focus Area 5: Boost Revenues
Boosting revenues is a vital component of thriving in this environment. This can be achieved by enhancing service offerings. Expand your service menu by identifying unmet needs in Bermuda. Research and potentially add specialized tests (for labs), procedures (for medical/dental/podiatry/veterinary), or services that might otherwise require patients/samples to be sent overseas. This could include genetic screening, advanced cardiovascular markers, specific allergy panels, toxicology, specialized dental treatments, advanced surgical procedures, diagnostic imaging services, or specialized veterinary care. Consider offering test panels (for labs) or bundled service packages. Identifying presently unmet needs through idea generation exercises is valuable.
Developing wellness and preventative packages marketed directly to consumers or employers is another way to enhance service offerings. This could include annual check-up panels (labs/medical), preventative dental packages, or wellness programs for pets (veterinary). Focusing on niche markets, such as targeting specific local industries (e.g., hospitality, international business) for occupational health testing, executive check-ups, or specialized care relevant to their workforce, can also boost revenue. You may have to go to these clients and do some selling.
Strengthening relationships with other players in the local healthcare ecosystem is essential. If you are a lab, actively engage with referring physicians, understand their needs, provide excellent customer service (fast turnaround times, clear reports, easy access for consultations), and potentially offer educational sessions on new services or guidelines. Avoid downtime; physicians need reliable partners. This underscores the importance of having local service and support.
Improving the patient experience through convenience (easy appointment scheduling – online/phone), minimal wait times, a clean and comfortable facility, clear instructions, and potentially a secure online portal for patients to access their results is also vital. Simple aspects of the patient experience, from how staff interacts with patients to the post-procedure care provided, can significantly impact satisfaction. Collaborating with local clinics, specialists, or hospitals for integrated services or referral agreements can also strengthen relationships and boost revenue.
Developing specialized expertise allows healthcare businesses to offer unique services that differentiate them from competitors. This means doing things that you are great at, and that not all others can do. Examples, if you are a diagnostic laboratory, include micro-biology, genetic testing, forensic testing, drug testing, and molecular testing (PCR). For other healthcare fields, this could mean specializing in certain medical conditions, dental procedures, surgical techniques, or veterinary treatments. Specific areas for expansion could include specialized diabetes testing/care, comprehensive cardiovascular risk assessment/care, and detailed renal function testing/care. There are many other possible additions to explore.
Highlighting local advantage is a powerful marketing tool. Emphasize the benefits of using a local healthcare provider: faster results/access, convenience for patients, supporting the local economy, easier communication with referring physicians compared to sending patients/samples abroad. Promoting accreditations, quality control measures, and the accuracy of results or the quality of care provided builds trust. Maintaining a professional and user-friendly digital presence with clear information about services, opening hours, location, contact details, and potentially online booking or results access is crucial. Targeted promotion of specific services (like wellness packages or new treatments) directly to relevant audiences can also be effective.
Finally, leveraging data analytics is essential for informed decision-making. Analyze service utilization to understand trends. Which services are most common? Which providers refer most frequently? Are there seasonal trends? Use this insight to manage inventory, staffing, and marketing efforts. Monitor turnaround times or wait times consistently to ensure targets are met and identify areas for improvement.
In conclusion, the current economic situation, marked by widespread tariffs and trade tensions, is dynamic and ever-changing. However, the future is not going to be like the past. Some businesses will thrive, others will merely do OK, and some will not survive. However, your healthcare business in Bermuda can flourish by adapting and focusing on key areas:
- Optimize your supply chain.
- Boost your operational efficiency.
- Control administrative and overhead costs.
- And importantly, boost revenues. You cannot "cut back" your business to prosperity; strategic action and resilience are required to thrive.
