What’s Driving Supply Chain Costs in 2026—And What You Can Actually Control
Why supply chain spend is climbing—and which levers are within your control.
If you're a CFO or COO at a health system, you already know supply chain costs are climbing. What's less obvious is how much of it you can do something about.
The pressures driving this environment aren't going away. Supply chain costs across healthcare continue to climb, driven by tariffs, persistent inflation, and disruptions linked to geopolitical conflict. Meanwhile, ongoing vendor consolidation is consolidating supplier power, while care migration is shifting volumes across settings, complicating cost management.
These dynamics were a central focus of our recent webinar on healthcare supply chain strategy. This article—the first in a three-part series—draws on that discussion to unpack the current operating environment, the constraints at play, and the internal levers you can act on now.
The Scope of Supply Chain Spend in Healthcare
When healthcare leaders think about the supply chain, the focus typically lands on medical, surgical, and pharmaceutical supplies, which represent roughly 11–22% of total costs. Significant, but incomplete.
Expand the lens to include purchased services, food, contract labor, and information technology (IT), and supply chain-related costs can represent up to 48% of total spend. Add hospital and medical equipment, and that share approaches half of every dollar an organization spends, according to Definitive Healthcare.
This makes supplies and purchased services, combined, the highest or second-highest spend in health systems. At that scale, supply chain performance becomes one of the most direct levers on margin.
“When we drive costs out of the supply chain—supplies, capital, purchased services—those savings flow straight to the bottom line.” –Carolyn Howard
Cost reductions in these areas flow dollar-for-dollar to the bottom line: every contract optimized and every category tightened translates into immediate P&L impact, without the margin leakage that often accompanies revenue-side strategies.
Understanding the Broader Healthcare Cost Structure
The External Forces Shaping Supply Chains
Several forces hitting supply chains in 2026 are external and largely beyond any single organization’s ability to control.
Tariff-driven cost volatility. The tariff environment remains unstable, with financial impacts embedded not only in product prices but also in contract terms. Suppliers are increasingly adding escalation clauses, fuel surcharges, and price adjustment provisions that can push effective costs well above headline pricing.
Inflation in purchased services. Persistent inflation in purchased services continues to build pressure. IT and outsourced services are expected to be the fastest-growing categories, making them key cost drivers.
Medical and surgical price inflation. Steady medical and surgical product price increases are being driven primarily by upstream inputs, including materials, distribution, and logistics. Certain products, like devices and implants, are highly variable, with costs becoming even more sensitive to global supply chain disruptions.
Manufacturer disruptions. The more globally sourced your supply chain, the more exposed you are to upstream disruption. Consider the resin market: much of the resin used in glove manufacturing comes out of Malaysia. A disruption there affects supply regardless of who your manufacturer is or how many domestic primary and secondary vendors you’ve lined up.
Vendor consolidation. As suppliers consolidate, competitive dynamics shift. Categories that supported genuine bidding competition two or three years ago may now have only two meaningful players. Health systems that haven’t actively managed their vendor relationships are increasingly negotiating from a weaker position.
Cybersecurity threats that originate outside your walls. The recent Stryker incident is a useful illustration. A cybersecurity event at a major device manufacturer can disrupt operations and parts of the supply chain across hospitals within its vendor network. Your risk extends to the security posture of your entire vendor ecosystem, not just your own systems.
Care migration expanding your supply chain footprint. Policy and funding changes, including the rollback of enhanced ACA subsidies and resulting coverage losses, are contributing to higher-acuity patients in acute settings. At the same time, care is expanding into ambulatory and home-based environments. This dual movement increases the distribution of products and materials across a broader set of care settings, adding complexity and making centralized supply chain control more difficult to maintain.
Internal Levers You Can Act on Now
While much of the external environment is outside an organization’s control, there are still meaningful internal levers to manage supply chain costs.
Contract intelligence, not just contract price. Product committees need to read every price escalation clause, every force majeure provision, every tariff language insertion before signature right now, because the true cost of a contract is often driven as much by these terms as by unit price.
Disruption planning as a standing function. Organizations that build a dedicated supply disruption team with standing decision authority will respond faster and at lower cost than those standing one up from scratch when the call comes in.
Visibility into the full supply chain ecosystem. Existing relationships and systems across the supply chain generate significant data, but most organizations aren’t using it to drive real-time decisions. A supply chain control tower, even a basic one, gives leadership the dashboards to see cost spikes before they compound across quarters.
Governance over purchased services. With 100 to 300 distinct purchased service categories, each essentially operating as its own mini-business, the lack of centralized oversight can create enormous leakage. Centralizing even a portion of this spend under consistent governance structures tends to generate meaningful savings quickly.
Clinical variation and contract compliance. Coming out of the pandemic, the discipline around compliant purchasing and clinical standardization loosened across the industry. Reestablishing that rigor, particularly in high-dollar service lines, is another way to recover margin without requiring new vendor negotiations.
Building for Supply Chain Resilience
The external pressures outlined here aren’t temporary. Forecasts for 2026 through 2028 point to prolonged supply chain challenges. Thus, the goal isn’t to stabilize the environment. It’s to build an organization that’s genuinely resilient within an unstable one. That means investing in operational infrastructure that turns the supply chain into a more reliable and manageable part of the business.
Part 2 of this series breaks down what that looks like in practice, including how to move beyond unit price thinking to total delivered cost, where your value analysis approach may need to evolve, and how to stand up a supply disruption team.
What would it take for your supply chain to operate with greater resilience?
- Read Part 2: A Supply Chain Playbook for Healthcare Leaders - Coming Soon
- See How We Support Supply Chain & Purchased Services
- Connect With Our Team
