U.S. policy changes continue to disrupt healthcare—here’s how medtech can respond

There’s no debating that the directives and rapid policy changes flowing from the U.S. government are introducing significant uncertainty across the entire healthcare industry, both in the U.S. and around the world. But it’s worth pointing out that medtech customers—health systems and hospitals—are on the front lines of these changes.

Our urgent advice to medtech amid the chaos? Look out for what’s happening to your biggest customers, which are hospitals. Then directly engage with them to discuss the implications of these changes and what could happen as a result. At the very least, we expect their existing financial and operational pressures to increase as federal funding models shift, potential tariffs emerge and new executive orders reshape the healthcare landscape—especially for those health systems and hospitals based in the U.S.

Not every hospital system will experience the same effects, however. Academic medical centers, safety-net hospitals and large health systems are likely to experience different challenges depending on their funding sources, patient populations and geographic locations.

Regardless of which way the political winds blow, we believe this is the moment for medtech companies to take stock of their strengths and risks to chart a revised course and solidify their position as a trusted partner to health systems. So, what are the no-regret moves that medtech can take now to avoid disruption to their operations and strategic planning?

First, let’s look at a quick forecast of three immediate challenges we see coming (and already hitting) medtech companies that they should build into their scenario planning now: 

1. Unpredictable medical device regulatory approvals: Medtech relies heavily on predictable regulation, which is currently under pressure. Recent departures of reviewers from the U.S. Center for Devices and Radiological Health (CDRH) and staff reductions at the FDA are likely to delay or lengthen approval timelines. We’re already seeing the impact in delays of De Novo, 510(k) and premarket approval reviews, as well as post-market surveillance. Certain medtech areas, such as devices with novel materials or technologies, might face increased scrutiny based on specific health policy agendas. And a focus on non-device interventions under a “Make America Healthy Again” agenda might affect the approval and expansion of related medical technologies.
2. The effects of tariffs on the intricate medical device supply chain: The eventual impact will hinge on factors like tariff size, phase-in periods, specific items taxed, country-specific rates and any exemptions. While both AdvaMed and MedTech Europe have supported a reciprocal “zero for zero” tariff policy where countries agree to no tariffs on medical devices, it is unclear if this will be approved. Currently, no tariffs, in place or on pause, have any medtech exemptions. If tariffs remain, this will trickle down through pricing pressure on medical devices as hospitals renegotiate contracts and purchasing agreements to drive pricing concessions from manufacturers. Beyond cost increases, there’s a risk of supply disruptions, whether real or due to preemptive stockpiling, potentially hindering patient access to necessary technologies.
3. Threats to funding of medtech research: The U.S. government has been crucial in supporting the research of new medical technologies. A reduction in government funding could obstruct the progress of medical technology research and innovation. Outside of the U.S., trade and investment policies with countries that develop medical technology could make it harder for U.S. and non-U.S. companies to collaborate on research or form investment partnerships that fund the growth of medical technologies worldwide.

With these challenges in mind, there are some specific, immediate capabilities that medtech companies can develop with relatively affordable investments of time and money. Making these no-regret moves now (and not waiting for the clouds of uncertainty to clear) will be key to strengthening your position in the market and your relationship with your customers.

Though we don’t know which challenges will persist and which will pass, we do know that event-driven contingencies and preparedness planning needs to become an enterprise capability for medtech. Medtech companies must shift from preparing for and reacting to mostly competitive threat scenarios to developing broad preparedness across various future scenarios as a core enterprise capability. This means focusing on the “how” of responding to change in addition to the “what.” When faced with disruptive changes today or in the future, organizations need to be equipped to mobilize swiftly and effectively.

Traditional planning can’t keep pace with rapid shifts across tariffs, regulatory hurdles, hospital consolidation, pricing pressures and changing reimbursement frameworks, among other things. Medtech needs a new kind of scenario planning—flexible “living” models that anticipate multiple and layered macroeconomic, regulatory, competitive and clinical innovation scenarios. These models can help companies adapt their capabilities, including both strengths and weaknesses, especially as they compare to competitors. This approach to planning should include dynamic scenario models that are updated continuously, stress-tested under multiple future states and used actively in leadership decision-making—versus a once-a-year planning activity. 

To build this capability, companies should conduct “resilience readiness drills” with surprise announcements of major disruptions. These differ from typical “war gaming,” which is most often planned as a reactive measure in response to competitive forces or a single factor. These resilience readiness drills should apply across a breadth of scenarios (not just competitive threats) with varying sets of disruptive forces. This will increase response rates and agility across multiple functions and regions to proactively identify gaps and strengthen a medtech organization’s capabilities. Knowing what types of things are more likely to become your advantages or disadvantages is key, as well as what you need for success.

Participants in this new approach to contingency and preparedness planning will practice aligning the organization to respond to varying disruptions while managing their regular business activities, not as an isolated activity. After each drill, leaders should debrief to learn how quickly and effectively the organization mobilized. This is your opportunity to identify ways to enhance agility for future challenges, adapting your future strategies accordingly and reducing the risk of overreacting when faced with disruption.

Medtech companies need to identify a wide range of scenarios to build into their resilience readiness drills that vary based on likelihood, impact and addressability. Once companies identify these, they should develop targeted contingency plans for each scenario. By anticipating these changes and preparing regularly, medtech companies can better navigate a range of uncertainties and maintain operational resilience when the disruption is no longer a drill. 

Both hospitals and medtech companies are experiencing increasing costs. Though we don’t know whether this will continue, it’s only natural that hospitals will want to seek some price concessions from their suppliers. At the same time, it makes sense that medtech companies want to (at a minimum) maintain their pricing. As costs rise, however, hospitals will remember how their medtech partners behaved.

We see this as an opportunity for medtech companies to rethink their portfolio and price for value to figure out what will be a win-win. While protecting profit is important, short-term transactional relationships may not pay off in the long term. Instead, we recommend taking a more strategic approach to pricing and portfolio that focuses on clinical and economic value—not just cost—and exploring strategic partnerships with your customers that mitigate risk on both sides, avoiding the need for reactionary pricing adjustments. It would be prudent to take advantage of the current moment to realign on portfolio planning and rationalization.

Price for value: Link your pricing to clearly proven clinical and economic outcomes and benefits that resonate with the needs of increasingly budget-constrained hospitals and health systems. For example, fewer readmissions or lower total cost of care are quite convincing, although factors like streamlining workflows and reducing time for certain activities also carry weight, especially when capacity is constrained.

Hospitals want to understand what they are buying. Yet sometimes the value proposition of medtech products gets lost among the noise. So it’s important to use this time to quickly reassess your in-market portfolio and ensure your value propositions. You may also reconsider value-based and risk-sharing models that reward adoption while protecting medtech margins, even if volume patterns shift.

In the past, many hospitals and medtech companies weren’t so willing to take on outcomes-based or performance-based contracts, which can be challenging to implement and execute on. But now may be the time to re-explore these types of arrangements to demonstrate your commitment to your customers and willingness to stand behind the clinical and economic value of your products, while encouraging hospitals to maintain utilization and continue purchasing your products. And remember that different value propositions resonate with different customers, so medtech companies will need to take a tailored approach to meet customer needs and drive maximal impact.

Design customer-focused portfolio pricing: Medtech cannot continue to think about each product in a vacuum. It should start thinking about more comprehensive portfolio pricing, where it makes sense to do so for their customers. This means developing different combinations of offerings that include devices, services, digital solutions and clinical programs, offering systemwide value and locking in broader hospital or IDN-level contracts. They should also think through modular pricing strategies that allow for mid-contract adjustment (such as cost pass-throughs or alternative configurations) in case of material shifts. This will require medtech companies to continue to strengthen relationships beyond their typical physician and purchasing customers, targeting more senior nonclinical decision-makers. For example, this could include C-suite and executive-level stakeholders who oversee enterprise decision-making and value strategic partnerships that strengthen their positioning and competitiveness.

Rationalize your medtech portfolio: Just as many medtech companies took advantage of the high cost of re-registering old products that came with European Union Medical Device Regulation to rationalize their portfolio, the current moment could be an opportune time to evaluate your portfolio. Given the external pressures, medtech companies might ask themselves: What don’t we need within our full range of products and SKUs? And how can we rationalize and prioritize our portfolio, divesting or sunsetting those products that pull resources away from other areas of investment? Now is the time to drive greater discipline around your guardrails and make the tough decisions that optimally align your portfolio with your future vision and business strategy, as well as the needs of your customers and patients.

Enhance your toolkit for communicating economic value: Communicating your value proposition and how your products are differentiated is critical. But you also need to have the right tools to support those conversations. The current moment is an opportunity for medtech to strengthen its value communication strategy and develop economic value communication tools that are simple, honest and accurate with a spirit of empathy and long-term partnership.

You’ll need a robust toolkit of value communication capabilities to reassure customers of your long-term commitment. This toolkit would include items like an economic benefit claims matrix, decision support analytical models (value and ROI calculators) and workflow or business model studies created in collaboration with your hospital customers to demonstrate the before-and-after picture of the economic impact your solution will drive. Instead of focusing only on selling the clinical benefits, use these tools to effectively convince your customers of the economic impact your portfolio can have for their patients and profits.

Strengthen your competitive positioning: Policy uncertainty is a reason for medtech to build or shore up its competitive intelligence and market monitoring capabilities to better understand the real-time shifts in market share and positioning. This could include being better able to integrate market, sales, reimbursement, purchasing, awareness, trial and usage data that you likely already have, plus robust analytics, agile scenario planning and forecasting to better predict future share shifts and provide more accurate future outlook scenarios. Importantly, this also means understanding the impact of what you make and where you make it, how your costs compare, where tariffs could give you advantages or disadvantages and what moves you can make to reduce your risk. A more intelligent, predictive and real-time view of your market position, now and in the future, will help you prioritize the most impactful tactics to position and sell your products optimally.

These capabilities will help medtech organizations gain a clearer picture of their competitive position amid a quickly changing landscape and answer questions like: Did your costs increase at the same rate as your competitors? What could happen in the future and how would those changes affect you and your competitors?

U.S. trade policy, regulatory capabilities and federal funding are moving so quickly that the very nature of the uncertainty they’re causing is difficult to get ahead of. It’s critical for medtech organizations to avoid the paralysis that can happen in this kind of environment or, conversely, the rash decision-making that sometimes occurs in a vacuum. Medtech should take a more strategic, appropriate and thoughtful approach to execute on the right actions now to prepare for what could happen next.

The two moves we’ve covered are achievable actions to take in the near term that will bring value to your business regardless of the changes that will stick or change yet again. The medtech companies that succeed over the long term will be those that embed flexibility, resilience and customer empathy into their core strategies. By recalibrating now, organizations can position themselves for leadership in a more volatile global market in the future. When you and your customers reach the other side of these disruptions, they’ll remember the value and partnership you offered to help them navigate to calmer waters.