Dr. Rupal Malani

Yes, absolutely.

So you're right to ask this question.

And this is really, for most providers, an unbudgeted cost.

And so this is really causing health systems to think about, in this space of uncertainty, to do some scenario planning around if this, then that, if this, then something else.

Health systems are really trying to investigate and understand what the specific impact to them will be.

Often they've reached out to their GPO partners and in some cases, major suppliers, but they're often told that the costs are simply going to be passed on, which is perhaps not all that surprising.

Many then are essentially trying to figure out, again, as I mentioned, what's the specific impact to their organization, depending on different permutations of how the tariffs actually play out.

They're comparing that to budgeted improvements that they had for 25 anyway to understand the real size of the gap that they need to close.

And some are considering options such as stockpiling.

We've had a few clients that have done that, not many, but certainly a few that have done so meaningfully.

And some are starting to really consider whether the onshore production of things like PPE, which a lot of it comes from China, if they can kind of revert back to what we were doing in the era of the pandemic and switch to some onshoring of at least those kind of high volume products.

Yeah, it's an enormous area of healthcare.

Most folks are surprised to hear that it already comprises 60% of care delivery in the U.S.

And pre-acute care specifically is an attractive area for really all stakeholders involved in healthcare.

For patients, it's often faster access, better experience, and oftentimes equivalent outcomes as well.

It's also a lower cost site of care for those financing health care, whether that's the government, whether that's employers, or even patients themselves.

And frankly, health systems are eyeing pre-acute segments as well as a way to capture and engage patients earlier in their care journeys at lower cost, more easily accessible sites of care.

The EBITDA margins in these segments, on average, again, it varies by segment, but on average is roughly 10% to 12%.

Now, a little bit to your question, the space has challenges, to be sure, and those challenges vary certainly by segment.

There are labor shortages that are similar to those faced by health systems more broadly, and certainly caregiver churn and turnover rates in some spots can be as high as 65%.