Have tariffs hurt the medical device industry?

Tariffs on medical devices have created both challenges and opportunities for the health care industry. While designed to influence trade and protect national interests, these policies can affect costs, access to essential products, and the way companies operate. Medical Economics spoke with Casey Hite, CEO of medical equipment provider Aeroflow Health, to learn how his company and the broader industry have navigated these changes.

(Editor’s note: Transcript has been edited for clarity and brevity.)

Medical Economics: When tariffs on medical devices were first announced, what were the biggest concerns within the industry?

Casey Hite: The primary concern, certainly at Aeroflow, is access to care. We were worried about whether we would be able to sustain the impact to our margins enough to continue providing the products and services we offer. We don’t have the ability to pass additional costs on to our consumers because more than 90% of our revenue is paid through third-party payers, primarily health insurers. Those rates are set in contracts negotiated well in advance and are in place for several years.

Medical Economics: Were certain segments of the medical device market expected to be hit hardest?

Hite: Yes. The segments hit hardest are those where products are manufactured overseas, primarily soft goods. In our business, that includes breastfeeding supplies, much of which is manufactured overseas. Even with electronic medical equipment assembled in the U.S., many of the components and raw materials come from overseas. And at a minimum, even with the electronic medical equipment, the components that go into those devices, they might be assembled here in the US, but those components and raw materials are overseas.

Medical Economics: How closely did the initial fears match what actually happened?

Hite: One thing we’ve learned is that the initial announcement of tariffs and their size is rarely what actually goes into effect. The original figures were mind-blowing and would have made some business lines unsustainable—we would have had to exit them completely. Fortunately, the size of those tariffs decreased over time.

Medical Economics: What have been the most measurable real-world effects of tariffs?

Hite: Physicians and hospitals are already dealing with constrained profit margins, just like companies like Aeroflow. In some cases, tariffs are preventing access, particularly for soft goods like syringes and personal protective equipment, which are more expensive. Organizations are looking for savings elsewhere. An unintended consequence has been increased urgency around innovation. We’ve doubled down—really tripled down—on innovation, rallying our staff around the crisis to find efficiencies so we can continue providing access to products and services people need.

Medical Economics: Are other companies adapting in similar ways?

Hite: Some are focusing primarily on lobbying the government or working with manufacturers to lower costs. Others, like Aeroflow, are also looking inward—leveraging technology and AI to drive efficiency and indirectly make up lost margins.

Medical Economics: How have you used AI, and what are others doing in response to tariff pressures?

Hite: At Aeroflow, we view AI as a force multiplier. It boosts productivity and reduces costs, but it also improves service levels and response times. Even simple tools like large language models can increase productivity.

We’re working to reduce reliance on fax machines by partnering with companies like Particle Health and Redox to set up data pipelines between us and physicians’ EMR systems. That allows us to extract medical records needed to prove medical necessity directly, reducing labor on both sides.

We’re also automating medical record interpretation. When physicians send entire patient charts—sometimes hundreds or thousands of pages—we use AI to extract key elements so our staff doesn’t have to parse everything manually. We’re targeting about 15% of document interpretation to be fully automated by the end of this year.

Additionally, we’re using AI agents to respond to incoming inquiries via email, chat, and soon phone. It’s critical to measure customer sentiment in real time and escalate to a live agent when needed. If implemented poorly, AI can destroy service levels.

We’re also using AI tools to assist our application developers. Tasks that once had to be done manually can now be partially automated. I’ve personally seen these tools eliminate 20% to 30% of the initial workload in development tasks.

Medical Economics: Have tariffs had unexpected effects on innovation?

Hite: They’ve increased the urgency to innovate. Companies have to find ways to boost productivity. Tariffs have accelerated the embrace of AI and technology. At the same time, uncertainty makes companies hesitant to hire. Tariffs aren’t going away, so companies will have to invest in retraining employees and teaching new skills.

Medical Economics: Are companies still absorbing some of the tariff costs?

Hite: Yes. A decent percentage of increased costs are being shouldered by manufacturers. But companies like Aeroflow are also absorbing costs. From 2024 to 2025, our cost of goods increased 15% across the board. We haven’t been able to find 15% in savings elsewhere, so the burden isn’t just on manufacturers.

Medical Economics:What lessons has the industry learned?

Hite: You have to diversify your product line and your supply chain. It can’t be concentrated in one country. We’ve emphasized finding manufacturers and material sources outside of China and diversifying across multiple countries to mitigate tariff spikes.

Medical Economics: How should physicians and health care leaders think about tariffs, technology and AI going forward?

Hite: There’s often a doom-and-gloom culture in health care that focuses on protecting what’s already there rather than seeing opportunities. My recommendation is to look at this differently—rally your staff around the crisis, boost productivity and embrace technology. Accept that tariffs aren’t going away and look for ways to make up lost margins while continuing to provide access to care.