PROVIDENCE – Supply chain woes have hit consumers and businesses, now it’s about to provide some discomfort in the medical industry.
“Med-inflation” is currently on the rise, said Cindy Juhas, chief strategy officer for Warwick-based health care equipment distributor CME Corp. She explained that supply chain woes combined with a decrease in raw materials have raised the cost of supplies in the medical industry, from bandages to exam tables.
“COVID really caused some pain. Now we have a war that is hurting things more,” said Juhas, referring to the conflict in Ukraine. That country is a world leader in raw materials, she said.
Recent price hikes that CME has seen include storage bins and waste cans up 10%, foam for upholstered items such as mattresses and stretcher pads up 8-15% and some steel products, including some operating room tables, blanket warmers, benches, and staff lockers, up as much as 20%.
“I have told my clients, if you want a powered exam table that is going to take about 19 weeks due to supply chain constraints, Juhas said. “We are advising they order three months ahead of time.”
Recently, the Health Industry Distributors Association reports that, due to aluminum shortages, a lack of crutches, walkers and wheelchairs have forced providers to ask for donations.
Some shippers have increased their rates by 10-40% in January, while others are holding steady, according to CME data. Juhas added that some suppliers couldn’t fulfill backorders from three months ago due to rising costs and supply chain issues.
“Most of that is contracted in the medical industry,’ Juhas said. “They could not honor the orders as the prices of the materials went up. They were forced to cancel the order and renegotiate.”
And, according to the Health Industry Distributors Association, shipping costs skyrocketed in early 2022 over the previous year by over 250%, citing a $15,000 price tag for a shipping container – more than a 250% rise – while trucking prices soared 22% and raw materials overall climbed 56%.
Juhas warned that hospitals and medical providers could pass those increased costs onto insurers, who could then pass along to their customers via higher premiums. She added most have yet to see the hikes due to their co-pays.
“I myself saw a rate increase of 20% which is unheard of. Usually, the industry standard is 3-5%,” Juhas said.
A recent survey by business.org has found 82% of small businesses across the U.S. have increased their prices due to inflation.
Another survey conducted in 2021 by the same Utah-based business software and services review website found that 92% of small-business owners say the cost of supplies or services needed to run their business has increased since the pandemic started.
Last year, 71% of small-business owners reported at least a 20% increase in costs for supplies and services, according to the survey. In 2021, the U.S. faced the highest month-over-month inflation rates since 2008, the business.org report said. In fact, 2021 had at least five of the 10 highest month-over-month inflation rates since 1990, the report said.
“Across the board, everyone has been affected,” Elizabeth Catucci, CEO and president of the Northern Rhode Island Chamber of Commerce. “One of our retailers has seen the cost of hangers go through the roof, while restaurants have seen prices of take-out boxes rise, among other things. Even jewelers are dealing with rising freight costs from China.”
According to the survey, 64% of small business owners have not been able to acquire the products they need to meet customer demand due to supply chain shortages, with 37% of customers complaining about increased prices. Almost half of businesses – 45% – have raised their prices by more than 20%, according to the report.
“It’s an interesting time to be a small-business owner, that’s for sure,” said Marc Streisand, owner of Marc Allen Fine Clothier in Providence. “We are trying to keep things as tight as possible.”
Streisand said costs for hangers have increased 28%, and he gives those to his customers for free. He also added that he has stopped making certain apparel because of the increased cost of cotton and cashmere.
“Everything has gone up, even energy,” he said. “Luckily most of my customers have means, but at some point, something has to give.”
The survey also found that 30% of small-business owners think raising prices will deter customers from shopping at their store. Data also showed 46% are reducing the size of their inventory, while 43% report being forced to change the products their business keeps in inventory, with 47% reporting decreased profit margin.
Catucci said she has mostly seen member restaurants forced to raise prices, but most have been upfront with customers about those hikes and the reasons behind them.
“Many went to social media and Facebook to explain why they had to pass along these costs,” Catucci said. “Most didn’t see a loss in customers, which may have put us ahead of the curve. They just want to take care of their client base.”
(Update clarifies Health Industry Distributors Association reporting on aluminum shortage where providers are seeking donations of wheelchairs, crutches and walkers)
