Hospital financial pressure is reshaping how we think about supply chain resilience

Hospitals entered 2026 facing a difficult operating environment.

According to Kaufman Hall, hospital operating margins declined at the start of the year as patient volumes softened, labour costs continued to rise, and uncompensated care remained elevated. Daily labour expenses increased despite lower patient volumes, while bad debt and charity care remained well above prior-year levels. Health systems across the country responded by reducing spending, reevaluating investments and, in some cases, decreasing staff headcount.

These financial realities affect nearly every aspect of hospital operations, and influence how organisations approach inventory management, purchasing decisions, and medication access.

At the same time, health systems face the pressure of maintaining continuity of care in an environment where supply disruptions and drug shortages are persistent concerns. As demand patterns continue to shift, manufacturers are managing their own production and cost challenges. Despite all of this, expectations from patients and providers have not changed.

The result is a healthcare system where every stakeholder is being asked to operate more efficiently while maintaining access to essential medications – and the brunt of the burden doesn’t rest on any single organisation’s shoulders. Instead, it requires increased coordination with partners across the healthcare supply chain to develop a model of resilience built around clearer demand signals, more consistent communication, and decisions accounting for how pressure in one link of the supply chain can affect the rest.

Supply chain resilience starts long before a shortage occurs

Drug shortages often receive attention once products become difficult to obtain by the site of care. By that point, however, the factors contributing to the disruption have already been building for weeks or months.

One of the most important lessons I have learned over the course of my career is that supply chain resilience is proactive – and shaped by everyday decisions long before a crisis actually emerges.

Health systems influence product demand through their purchasing behaviour and inventory strategies. Manufacturers then depend on those demand signals to make production decisions that often stretch many months into the future. Distributors sit in the middle of this activity, helping translate demand and availability signals across the supply chain while managing inventory flows across hundreds of thousands of products and customers.

Each participant sees only part of the picture. In turn, information is fragmented, with participants relying on signals to infer what is happening in other areas of the system. Consequently, this can influence decision making, creating a chain reaction where one decision snowballs into the next, resulting in unintended consequences that span the entire supply chain. For example, a purchasing adjustment made by one health system may appear relatively small in isolation. But when similar decisions occur across dozens or hundreds of these organisations, the collective impact can be felt across the supply chain.

This dynamic is especially pertinent to consider during periods of uncertainty, when sites of care tend to order significantly above expected utilisation levels, and manufacturers, in turn, receive signals that suggest demand is growing faster than it actually is without the context to accurately discern the reason for the increase. If they choose to interpret changes as evidence of a broader supply and demand challenge, they may take precautionary actions. Production planning and inventory positioning may become more difficult – and the resulting volatility can cause issues even when sufficient product exists. Fragmented signals and subsequent decisions can also create inventory accumulation in various parts of the network while being difficult to access in other areas.

Financial pressure makes predictability more difficult

The current financial environment adds another layer of uncertainty for hospitals, with leaders balancing staffing challenges, rising expenses, and increasing pressure to improve operational performance, with inventory decisions naturally affected. Organisations want confidence that critical medications will be available when patients need them. This objective is entirely reasonable, yet, when financial pressure and supply uncertainty occur simultaneously, decision-making tends to become more reactive in nature. Teams may adjust purchasing patterns, hold smaller or larger volumes of inventory than usual, delay certain investments, or make short-term decisions to protect product access and manage cash flow.

Over time, reactive behaviour can spur supply chain volatility.

As an ecosystem where actions in one area create ripples elsewhere, the healthcare supply chain and its players need to create transparency through strong partnerships, built on open communication, providing earlier visibility into respective areas. For example, a group of health systems providing better insight into utilisation patterns, manufacturers sharing information about production timelines and potential constraints, and finally distributors helping connect those conversations while providing a broader view of market activity.

Although better information, based on actual conditions, rather than assumptions, does not eliminate disruption, it does help organisations respond with greater confidence.

Resilience depends on shared responsibility

Supply continuity is often discussed as though responsibility belongs to a single stakeholder, when every participant influences outcomes.

For example, manufacturers are responsible for producing safe, high-quality products and planning for future demand. At the same time, health systems make decisions that shape utilisation and purchasing patterns. And distributors help coordinate inventory movement while absorbing a significant amount of operational complexity across the network.

When manufacturers, distributors, and sites of care manage their responsibilities and operate in alignment, the system becomes more resilient.

Over the past several years, I have seen encouraging examples of organisations taking a more collaborative approach. Health systems are looking for new ways to improve inventory visibility. Manufacturers are engaging earlier and more frequently with supply chain partners, and distribution partners are investing in tools and programmes designed to provide greater flexibility during periods of disruption.

Those efforts share a common theme: stronger outcomes emerge when organisations focus on the health of the broader ecosystem, rather than their individual position within it.

Building a more resilient future

The financial challenges facing hospitals are real, and many organisations will continue operating under significant pressure for the foreseeable future. That reality makes supply chain resilience even more important.

As healthcare leaders evaluate strategies for the years ahead, I believe the conversation should extend beyond inventory levels or shortage response plans. Greater attention should be given to how organisations create predictability, improve transparency, and strengthen coordination across the supply chain.

The pharmaceutical supply chain will always face disruption as economic conditions change, demand shifts, and unexpected events occur. What determines resilience is how effectively stakeholders work together to mitigate those challenges.

The organisations making the greatest progress today are not waiting for the next shortage to begin collaborating. They’re building stronger connections across the supply chain now to create the visibility, trust, and predictability needed to protect medication access when conditions change.

About the author

Christine Dunn is vice president, portfolio strategy, supply chain at Cencora, where she leads long-term portfolio strategy for health system customers focused on inventory management and drug shortage prevention. A pharmacist by training, with more than 20 years of acute care experience, she has held progressive leadership roles across clinical operations, supply chain, GPO, and procurement. Her deep expertise in pharmacy contracting and hospital operations fuels her passion for advancing resilient, patient-centred supply chains.