How to Combat the Rising Cost of Medical Inflation

March 6, 2023
pink piggy bank with stethoscope

Companies across every industry are experiencing signs of inflation, and healthcare is no exception. Inflation is impacting non-acute healthcare organizations, their partners and their patients. A new report sheds light on what facilities can expect moving forward.

The “Budget impact projections report” examines medical prices for 2023. The forecasts are point-in-time estimates of price changes and are subject to shifts in market conditions, yet they offer insights into what healthcare organizations, including non-acute providers, can expect across the medical supply chain.

The bottom line is this—overall market prices for supplies are projected to increase an average of 4.2% from January 2023 to December 2023. That increase covers everything from medical supplies to lab equipment, and IT software to food.


Some of the biggest areas expected to be impacted by inflation include:

  • Food, forecast to increase 10% to 12%
  • Furniture and construction, each with an 8% to 10% increase
  • Medical gasses, expecting 5% to 7%
  • Laboratory equipment, at 5% to 6%

Meanwhile, the U.S. Department of Agriculture’s Economic Research Service projects higher food price increases in 2022, compared to the previous two years. In 2022, all food prices are predicted to increase between 9% and 10%, according to the Economic Research Service. “Food prices are expected to grow more slowly in 2023 than in 2022, but still above historical average rates. In 2023, all food prices are predicted to increase between 2.5% and 3.5%.”

The “Budget impact projections report” notes that “persistent, unrelenting high input prices” will affect manufacturing, while consumer inflation will lower spending. “Combine this with the Fed raising interest rates and there is fear the U.S. will slide into a recession,” the report states. “A recession, or significant decline in demand, could be the necessary adjustment to bring supply and demand back into balance and slow inflation.”


“Relentless inflation, supply chain disruptions, the Federal Reserve’s rate hikes, China’s pandemic lockdowns and the Russia-Ukraine war, all present unique market variables and supply chain vulnerabilities,” according to the report.
Several other factors are also contributing to price inflation. According to the report, these factors include the Avian influenza, which caused more than 40 million chicken and turkey deaths, and droughts in parts of the U.S. that resulted in food price increases. In addition, economic issues—such as the rising cost of raw materials—are responsible for higher food prices.
The bad news for non-acute healthcare providers is that the challenges facing the medical supply chain will likely persist through 2023 while disrupting crucial sections of the economy. The problem will likely only improve when demand for medical products eases, raw materials become more available, labor shortages end and global resolutions help resolve shipping delays.
In the meantime, rising costs for energy and logistics like shipping and labor, as well as the current elevated cost of raw materials, are expected to continue causing price increases for products needed by non-acute providers. Medical products experiencing price increases include:

  • Medical and surgical appliances and supplies, with a 8.7% increase over three years
  • Surgical and medical instruments, a 2.7% increase over the same period

But there is some good news—downward price pressures are expected to reduce some costs. These factors include slowing consumer demand because of high inflation, and the soon-to-be or currently leveled-out prices of most raw materials. Some of these raw materials may even see a modest price decrease at the end of 2022 or in 2023.

“One proven way to combat rising medical supply chain prices and other cost increases is to work with a group purchasing organization.”


One proven way to combat rising medical supply chain prices and other cost increases is to work with a group purchasing organization (GPO). GPO contracts can offer significant savings on the products and services that non-acute healthcare providers use. The contracts cover everything from patient care products to office supplies.
In addition to the price savings, GPOs can help drive efficiencies across the supply chain. GPOs can also implement a modern software platform for members. For example, Provista offers Envi®, which drives new levels of procurement automation, offers better visibility across the supply chain, and saves facilities time with product ordering, fulfillment and inventory. Gaining this transparent view of the supply chain and inventory levels helps organizations better plan for product disruptions.
GPO contracts also help mitigate the risk of unstable pricing and product shortages caused by increased demand or other factors—up to a certain point. While their terms and conditions offer protections against price spikes and shortages, GPOs cannot completely isolate members from the effects of the economy, like today’s high inflation and product shortages. Still, there are many more protections in place and a higher likelihood of less disruption in the supply chain when facilities partner with a GPO.
For instance, Provista stringently monitors and analyzes manufacturing input costs that impact the supply chain. It also negotiates with suppliers for competitive prices and can sometimes delay a price increase for several months. Under certain circumstances, when prices do increase, Provista negotiates a 90-day price change, then reviews the market to determine if pricing will remain or needs to be adjusted again.
That’s why when non-acute organizations are experiencing rising costs, working with a GPO is more important than ever.

Ready to Get Started?

Take the next step to start saving.

Become a Member