Orthopaedic professionals are confronting a cascade of pressures in 2025. Tariffs on imported devices are increasing costs across the board. Medicaid cuts threaten the financial structure of care delivery. Practice closures are compounding barriers to surgical access, especially in areas where resources are already limited. You are operating in an environment where maintaining clinical and operational stability demands constant reassessment of supply chains, payer mixes, and growth strategies.
Manufacturers, hospitals, and private practices are all adapting in different ways. Many are scaling back, while others are trying to localize production or consolidate resources. Regardless of the approach, the effects are tangible. Delays in device shipments, shrinking margins, and fewer available surgical slots are becoming part of the daily reality for teams across the country. The long-term consequences of these changes are taking shape in uneven and unpredictable ways.
Tariffs are raising the cost of doing orthopaedic work
Tariff-related expenses are driving up the cost of orthopaedic care. In 2025, up to $400 million in additional costs are projected for companies like Johnson & Johnson due to ongoing U.S. and Chinese trade measures, with orthopaedic and spine devices among the hardest hit product categories. While large manufacturers may have the flexibility to absorb or redistribute these costs, you may be seeing the pressure passed down to ASC operators, hospital systems, and independent providers.
Smaller device startups, which typically have fewer sourcing options, face serious exposure. Without the resources to retool manufacturing quickly or shift suppliers outside tariff zones, these companies are experiencing slowed production timelines and narrowed margins. Even when substitute parts or devices are available, you may be relying on lower-tier alternatives that don’t align as well with surgical preferences or existing protocols. Some practices have begun delaying purchases of capital-intensive equipment altogether.
The FDA’s internal reshuffling has only added to the complications. Recent high-profile firings within the agency have disrupted communication and approvals, further slowing product pipelines. For device companies already grappling with global cost inflation, regulatory bottlenecks are making innovation riskier. You may be noticing that access to newer implant technologies or updated instrumentation has stalled in the short term.
Tip: Evaluate your most frequently used implants and instruments now. Identify secondary suppliers and build direct relationships with distributors in less-affected trade zones.
Medicaid cuts are changing how and where care is delivered
Federal efforts to reduce Medicaid spending by $880 billion over the next ten years are triggering defensive measures at both the system and provider level. These projected cuts threaten the viability of safety-net providers and could result in more than 477,000 lost jobs across the healthcare sector by 2026. States that expanded Medicaid under the ACA are especially vulnerable. Hospital spending could drop by nearly 10 percent in places like Indiana and New Mexico if current proposals are enacted.
In your practice, this may translate to:
- Fewer covered procedures for low-income patients
- Increased patient wait times for surgical consults
- Rising volumes of uninsured or underinsured patients
- Greater financial strain on multispecialty groups operating near margin
With reimbursements tightening, some hospitals are being forced to reconsider their service lines. For orthopaedic surgery, which already operates on thinner margins in rural and high-need urban areas, the risk of service reduction or outright closure is significant.
Health organizations are responding through consolidation, acquisitions, and targeted care expansions. VNS Health, for example, is prioritizing behavioral health and managed long-term care in high-need areas in an effort to diversify its Medicaid exposure and support underserved populations. While this represents a proactive approach, it does little to offset the challenges you may face in delivering high-complexity surgical care under increasingly fragile payment structures.
Tip: Consider mapping your patient base by insurance type and geographic location. This can help you anticipate reimbursement risk and identify where partnerships with community health centers or federally qualified health clinics may strengthen continuity of care.
Practice closures are accelerating in underserved areas
You may be seeing firsthand how reduced revenue and mounting expenses are forcing practices to shut down. These closures are accelerating in regions with high Medicaid reliance and fewer private-payer options. The result is a shrinking number of providers able or willing to offer orthopaedic procedures in disadvantaged communities.
Cuts to physician Medicare payments are also worsening the situation. In 2025, CMS proposed an additional 2.8 percent cut to physician reimbursements, continuing a downward trend that has persisted for two decades. Over time, the compounding effect of these reductions is narrowing the pool of viable outpatient orthopaedic providers. Without intervention, entire regions could be left with no local surgical options.
Professional organizations and trade groups are pushing back. Advocacy efforts include:
- Formal requests for Medicare payment reform
- Lobbying for streamlined device approval pathways
- Petitioning for tariff exemptions on medical imports
If your organization is not yet involved in these policy efforts, now may be the time to reconsider its stance.
Supply chains and strategy are shifting in response
Adapting to this policy environment requires you to rethink sourcing and logistics. Some large manufacturers, such as Abbott, are investing heavily in U.S.-based production facilities to buffer against supply chain disruptions and tariff exposure. While this offers some long-term hope for cost stabilization, it does little to resolve short-term availability issues. You may still face delays and higher costs when trying to access core surgical products.
Alternative strategies include increasing the use of value-based procurement models, diversifying supplier bases, and forming tighter regional purchasing alliances. These approaches require investment and organizational alignment. For smaller practices or those operating on slim margins, the transition may be infeasible without external support. The disparity between resource-rich systems and struggling independent providers is widening.
At the national level, device makers and provider networks are pushing for targeted tariff relief and long-term payment reform. Whether these efforts will succeed remains uncertain. You are working within a policy landscape that has grown more fragmented and volatile, with fewer clear paths toward financial and clinical stability.
Consequences are unfolding unevenly but unmistakably
Orthopaedic surgery is being reshaped by a convergence of policy changes. The effects are not speculative. You are already seeing increased costs, restricted access, and constrained margins. If Medicaid cuts continue and tariff-related costs remain high, access to orthopaedic care will contract further, especially for patients living in low-resource regions. The impact will not be evenly distributed.
Some organizations will adapt through vertical integration, localized manufacturing, or selective divestment. Others will not. As the year progresses, expect to see more closures, more variability in device availability, and more complex patient navigation challenges. Continued advocacy and system-level innovation will be required to keep surgical care viable for underserved populations. Without it, the next round of closures could push entire communities out of reach.
Sources
How Will Tariffs and FDA Firings Impact Orthopedic Companies?
Orthopedic Market Outlook 1Q 2025: M&A, Tariffs, and Industry Headwinds
Spine, orthopedic leaders strategize amid shifting tariff policy
Tariff Takeaways for Ortho and Spine
Trump’s New Tariffs Could Drive Up Health Care Costs, Experts Warn
