Tariffs and the medical device industry, with Casey Hite, CEO of Aeroflow Health

When tariffs on medical devices and components were first announced, the initial figures were, as Casey Hite puts it, mind-blowing — potentially forcing Aeroflow Health to exit entire business lines. In this episode, Hite joins Medical Economics Managing Editor Todd Shryock to discuss how the medical device supply chain has been reshaped by tariffs, why physician practices are already feeling the squeeze on items like syringes and PPE, and how Aeroflow responded not by lobbying for relief, but by accelerating AI adoption across the organization. 

Hite walks through specific examples, from artificial intelligence (AI)-powered medical record interpretation to automated customer inquiry agents, and explains why implementing these tools wrong can be just as damaging as not implementing them at all. He also addresses how supply chain costs have risen 15% year over year, why diversifying away from single-country sourcing is now essential, and why he believes health care's default tendency to protect the status quo is its biggest obstacle in a tariff-driven world.

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Music Credits:
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Editor's note: Episode timestamps and transcript produced using AI tools.

0:00 – 0:25 | Sponsor message Copic Insurance.

0:25 – 0:42 | Cold open Hite previews the episode's central tension: the initial tariff figures were so large they would have made entire business lines unsustainable.

0:42 – 1:31 | Introduction Austin Littrell introduces the episode and previews the conversation with Hite.

1:31 – 2:34 | Initial fears when tariffs were announced Hite says Aeroflow's primary concern was access to care — specifically, whether they could absorb the margin hit without passing costs to patients, given that more than 90% of revenue flows through third-party payers at rates locked in years in advance.

2:34 – 3:13 | Which segments were hit hardest Hite identifies soft goods — breastfeeding supplies, PPE, syringes — and device components assembled in the U.S. from overseas parts as the most vulnerable categories.

3:13 – 3:58 | How fears compared to reality Hite notes that announced tariff sizes rarely match what actually goes into effect, and that the figures initially quoted would have been existential for some of Aeroflow's business lines. The final numbers came in lower — but still significant.

3:58 – 5:33 | Real-world effects on physician practices and the industry Hite describes the squeeze on practices already operating on thin margins — higher costs for basic supplies, pressure to find savings elsewhere. He explains how Aeroflow chose to treat the crisis as a forcing function for innovation rather than simply lobbying for tariff relief.

5:33 – 7:07 | How the industry is responding — and how Aeroflow is different Most companies are focused on pushing back on tariffs directly. Aeroflow looked the other way: how can AI and technology make up the lost margins? Hite frames AI as a force multiplier — one of the rare tools that simultaneously reduces cost and improves service.

7:07 – 12:35 | AI in action at Aeroflow Hite walks through specific deployments: replacing fax-based communication with EMR data pipelines via Particle Health and Redox; using AI to extract relevant data from patient charts that can run hundreds of pages; deploying AI agents to handle email, chat and soon phone inquiries; and putting AI coding tools in developers' hands to cut workload by 20–30%. He stresses that real-time sentiment monitoring is essential to prevent AI agents from trapping customers in loops.

12:35 – 13:27 | P2 Management Minute Keith Reynolds shares practice management tips and invites listeners to submit their own workflow ideas.

13:27 – 15:00 | Why most companies aren't seeing the AI gains they expected Hite says the problem isn't the tools — it's implementation. Large committee-driven rollouts move too slowly. He also shares a candid moment: the first time he used AI coding tools, it hit his ego.

15:00 – 16:50 | Tariffs as an unexpected accelerant for innovation Hite argues the counterintuitive effect of tariffs is that they've urgently accelerated AI adoption. He also warns that this same dynamic will eventually depress hiring, and that companies will need to invest in retraining their people.

16:50 – 18:02 | Who's absorbing the cost — and by how much Hite confirms that Aeroflow's cost of goods rose 15% from 2024 to 2025 — and that savings elsewhere have not come close to offsetting that increase. Manufacturers are shouldering some of the burden, but not all.

18:02 – 18:46 | Lessons learned: diversify the supply chain Hite's key takeaway for the industry: stop concentrating supply chains in a single country. Aeroflow has prioritized sourcing from multiple countries to reduce exposure to any single tariff spike.

18:46 – 21:27 | Advice for physicians and health care leaders Hite pushes back on health care's doom-and-gloom culture and its tendency to protect the status quo — citing fee-for-service as the prime example. He draws a parallel to COVID-19, arguing that tariffs, like the pandemic, have simply accelerated adoption of technology that was already available. His message: accept the new reality, rally your team and look for the opportunity.

21:27 – 22:15 | Outro Shryock closes the interview. Littrell thanks listeners and reminds the audience to subscribe and visit MedicalEconomics.com and PhysiciansPractice.com.