Economic Activity in Hospital Sector Grows in July

Economic activity in the hospital subsector grew in July for the second consecutive month after one month of contraction preceded by 35 consecutive months of growth, according to the latest Hospital ISM Report on Business from the Institute for Supply Management.

“The Hospital PMI registered 53.3% in July, a 1.8-percentage point increase from the June reading of 51.5%, indicating a second consecutive month of growth after one month of contraction in May,” Nancy LeMaster, MBA, chair of the ISM’s hospital business survey committee, said. “The Business Activity Index moved into contraction territory. The New Orders Index expanded for the second consecutive month, and the Employment Index returned to expansion territory. The Supplier Deliveries Index moved into expansion (which indicates slower delivery performance), ending five months in ‘faster’ territory. The Case Mix Index reading of 53% is up three percentage points compared to the June figure of 50%. The Days Payable Outstanding Index returned to contraction territory at 48.5%, down three percentage points from the 51.5% reported in June. The Technology Spend Index reading of 52.5% is an increase of 0.5 percentage point compared to the 52% recorded in June. The Touchless Orders Index reading of 47% is a decrease of 4.5 percentage points compared to the June figure of 51.5%.

“Business Survey Committee respondents attributed lower business activity in July to normal seasonality. There did not appear to be concerns regarding an underlying reduction in demand. The potential of a UPS work stoppage was top of mind for survey panelists, with several mentioning contingency planning. (Some panelists submitted their information before a tentative UPS labor agreement was reached.) Interestingly, only one participant mentioned increasing inventory as a buffer. The majority indicated they were continuing to burn down inventory. Supplier deliveries slowed in July, and there were multiple mentions of increased back orders and shortages related to products containing resins. High labor and supply costs continued to erode margins, and organizations were focused on cost reduction efforts. Employment moved into growth territory, with comments indicating successful job fairs and an increase in international hiring.”

Hospital PMI History