Economic Activity in Hospital Sector Grew in March for Seventh Straight Month

Economic activity in the hospital subsector grew in March for the seventh consecutive month after contracting twice in the previous four-month period, with 35 consecutive months of growth prior to that, according to the latest Hospital ISM Report on Business from the Institute for Supply Management.

“The Hospital PMI registered 52.3% in March, a 4.3-percentage point decrease from the February reading of 56.6%, indicating a seventh consecutive month of growth after a contraction in August,” Nancy LeMaster, chair of the ISM’s hospital business survey committee, said. “The Business Activity Index expanded for the seventh consecutive month. The New Orders Index remained in expansion for the seventh straight month, and the Employment Index also stayed in expansion territory. The Supplier Deliveries Index remained in expansion (which indicates slower delivery performance). The Case Mix Index registered 51%, a decrease of one percentage point compared to the February figure of 52%. The Days Payable Outstanding Index contracted in March after expanding for five consecutive months, registering 49.5%, down one percentage point from the 50.5% reported in February. The Technology Spend Index reading of 57% is an increase of three percentage points compared to the 54% recorded in February. The Touchless Orders Index registered 52.5%, up 1.5 percentage points from the 51% reported in February.

“The revenue issues caused by the Change Healthcare cybersecurity breach were top of mind for several hospital business survey committee respondents. The incident impacted health systems of all sizes. Although the Days Payable Outstanding Index contracted slightly in March, panelists from affected systems indicated expanded payment terms will be sought to help cope with cash flow issues. There was no consensus on volume growth in the month. Some respondents indicated surgical volumes were down at their facilities, while others indicated volumes were steady. There were multiple mentions of mergers and acquisitions used to increase volumes versus organic growth rates. Back orders and product substitutions continued but received less attention than in previous months. Some panelists noted ongoing efforts to replace contract labor with permanent employees, while there was also mention of continued pressures to limit hiring whenever possible.”

Hospital PMI History