Economic activity in the hospital subsector contracted in June after 21 consecutive months of growth, according to the latest Hospital ISM Report On Business.
The report was issued by Nancy LeMaster, chair of the Institute for Supply Management (ISM) hospital business survey committee.
“The Hospital PMI registered 49% in June, a 3-percentage point decrease from the May reading of 52%, indicating contraction after 21 consecutive months of growth. The composite index is in contraction territory for just the fifth time (with the PMI also registering below 50% in April and May 2020, as well as May and August 2023) in more than seven years of Hospital ISM Report On Business data collection,” LeMaster said. “The Business Activity Index remained in expansion territory for the eighth straight month. The New Orders Index returned to expansion territory from an ‘unchanged’ reading in May, and the Employment Index returned to contraction after two consecutive months of expansion with its lowest reading since January 2022. The Supplier Deliveries Index was ‘unchanged’ in June after two consecutive months of expansion (which indicates slower delivery performance). The Case Mix Index remained in expansion territory in June, registering 50.5%, a decrease of 2.5 percentage points from the reading of 53% reported in May. The Days Payable Outstanding Index remained in expansion in June, registering 51%, down 0.5 percentage point from the 51.5% reported in May. The Technology Spend Index reading of 57.5% is a decrease of 1.5 percentage points compared to the 59% recorded in May. The Touchless Orders Index remained in expansion territory in June, registering 52.5%, up 1 percentage point from the reading of 51.5% reported in May.”
“Half of the general comments by Hospital Business Survey panelists related to concerns and challenges dealing with tariffs and the shifting geopolitical landscape. Panelists were nearly unanimous in indicating their facilities or systems were beginning to see tariff-related surcharges or increased pricing. The largest month-over-month change in this month’s report was the Employment Index, and the 8-percentage point decrease pulled the PMI into contraction,” LeMaster said. “Comments indicated the reductions in staffing were related to margin pressures and loss of federal funding; they did not appear to be driven by volume levels. Although the Business Activity Index dropped 3.5 percentage points from the previous month, most comments cited strong or seasonal-level volumes. While inventories growth slowed, increases continued to be driven by efforts to blunt the impact of tariffs and potential shortages. Supplier deliveries continued to improve, and very few panelists commented about product shortages.”
