Economic activity in the hospital sector grew in March for the 19th consecutive month, according to the latest Hospital ISM Report on Business. However, growth slowed significantly, with the Hospital Purchasing Managers Index (PMI) falling to 51%, down from 56% in February — its lowest level since August 2023.

“The reading still indicates expansion, but the drop raises concerns,” said Nancy LeMaster, MBA, chair of the Institute for Supply Management (ISM) Hospital Business Survey Committee. “While business activity and new orders remained in expansion territory, employment continued to contract and supplier deliveries sped up after 18 months of slower performance.”

LeMaster noted that hospital executives expressed growing concerns over government funding cuts and tariffs. Seasonal respiratory illnesses drove supply usage, while economic uncertainty was seen as a factor limiting surgical volumes.

Other key indicators showed mixed results:

• The Case Mix Index rose to 54.5%, rebounding from February’s contraction.
• Technology spending increased to 55%, up 6 percentage points.
• Days Payable Outstanding dropped to 47.5%, signaling tighter cash flow.
• The Employment Index remained in contraction as some facilities reported staff reductions while others increased hiring to reduce agency labor costs.

Inventory levels contracted, driven by illness-related demand and cost-cutting efforts. The Supplier Deliveries Index dropped below 50%, reflecting faster delivery times — a reversal after a year and a half of slower performance.

The Hospital PMI has averaged 55.2 over the past 12 months, peaking at 58.6. March’s reading of 51% is the lowest during that period.

The Hospital ISM Report on Business surveys hospital purchasing and supply executives nationwide and is considered a key economic indicator for the healthcare sector.

The next report, covering April data, will be released May 7.