Economic activity in the hospital subsector grew in August for the 15th consecutive month, according to the nation’s hospital supply executives in the latest Hospital ISM Report On Business.

“The Hospital PMI registered 60.4% in August, decreasing 2.4 percentage points from the July reading of 62.8%, indicating a 15th consecutive month of growth. The Business Activity Index decreased in August compared to July, and the New Orders Index increased slightly. The Employment Index remained in contraction in August. The Case Mix Index increased to 56%, up 3 points compared to the July reading of 53%. The Days Payable Outstanding Index registered 48%, a 5-percentage point decrease from the July reading of 53.0%. The Technology Spend Index registered 50%, a decrease of 3 percentage points from the July reading of 53%,” Nancy LeMaster, MBA, chair of the Institute for Supply Management Hospital Business Survey Committee, said.

LeMaster continued, “In August, Business Survey Committee panelists commented on the increase in demand driven by COVID-19 patients. Some indicated that they were still able to accommodate elective procedures, while others had to shift all resources to COVID-19 care. In the July report, comments suggested an imminent increase in inventory levels. This was born out in August, when the Inventories Index increased 14.5 percentage points, from 47.5% to 62%. The spike in COVID-19 cases and ongoing shipping delays were the most-cited reasons for the large increase. Panelists attributed staff vacancies and hiring difficulties to pandemic burnout, mandatory vaccination for staff and higher pay in other industries. Comments such as ‘Staff leaving hospital as they do not want to be forced to get the COVID-19 vaccine,’ and ‘Better pay rates at other businesses’ were common.”

Hospital PMI History

The information compiled in this report is for the month of August 2021.

The Hospital PMI was developed in collaboration with the Association for Health Care Resource & Materials Management (AHRMM), an association for the health care supply chain profession, and a professional membership group of the American Hospital Association (AHA).

The data presented herein is obtained from a survey of hospital supply executives based on information they have collected within their respective organizations. ISM makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

The Hospital ISM Report On Business is based on data compiled from hospital purchasing and supply executives nationwide. Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Employment, Supplier Deliveries, Inventories, Prices, Prices: Pharmaceuticals, Prices: Supplies, Backlog of Orders, Imports, Inventory Sentiment, Case Mix, Days Payable Outstanding, Technology Spend, and Touchless Orders), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Beginning in January 2021, the Report On Business^® staff and consultants are gathering market information to better validate the Exports Index. Exports Index data are still being collected.

The Hospital PMI  is a composite index computed from the following, equally weighted indexes: Business Activity, New Orders, Employment and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A Hospital PMI index reading above 50% indicates that the hospital sub-sector is generally expanding; below 50 percent indicates that it is generally declining. For the sub-indexes, except Supplier Deliveries, an index reading above 50 percent indicates that the sub-index is generally expanding; below 50 percent indicates that it is generally contracting. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.