ISM: Hospital Economic Activity Grows in August Despite ‘Slower Rates Than in July’

Economic activity in the hospital subsector grew in August for the third consecutive month, according to hospital supply executives in the latest Hospital ISM Report On Business from the Institute for Supply Management.

“The Hospital PMI registered 63.8 percent, down 5.1 percentage points from the July reading of 68.9 percent,” Nancy LeMaster, MBA, chair of the Institute for Supply Management hospital business survey committee, said. “This was the third month of growth following two months of decline. Each of the sub-indexes (Business Activity, New Orders, Employment and Supplier Deliveries) that directly factor into the Hospital PMI continued to show growth but at slower rates than in July. Survey committee panelists’ comments indicated that the varying degrees of COVID-19 across the country are impacting levels of elective procedures performed, which affects overall growth and revenues. The Case Mix Index decreased to 54.5 percent, down seven percentage points compared to the July reading of 61.5. The Case Mix Index change is consistent with slower growth in surgical cases. The Days Payable Outstanding Index was unchanged at 55 percent. The Technology Spend Index registered 53 percent, an increase of 3.5 percentage points from the July reading of 49.5 percent.

“Although the growth rate in August was slower than in July, there was no consensus among survey committee members as to the cause. Some attributed the slowdown, directly or indirectly, to the coronavirus (COVID-19) pandemic, while one respondent cited normal seasonal variation. However, participants agreed that sourcing and procuring personal protective equipment (PPE) remains a struggle. One respondent commented, ‘Medical supplies, particularly PPE, are still in short supply, with an unprecedented level of distributor allocations. My facility needs to purchase certain PPE outside of normal distribution channels, at higher-than-contract cost, to remain operational.’”

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