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Hospital PMI® Signals Continued Growth

In May 2025, the Hospital PMI® (Purchasing Managers' Index) recorded a value of 52%, reflecting the 21st consecutive month of economic expansion within the hospital subsector. This figure marks the 38th time in the past 40 months that growth has been reported, as stated by Nancy LeMaster, MBA, Chair of the Hospital Business Survey Committee at the Institute for Supply Management (ISM).

The decrease of 3 percentage points from April’s 55% is noteworthy, yet the Business Activity Index has remained in expansion territory for seven straight months. Additionally, while the New Orders Index held steady, both the Employment Index and the Supplier Deliveries Index showed signs of growth, indicating the health of the hospital supply chain.

Key Findings from the Report

• - Business Activity: The Business Activity Index remained firmly in expansion territory for the seventh month. This reflects sustained demand for hospital services despite the challenges faced in the preceding months.

• - New Orders and Employment: The New Orders Index remained unchanged, suggesting stability in the demand for hospital services. The Employment Index, however, reported growth for the second consecutive month, indicating that hospitals are on the path to hiring for necessary clinical positions.

• - Supplier Deliveries: An expansion in the Supplier Deliveries Index suggests slower delivery performance, which could hint at pressure within the supply chain.

• - Case Mix Index: The Case Mix Index, which reflects the types of cases hospitals are handling, returned to growth by reaching a score of 53%, an increase from 49.5% in April. This uptick suggests a broader range of services being offered and an increase in the complexity of cases.

• - Days Payable Outstanding Index: This index also rose to 51.5%, demonstrating that hospitals are effectively managing their payables amidst fluctuating economic conditions.

• - Technology Spend Index: Notably, the Technology Spend Index increased to 59%, up by 2.5 percentage points from the previous month. This indicates continued investment in technology, driven by the need for advancements in healthcare delivery and telemedicine solutions.

• - Touchless Orders Index: The Touchless Orders Index returned to expansion, underscoring the increasing trend of hospitals adopting contactless solutions for their supply orders.

Tariff Concerns and Economic Outlook

Despite these positive indicators, tariff-related uncertainties have emerged as a main concern among hospital executives. Many are adopting a 'wait-and-see' strategy while others are ramping up their purchasing activities to mitigate the potential impact of tariffs on healthcare supplies and equipment costs. Contract agreements with group purchasing organizations (GPOs) have helped stabilize pricing to some extent, but some facilities are beginning to experience price increases for certain supplies.

Hospital volumes have shown variability, with some facilities reporting robust traffic for elective procedures, while others have noted a decline. Employment perspectives are similarly mixed, where some hospitals planned reductions in headcount, whereas others are actively recruiting to fill critical clinical roles. Additionally, hospitals have increased their inventory levels in response to potential tariff impacts, demonstrating a proactive approach to supply chain management.

Overall, the trends illustrated in the Hospital ISM® Report suggest a resilience in the hospital sector, with managers navigating challenges with a keen eye on future investments and operational adjustments. These insights can assist decision-makers in effectively planning for the ongoing evolution of the healthcare landscape.

Conclusion

The Hospital PMI® for May 2025 serves as a crucial indicator of ongoing growth in the healthcare supply chain despite the broader economic challenges. As healthcare facilities continue adapting to changing conditions, it is evident that effective supply chain management remains integral to their operational success. The next report, featuring data from June 2025, will further shed light on evolving trends in the hospital sector.