Hospital Subsector Reports Continued Expansion as Activity Grows for 16 Consecutive Months

Continued Growth in the Hospital Subsector: December Report Overview

As of December 2024, the economic activity within the hospital subsector is on an upward trend, exhibiting growth for an impressive 16 consecutive months, according to the latest Hospital ISM Report On Business. This report provides valuable insights into the developments and challenges faced by healthcare facilities across the nation.

In December, the Hospital Purchasing Managers' Index (PMI) stood at 56.3%, marking a slight decrease of 2.2 percentage points from November's reading of 58.5%. Despite this reduction, the index continues to reflect ongoing expansion within the sector. A PMI value over 50 indicates growth, suggesting that the hospital industry, as a whole, remains buoyant and resilient in navigating various economic conditions.

The figures presented in the report also reveal noteworthy trends in key indices. The Business Activity Index has sustained its position within expansion territory for two months consecutively, confirming stability in hospital operations. Furthermore, the New Orders Index has expanded, indicating increasing demand for services. Encouragingly, the Employment Index returned to an expansion phase in December, reversing its unchanged status from the previous month, demonstrating that hospitals are actively hiring to meet service demands.

Executives surveyed pointed to strong consumer demand for healthcare services, albeit tempered by staffing shortages and the postponement of elective surgeries. These challenges are largely attributed to ongoing issues such as shortages of intravenous (IV) solutions, which have resulted in significant operational impacts across many facilities. To tackle these staffing issues, many hospitals are currently re-evaluating their workforce strategies to enhance efficiency and contentment in their operations.

Moreover, the report also highlighted an increase in inventories influenced by multiple factors. Executives voiced concerns regarding potential disruptions linked to a foreseen ports strike, prompting proactive inventory management amidst increasing allocations of scarce products. Additionally, the end of year budget spends played a crucial role in inventory fluctuations, as hospitals aimed to bolster their stock in response to the high demand for supplies.

The Supplier Deliveries Index, which reflects the performance of suppliers in delivering medical supplies, indicates a continuation of slower delivery times due to higher demand—an ongoing trend for 16 months. This highlights the complexities and pressures that suppliers face in meeting the needs of healthcare providers.

Also noteworthy is the Case Mix Index, which rebounded to expansion in December, showing a 3.5 percentage point increase from the prior month's stagnant reading. This shift suggests an increase in the types and complexities of cases being handled, potentially signifying more comprehensive patient care being administered.

Despite the progress, the Technology Spend Index saw a decline to 54.5%, down 4.5 points from November, indicating a momentary slowdown in technology investments amid consistent expansion. Nonetheless, the Touchless Orders Index remains in expansion territory, showcasing a positive shift toward modernized operational practices in response to evolving consumer preferences.

To summarize, the December Hospital ISM Report illustrates a sector characterized by certain challenges but resilient growth overall. With steady demand for healthcare services, propelled by a competent supply chain strategy and responsive workforce expansion, the hospital subsector showcases its capacity to adapt and thrive in a challenging healthcare environment. As we move forward into 2025, the industry’s agility and commitment to meeting patient demands will remain crucial.

For further details, stay tuned for the next Hospital ISM Report set to be released on February 7, 2025, which will highlight January 2025's data.