#USA #Economic Growth #Tempe #Health Sector #Hospital PMI

Growth in the Hospital Sector: February 2025 Report

The economic landscape within the healthcare sector has seen a notable increase, as evidenced by the recent Hospital ISM® Report on Business® for February 2025. The Hospital PMI® recorded a significant 56% in February, marking a growth of 2.5 percentage points from 53.5% in January and indicating 18 consecutive months of expansion. This trend follows a brief period of contraction noted earlier this year, highlighting the resilience of the hospital subsector amidst fluctuating economic conditions.

Key Findings of the February Report

According to Nancy LeMaster, MBA, Chair of the Institute for Supply Management® (ISM®) Hospital Business Survey Committee, the Business Activity Index has maintained its position in the expansion zone for the fourth month in a row, while the New Orders Index has also expanded for the same duration. Despite these positive indicators, the Employment Index experienced a return to contraction territory, suggesting that workforce challenges continue to impact the sector.

The Supplier Deliveries Index, which reflects the performance of delivery logistics, has remained in an expansion phase for 18 consecutive months, pointing towards ongoing issues with delivery times despite high patient volumes. Meanwhile, the Case Mix Index, which reflects the diversity of patients treated, saw a decline, registering 49.5%, a decrease from 53% in January.

Additionally, the Days Payable Outstanding Index showed a rebound, reaching 51%, indicating an efficient management of payables, while the Technology Spend Index observed a significant dip, dropping to 49%. Conversely, the Touchless Orders Index climbed back into expansion territory, indicating a successful shift towards more efficient ordering systems.

Patient Volume Dynamics

Patient volumes in February were notably influenced by an uptick in respiratory illnesses, including the flu, COVID-19, respiratory syncytial virus (RSV), and norovirus. This surge in patient numbers has compelled hospitals to adapt quickly, leading to a persistent need for effective supply chain management. However, concerns about impending tariffs and potential funding losses for rural hospitals have added a layer of complexity to the operational challenges.

While some panelists reported ongoing growth, others noted minor layoffs, signaling mixed feelings about employment stability. Specifically, Veteran Affairs hospitals expressed apprehensions over the impact that Department of Government Efficiency (DOGE) activities could have on staffing levels, particularly as workers are offered buyouts.

Challenges Ahead

Weather conditions have impacted logistics in various regions, though there have been few reports of significant product shortages. The ongoing efforts to manage inventory levels effectively, even in the face of high inpatient volumes, highlight the adaptive strategies being implemented across the sector.

In conclusion, the February 2025 Hospital ISM® Report On Business® underscores a proactive approach within the hospital subsector, as executives navigate through both growth opportunities and existing hurdles. The next report, featuring data for March 2025, is expected to provide further insights into this dynamic sector, continuing to serve as a crucial resource for stakeholders concerned about the health industry’s trajectory.