#USA #Tempe #Economic Activity #Hospital PMI #healthcare sector

March 2025 Hospital PMI Report

The Institute for Supply Management® (ISM®) released its latest report on hospital economic activity for March 2025, revealing that the Hospital PMI® stands at 51%. This marks the 19th consecutive month of growth in the hospital subsector, even though the PMI has dipped 5 percentage points from February's reading of 56%.

Despite this decrease, it is essential to note that the PMI remains above the crucial threshold of 50%, indicating that the hospital sector is still experiencing expansion. This upswing comes after two months of contraction earlier in the year, highlighting an overall positive trend following previous months of strong growth.

Key Index Highlights

• - The Business Activity Index remains in the expansion zone for the fifth month in a row.
• - There has been an increase in the New Orders Index, also expanding for five consecutive months.
• - Conversely, the Employment Index is still in contraction territory, indicating ongoing hiring challenges within the sector.

The Supplier Deliveries Index, which reflects delivery performance, saw a return to contraction. This is a significant shift after 18 months of consistent expansion and suggests a faster delivery speed of supplies. Moreover, the Case Mix Index, which reflects the variety and complexity of cases hospitals are handling, has returned to expansion, showcasing a bounce back in complexity in patient care.

Challenges Ahead

Nancy LeMaster, Chair of the ISM Hospital Business Survey Committee, emphasizes that while growth is evident, there are notable concerns among hospital administrators. Factors such as tariffs and reductions in government funding are weighing heavily on executives' minds.

One ongoing issue is the impact of seasonal respiratory illnesses, which have been pervasive this March, affecting patient volumes. Some reporting hospital executives noted a general economic uncertainty that may constrain surgical volumes.

Supplier Issues and Inventory Management:
Hospitals are grappling with delayed inventory deliveries, resulting in higher backlogs of supplies. Panelists indicated that while some operational efficiencies have been gained, the unpredictability of product availability continues to pose a threat to smooth hospital operations. Furthermore, the inventory levels have seen a contraction due to both high levels of patient demand and strategic initiatives aimed at cost management.

Looking Forward

Interestingly, the Technology Spend Index rose to 55%, which is a positive signal, indicating hospitals are investing more in technological advancements, possibly as a means of coping with the current economic strains. The Touchless Orders Index, a newer metric reflecting the shift towards automation in hospital supplies procurement, remained in expansion at 52%.

As hospital management continues to navigate these mixed signals, the focus will likely remain on strategic initiatives that enhance efficiency while addressing the growing complexities of patient care services. With the next report scheduled for May 7, 2025, stakeholders will be keenly observing how these developments evolve in the coming weeks.