July 2025 Hospital PMI Reports Positive Growth After Contraction

Overview of Hospital PMI July 2025

The Hospital Purchasing Managers' Index (PMI) registered at 51% for July 2025, marking a welcome return to growth in the hospital subsector after experiencing a slight contraction in June. This latest figure represents a 2-percentage point increase from the previous month's reading of 49%. The report, released by Nancy LeMaster, Chair of the Institute for Supply Management (ISM) Hospital Business Survey Committee, reflects the sentiment of hospital supply executives nationwide.

Economic Context and Implications

For the entirety of July, the hospital sector experienced expansive growth after enduring only its fifth contraction in over seven years. The PMI indicates that a reading above 50% denotes growth; hence, the bounce back this month is seen as a pivotal sign of improvement in hospital operations. Prior to June, the sector had enjoyed 21 consecutive months of growth, illustrating its overall resilience in the face of ongoing challenges.

The Business Activity Index has now remained within expansion territory for nine successive months, signaling sustained demand. Moreover, the stability of the New Orders Index, which remained unchanged in July, indicates consistency in new procurement, crucial for hospital supply chains during uncertain times.

Employment and Staffing Trends

One of the key highlights from the report is the movement of the Employment Index out of contraction territory. This shift has been driven by increased hiring of clinical personnel as organizations prepare for fluctuations in government funding, particularly concerning programs like Medicaid and Medicare. Despite the optimistic growth outlook, many hospitals have implemented hiring freezes and sought early retirement packages for nonclinical staff in anticipation of economic pressures.

Concerns about potential government funding cuts and rising prices remain prevalent among hospital executives. Several respondents noted that tariffs are pushing prices higher on certain products, with expectations of continued price increases in the coming months. Organizations are employing various strategies to buffer these financial strains, including enhancing efficiency through automation in the procure-to-pay process and ongoing investments in IT infrastructure.

Inventory Management and Supplier Relationships

Interestingly, the Supplier Deliveries Index showed no changes for two consecutive months, following a period of rapid expansion. This steadiness, paired with a decrease in back orders, has encouraged some hospitals to streamline their inventories while being cautious to stock essential goods that may be affected by tariffs.

The report's Case Mix Index registered a decline to 46%, indicating potential shifts in patient demographics or care volume expected during this period. This decrease is significant given its relationship to hospital reimbursements and operational focus.

Future Perspectives and Technology Investment

Looking ahead, the July report underscores the importance of ongoing investment in technology and infrastructure within the hospital sector. The Technology Spend Index declined slightly to 57%, showcasing hospitals' commitment to upgrading their operational capabilities amidst changing economic conditions. The Touchless Orders Index also maintained an expansion territory, which highlights progress toward more efficient and secure healthcare procurement processes.

Overall, the July 2025 Hospital ISM Report On Business brings a cautiously optimistic outlook. With the PMI showcasing a shift towards recovery, hospitals may look forward to the potential for stabilization and growth in the coming months as they navigate funding uncertainties and strive for operational efficiencies.