Report On Business® Roundup: October Hospital PMI®
Data for all three editions of the ISM® Report On Business® continues to show that for many businesses and supply chains, the frequency and severity of coronavirus-related issues still resembles the early stages of the pandemic.
That’s especially true for professionals in the hospital subsector, who in October still confronted crowded intensive-care units (ICUs), scrambled to find personal protective equipment (PPE) and other supplies, and dealt with strained clinical and nonclinical employment resources. The Hospital ISM® Report On Business® data reflected those challenges, though there were signs of potential relief.
The Hospital @ISM® Report On Business® found that business activity remained high and new orders up in October, but supplier deliveries slowed. Those dynamics drove a 2.8-percentage point bump in the Hospital PMI®, to 63.4%. https://t.co/mPhdLygXbR #ISMPMI #economy #healthcare— Institute for Supply Management (@ism) November 5, 2021
The Hospital PMI®, released on Friday, registered 63.4 percent, with mixed results on ability to schedule the elective procedures that are a significant revenue source. An increase in the New Orders Index suggested a resumption of elective procedures at many facilities, but some Institute for Supply Management® (ISM®) Hospital Business Survey Committee respondents reported continuing postponements of as long as 30 days.
Meanwhile, the Suppler Deliveries and Prices: Supplies indexes both increased 6 percentage points compared to September, and the Inventory Sentiment Index dropped 10 percentage points into contraction territory, as hospitals continued to struggle to stock up. As a result, many facilities explored using substitute items — which introduces multiple dynamics, including increased risk.
“COVID-19 was starting to loosen its grips in different parts of the country,” Nancy LeMaster, MBA, Chair of the Business Survey Committee, said on Friday. “The New Orders Index number looks like elective procedures are able to get in the queue. But respondents are still pretty cautious about this shift back (toward normal) — COVID-19 cases were going down, but there were still a lot of patients in the ICU. So, they have have to be careful when thinking about scheduling elective procedures if it’s a type of procedure that could require ICU backup or a stay. The capacity has to be there to take them.”
On November 4, the seven-day rolling average of coronavirus cases in the U.S. was 71,180, according to data compiled by The New York Times. On that date a year ago, that number was 91,920, on its way up to a seven-day rolling average winter peak of 251,232 on January 11, before vaccines were readily available. Another potential winter spike is an ominous scenario for hospitals still plagued by staff shortages.
.@ISM Hospital PMI® survey respondent: “We are trying to run lean, but the logistics nightmare has made us pivot. … It would be better if carriers could tell the difference between Christmas presents and medical supplies.” #ISMPMI #economy https://t.co/Ts550Vr7Zf #healthcare— Dan Zeiger (@ZeigerDan) November 5, 2021
The Employment Index increased 1 percentage point in October but remained in strong contraction territory, and LeMaster indicated that some facilities’ clinical staff are department for such higher-paying positions as traveling nurses. Also, competition from other industries for nonclinical workers remains fierce, as dynamic that is most reflected in the Hospital Report On Business® subindex most watched by suppliers.
In October, the Days Payable Outstanding Index increased 3.5 percentage points to 51.5 percent, indicating that hospitals are taking longer to pay suppliers; LeMaster said that could be a product of accounting departments being understaffed.
In its monthly report on Friday, the U.S. Bureau of Labor Statistics indicated that health-care employment increased by 37,000 in October, although it remains 460,000 jobs below its February 2020 level — one of the largest deficits among business sectors. (Some of the jobs counted in the federal jobs report are outside the ambulatory, inpatient and nursing home-type facilities covered by the Hospital Report On Business®.)
“Hospitals are continuing to struggle with recruitment and retention,” LeMaster said. “It’s an instance where the (Hospital PMI® data) and the jobs report kind of reinforce each other, because the sector is definitely trying to play catch up and retain employees for the long term.”
ISM Hospital Inventory Sentiment down 10 points into contraction at 48%! Coupled with high prices, and slowing deliveries - U.S. hospitals continue to feel the pressure.— Kristina Cahill (@KristinaMCahill) November 5, 2021
Regarding inventories, hospitals relying on product substitutions is an issue of timing and risk, LeMaster said. Clinical staff must inspect and approve a substitute, and hospitals must always be on alert for defective or counterfeit products. However, she added, patient care can’t wait for a supply shortage to be resolved — and among less-than-ideal options, substitute products are the best.
“Making substitutions means evaluating products, often in a time crunch,” LeMaster said. “And an inadequate product has to be pulled back. It’s time consuming and risky, but there's no alternative. You have to try to find products to keep providing treatment.”
In case you missed the Report On Business® Roundup from Monday on the release of the October Manufacturing PMI®, you can read it here. The Roundup on Wednesday’s release of the Services PMI® can be read here. For the most up-to-date content on the three indexes in the ISM® Report On Business® family, use #ISMPMI on Twitter.