Report On Business® Roundup: January Hospital PMI®

By Dan Zeiger

After the releases of the ISM® Report On Business® for the manufacturing and services sectors last week, some analysis suggested that the slower growth in January was temporary, and that the pace would pick up because COVID-19 cases in the U.S. are again declining.

While those sectors have gotten relief from lowered case rates — and there was more good news on that front as the week began — at stages of the two-year coronavirus pandemic, there has been few or no breaks for hospitals and other health-care facilities. The still-highly transmissible omicron variant will make the coming months a continuing slog for the resource-strained sector, as the Hospital ISM® Report On Business® data indicated on Monday.

The Hospital PMI® of 64.1 percent was an increase of 0.3 percentage points compared to December, but that was the product of elevated Business Activity (which tied an all-time high) and New Orders (up 6 percentage points) indexes that reflected high volumes of COVID-19 patients. That was compounded by a frighteningly low Employment Index reading, the annual January increase in pharmaceutical prices and respondent comments detailing how hospitals and their staffs remain under tremendous strain.

“I keep feeling like I’m the bearer of doom, but I’m looking for that cloud with the silver lining,” Nancy LeMaster, MBA, Chair of the Institute for Supply Management® Hospital Business Survey Committee, told a conference call of reporters on Monday. “There’s maybe a couple of small silver linings (in the January data), but not much.”

We’ll get to those small victories in a moment, but human capital is the most pressing need in U.S. health care, and LeMaster said the employment situation could be the most severe since the start of the pandemic. The Employment Index in January registered its lowest reading since May 2020, when hospitals halted elective procedures and were furloughed staff. The current worker shortage is not voluntary.

ISM’s Manufacturing and Services Employment indexes are in expansion territory, and LeMaster said some hospital personnel like housekeeping and food service are departing for jobs in other industries. However, the paucity of clinical staff is acute; wrote a Business Survey Committee respondent, “Struggling to fill open employment requisitions — either not interested in working, or they can make more money as a travelling nurse.” Another indicated that the number of employees out sick is at an all-time high.

Hospitals and health-care facilities are exploring several ways to fill the employment void. During the pandemic, regulators and/or lawmakers have relaxed practice limitations on nurse practitioners, out-of-state telehealth services, and other workforce dynamics; the American Hospital Association (AHA) has requested those waivers be extended or made permanent. The AHA has also asked the Biden administration to help lower traveling nurse costs, and some facilities are looking to import clinical workers.

“With a fundamental shortage of staff and people retiring, the labor pool is going to be smaller,” LeMaster said. “We need to change some of those regulations, so I think there will be a push to open up — and these are my words — and modernize the kind of archaic patchwork of perfectionistic laws. That would enable staff to move between states easier and allow telemedicine to operate more effectively, which would really help rural areas that have so much trouble attracting staff.”

The Prices: Supplies Index elevated 9 percentage points in January, and pharmaceutical costs also went up, which was not unexpected, LeMaster said. The Prices: Pharmaceuticals Index has been in expansion (or increasing) territory in each of the 46 months that Hospital Report On Business® data has been collected, but pharma companies typically increase prices in January and July. “Hospitals cope with (the increases),” she said. “They don’t have the same leverage as the pharmaceutical companies, which make drugs that hospitals must have.”

The closest things to silver linings came on the last two subindexes on the Hospital PMI® chart. The Technology Spend Index increased 2.5 percentage points to 54.5 percent, indicating that facilities confidently made such capital investments, and the Touchless Orders Index went up 9 percentage points to 52.5 percent, suggesting more inventory reordering ease, with fewer product substitutions.

“One month does not make a trend, and we’ve been here before, thinking we were starting to pull out of this, only to have the next month crash again,” LeMaster said. “So, we’ll try and be a little optimistic.” She was referring to the Touchless Orders Index, but LeMaster could have been speaking about the entire hospital subsector in January.

Omicron might be on the wane, but health-care facilities have seen this movie before: When delta variant cases declined, hospitals in many parts of the U.S. — particularly rural areas — remained highly populated, elevating the country’s vulnerability to another surge. LeMaster expect the comping months to remain stressful; hospitals will continue to treat COVID-19 cases, but elective procedures cannot remain on backlog indefinitely.

“Cases may be coming down, but I’m not sure if the hospitalizations will follow at the same pace,” LeMaster said. “Hospitals will continue to be staff constrained. As I ask around, I don’t expect a recovery in the first quarter. It will be at least the second quarter before hospitals start to see a better and more manageable balance of patients.”

In case you missed the Report On Business® Roundup from last week on the release of the January Manufacturing PMI®you can read it here. The Roundup on the 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.

(Photo credit: Getty Images/TravelCouples)

About the Author

Dan Zeiger

About the Author

Dan Zeiger is Senior Copy Editor/Writer for Inside Supply Management® magazine, covering topics, trends and issues relating to supply chain management.