Report On Business® Roundup: November Hospital PMI®

December 07, 2023
By Dan Zeiger

In recent years, health-care providers have experienced a shifting peak season — from the summer, when children are out of school and adults generally have more elective-procedure flexibility, to the winter, as consumers rush to beat the new year’s insurance-deductible resets.

The Hospital ISM® Report On Business® data for November, released on Thursday, confirmed this dynamic. The Hospital PMI® registered 59.8 percent, up 7.7-percentage points compared to the previous month, powered by healthy gains in the Business Activity (up 18.5 points, to above 70 percent) and New Orders (up 7 points, to above 60 percent) indexes.

Add the normal rise in winter respiratory cases, and there was no shortage of traffic at hospitals and other health-care facilities. “November came roaring in,” Nancy LeMaster, MBA, Chair of the Institute for Supply Management® Hospital Business Survey Committee, told a conference call of reporters on Thursday. “It was what’s become a typical month for hospitals during the fourth quarter.”

However, facilities weren’t overwhelmed. The Backlog of Orders Index increased just 0.5 percentage point and remained in contraction, indicating hospitals managed to keep patients’ appointments. To help meet demand, they bulked up on staff (the Employment Index increased 7 percentage points) and supplies (the Inventories Index rose 9.5 points); both indexes returned to expansion territory.

“People were able to get scheduled,” LeMaster said. “In the past, nobody worried about surgery before the holidays, but now that’s flipped and because people want to have procedures before January, when a new deductible year starts. And there was an increase in respiratory conditions. But there was nothing in (Business Survey Committee) panelists’ comments that the activity was excessive or beyond what hospitals normally get at this time of the year.”

The Employment Index has changed direction — going from expansion to contraction, or vice versa — seven times this year. That volatility could be due to the unique nature of health-care employment, LeMaster said. Because patient volumes don’t always translate to profitability, it’s more difficult for facilities to right-size nonclinical head counts when demand fluctuates. As a result, most hospitals focus their cost-cutting efforts on supplies, not labor.

The Employment Index movement in 2023 suggests that November’s gain could be temporary. However, LeMaster said, “I didn’t see any mentions this month about planned reductions with layoffs or hiring freezes, so nonclinical labor may have stabilized again.”

The inventories boost was a product of stocking up on personal protective equipment (PPE) and other supplies for winter virus season. But with manufacturers due to take inventories and set prices in January, supply managers were also likely hedging against price increases and/or stockouts, LeMaster said.

In other subindex news:

  • All three prices gauges — the Prices, Prices: Pharmaceuticals and Prices: Supplies indexes — were at 55 percent or higher, and manufacturers will add increases in January. “There’s no break on pricing,” LeMaster said.
  • The Supplier Deliveries Index remained in expansion, or “slowing,” territory, as survey respondents generally indicated improved supply chain performance, though back orders and shortages remained issues for some.
  • The Technology Spend Index was up 1.5 percentage points to 57 percent in November, indicating an eagerness for such capital investments.

“There was strong volume, and the supply chain was pretty stable,” LeMaster said. “From a hospital perspective, you hate to say it, but sick people are usually good (for business). We always say that we don’t want people to be sick, but if they are sick, we want them at our hospital, so it was a strong month for that.”

In case you missed the Report On Business® Roundup on the release of the November Manufacturing PMI®you can read it here. The Roundup on the release of the Services PMI® can be read here. Also, the Semiannual Economic Forecast for the manufacturing and services sectors will be released on December 15.

For the most up-to-date content on the three indexes in the ISM® Report On Business® family, use #ISMPMI on X, formerly known as Twitter.

(Photo credit: Getty Images/JazzIRT)

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.