Report On Business® Roundup: June Hospital PMI®
On Fourth of July weekend, a baseball analogy seems fitting to discuss the Hospital ISM® Report On Business®: The late, legendary announcer Vin Scully often said hot hitters were living in the “high-rent district,” citing their lofty statistics.
If the Hospital PMI® figures for May reflected prime real estate, those for June were not as eye-popping but still commanded an expensive lease. The composite index reading of 55.8 percent was powered by strong patient volumes (though not at the previous month’s levels) while hospitals continued investing in technology and even got some relief on prices.
If that’s an off month, the hospital subsector will take it every time. “It was not a rock star month like May, but it was a pretty good month,” Nancy LeMaster, MBA, Chair of the Institute for Supply Management® Hospital Business Survey Committee, told a conference call of reporters on Friday. “And more importantly, I didn’t see any red flags (in the data).”
Patient traffic was down but remained busy, staff recruitment efforts were successful and #healthcare facilities kept investing in technology. Those details and more in the Hospital @ISM® Report On Business® for June; the PMI® was 55.8%. https://t.co/XaX9KsNCDL #ISMPMI #economy
— Dan Zeiger (@ZeigerDan) July 5, 2024
The Business Activity and New Orders indexes dropped a combined 12 percentage points to come down from their May readings of 60 percent or better. That’s still strong growth, bolstered by the Backlog of Orders Index (which measures patients, not products) moving into expansion territory, up 5 percentage points.
The backlog could be a product of treatments delayed as clinicians take summer vacations, though the overall employment picture indicates facilities are largely handling the patient traffic. The Employment Index increased 1 percentage point to stay in expansion as Business Survey Committee respondents reported success in recruitment efforts to replace traveling labor with permanent employees.
“There’s no sign that the volume numbers will go downhill,” LeMaster said. “The staff recruitment and retention are good signs; that means we’re not just churning people who are leaving as fast as they come in. That situation does not provide any stability. So, having the labor to be able to take care of that volume is a very positive trend.”
Meanwhile, the Prices, Prices: Pharmaceuticals and Prices: Supplies indexes decreased a combined 19.5 percentage points after May readings above 60 percent. However, they all remain in expansion (or “increasing”) territory, and the history of those indexes suggests such relief will be temporary.
Also, respondents noted inflation for some products and supplies, and last month, Chicago-based health-care consultant Kaufman Hall suggested a potential “new normal” of elevated prices eating into profit margins.
“There’s no consistency in terms of the prices indexes; when they dip into the 50s one month, they’ll be back up in the 60s the next month,” LeMaster said. “They’ve been bouncing all over, so there’s no good trendline. We had some comments about the tariffs (on supplies from) China having an impact, so there hasn’t been a lot of relief in pricing.”
Hospital #ISMPMI survey respondent: “The #economy. Prices keep going up and up and up. The price of hard goods is going up, therefore the end price is going up. Things keep going on back order, so that is driving prices up as well.” https://t.co/SyEnsebCK1 #healthcare #inflation
— Institute for Supply Management (@ism) July 5, 2024
If there were no red flags in June, there were at least dynamics to watch. The Supplier Deliveries Index remained in strong expansion territory (indicating longer lead times) and the Inventories Index returned to expansion. That suggests facilities are optimizing their supplies due to inflationary pressures, slower deliveries and continuing turbulence with syringes.
The Technology Spend Index was up 1 percentage point to 61.5 percent, but not all of that capital investment is positive and patient-focused. While the impacts of the Change Healthcare breach in February appear to be waning, hospitals remain a frequent target of cyber criminals — which comes at a human cost.
And every dollar spent on security is not one spent on care. Vulnerabilities are across the board, LeMaster explained: Rural facilities typically lack the prevention resources, and large systems have the budgets attractive to ransomware attackers.
“It’s frustrating in that dollars are not being spent on improving functionality or other things that could be benefit to the hospital. It’s very much a defensive move,” LeMaster said. “I don’t think people have a handle on how to combat it. Every time we think we’ve come up with fixes and security, criminals find another way in.”
In case you missed the Report On Business® Roundup on the release of the June 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 X, formerly known as Twitter.
(Photo credit: Getty Images/SDI Productions)