Report On Business® Roundup: April Hospital PMI®
The Hospital ISM® Report On Business® for April revealed largely positive numbers due to robust patient volumes, but enthusiasm was tempered by the fact that long-time challenges in health care are only intensifying.
The Hospital PMI® reading of 55 percent was a 4-percentage point increase compared to March, a nice rebound after a month in which patient traffic was limited despite a continuing prevalence of respiratory cases. A slowing economy was cited as a reason many consumers were hesitant to seek treatment.
Such demand worries continue — along with concerns among hospital executives regarding proposed federal budget cuts impacting health care, rising costs exacerbated by tariffs, and underpayments or payment delays from Medicare and Medicaid.
Business activity growth quickened, #employment returned to expansion and #tariffs raised prices and slowed delivery times. Those details and more in the Hospital @ISM® Report On Business® for April; the PMI® was 55%, up 4 points. https://t.co/bhpnJyquQM #economy #healthcare
— Dan Zeiger (@ZeigerDan) May 7, 2025
All are significantly impacting hospitals’ finances and are issues that are reflected in the Hospital PMI® data and discussed each month by Nancy LeMaster, MBA, Chair of the Institute for Supply Management® Hospital Business Survey Committee. Last week, the issues were the focus of a report by the American Hospitals Association (AHA), which stated that “the ability of hospitals to deliver high-quality, timely care” is in jeopardy.
“(The health-care community) keeps coming back to the fact that it’s not an issue of if there will be payment reductions and increased costs, it’s a matter of how much,” LeMaster told a conference call of reporters on Wednesday. “We figure out how to cope with that and find ways to be more cost effective. A stock answer is going more to outpatient care, so you see knee replacement surgery patients going home the same day or the next day, when it used to be a five- to seven-day hospital stay.”
She continued, “Part of the questions goes beyond rural hospitals. Will we see some urban hospitals shutting down? There’s a lot of dialogue about where we go from here and if it means less capacity to treat people in certain areas.”
While hospitals grapple with such dynamics that are, in many ways, existential, there are small victories in the April data. The Business Activity Index increased 2.5 percentage points to expand strongly, with a reading above 55 percent.
The Employment Index was up 5 points to return to growth territory, as some panelists cited success in recent labor recruitment and retention initiatives. In related news, some of the nation’s for-profit hospital systems reported in first-quarter earnings calls that labor costs had stabilized year over year, particularly for contract workers, and Fitch Ratings found nonprofits making similar progress.
Many of the challenges in April stemmed from tariffs and trade uncertainties — not surprising with the overwhelming share of pharmaceuticals and medical supplies coming from overseas. The Supplier Deliveries Index elevated 9 percentage points to strong expansion, which indicates longer lead times, and the Touchless Orders Index (49.5 percent) contracted, indicating less-than-smooth reordering processes.
All three prices gauges — Prices, Prices: Pharmaceuticals and Prices: Supplies — were in strong expansion, and facilities continued chipping at current inventories to help blunt the impact of supply cost increases. The Inventories Index was in contraction for a second month.
“Hospitals are taking down their inventories, not only because volume went up (in April), but also because pricing still is causing a lot of pain,” LeMaster said. “Supplier deliveries were slower, but the delivery times aren’t causing as much pain as are the back orders and product substitutions that are happening.”
Meanwhile, some shipments have been slowed as buyers and suppliers wrangle over which party absorbs tariff-related costs. Wrote a Business Survey panelist, “We are actively pushing back on (increases). We expect our vendors to honor our contracted pricing.”
Hospital #ISMPMI survey respondent: “We have not taken price increases related to #tariffs, though suppliers are probing the appetite. It’s hard to determine which tariffs are real and which increases are opportunistic from suppliers.” https://t.co/4CSocft4px #economy #healthcare
— Institute for Supply Management (@ism) May 7, 2025
In other April news:
- The Case Mix Index, a lagging indicator, fell 5 percentage points to 49.5 percent. The contraction in April is reflective of the lower patient traffic the previous month, and LeMaster expects a rebound in May.
- The Technology Spend Index registered 56.5 percent, an increase of 1.5 percentage points, suggesting that economic uncertainties have yet to impact such investments.
- Though the U.S. measles outbreak is expected to be the worst in 30 years, panelists’ comments have been rare. Cases have been manageable, LeMaster said, and largely restricted to pediatric facilities and home care.
Tariffs will continue to raise anxieties in coming months, LeMaster said: “Hospitals are trying to figure out how to limit the impact, but of course that can only go on for so long. They can push back on pricing, but those contracts will eventually expire. I think the hope with tariffs is that since they’ve been so erratic, the (Trump administration) will retreat before there is significant damage.”
She concluded, “That’s been the talk of supply chain people, pretty much nonstop.”
In case you missed the Report On Business® Roundup on the release of the April 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/Marina Demidiuk)