Report On Business® Roundup: July Hospital PMI®
The Hospital ISM® Report On Business® indicated a return to expansion in July, with an employment bump that mirrored federal jobs data, but such positive developments were muted somewhat by tariff-powered price increases and the specter of federal budget cuts.
The Hospital PMI® registered 51 percent, a 2-percentage point gain compared to the previous month, fueled by a faster rate of expansion for the Business Activity Index and a 6.5-percentage point gain that lifted the Employment Index out of contraction.
But survey respondents noted that their facilities and systems paid more for supplies thanks to tariffs, and significant levies on pharmaceuticals could be on the way. And while much of the budget fallout from the sweeping federal budget and policy bill passed in June was designed to hit in the future, hospitals have begun preparations — including changes to many of their business and supply chain operations.
ISM hospital PMI bounces back to expansion territory for Jul as employment losses end and business activity rises while new orders were flat: pic.twitter.com/1ucsv9cZ2O
— E.J. Antoni, Ph.D. (@RealEJAntoni) August 7, 2025
“The story behind the numbers is now that the ‘One Big, Beautiful Bill’ has been signed, there’s concern about the timeline for cuts to Medicaid and potentially Medicare, and what the funding is going to look like,” said Nancy LeMaster, MBA, Chair of the Institute for Supply Management® Hospital Business Survey Committee.
“And while (previous months) had worries about the tariffs happening, July was the first month where hospitals said they were actually seeing price increases. Those products are not necessarily high-dollar, but they’re high-volume. So, if you start seeing increases on masks, gloves, gowns and PPE (personal protective equipment), that adds up pretty quickly.”
The Prices Index was down 3.5 percentage points and the Prices: Supplies Index matched its June reading, but both gauges remained in strong expansion (or “increasing”) territory. So did the Prices: Pharmaceuticals Index, which was up percentage 2.5 points with President Donald Trump threatening tariffs of up to 250 percent.
However, the most eye-catching subindex reading in July was the Employment Index, which reversed a one-month dip into contraction to post an “unchanged” status. That reading was in line with the federal jobs report from the U.S. Bureau of Labor Statistics (BLS), which revealed that the Health Care & Social Assistance industry accounted for nearly all private job gains in the U.S. in July.
LeMaster noted that the job gains in July were largely for clinical staff, with facilities continuing to phase out temporary physicians, nurses and technicians for permanent hires. Hospital Business Survey panelists commented on hiring freezes for such roles as office and food-service staff.
“Though we haven’t seen much traffic for respiratory infections this summer, the demand for surgical procedures is still there,” she said. “So, when you know you’ve got the patients, you need clinicians to take care of them in the beds. The challenge in health care is not that demand goes away. It’s that your facility is not always paid or reimbursed for it.”
And that is a challenge hospitals face in the wake of the federal budget bill, which calls for US$1.1 trillion in health-care spending cuts over the next 10 years, with up to 12 million Medicaid recipients losing coverage. Panelists noted cost cutting and process revamping at their facilities in July, and LeMaster said it’s not hyperbolic to suggest that the federal chopping block has necessitated a health-care realignment.
Hospital #ISMPMI survey respondent: “Scarcity of funds for new hires, equipment purchases and some medical supplies. Costs from our preferred vendor for supplies sourced from China, Canada and Mexico are up 17% due to #tariffs.” https://t.co/8yREaetwYc #economy #healthcare
— Institute for Supply Management (@ism) August 7, 2025
Hospitals are generally (small-d) democratic, LeMaster said, with staff at all levels given a voice that can often amount to a veto — which can hamper efforts to standardize and streamline processes. “If somebody complains, it can be one step forward and two steps back,” she said. “You end up trying to do it 10 different ways. I don’t think that’s possible anymore.”
LeMaster continued, “It’s been an uphill push sometimes to get improvements adopted. But (hospitals) are still doing way too much manually and have to figure out how to make things more automated. The amount of manual rework in the procure-to-pay cycle in hospitals is crazy. So, I think some of those changes will be forced, because I don’t see anything on the horizon from the outside that will provide much relief to hospitals.”
In case you missed the Report On Business® Roundup on the release of the July 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/JazzIRT)