Hospital PMI™ at 63.0%
October 2020 Hospital ISM® Report On Business®
(Tempe, Arizona) — Economic activity in the hospital subsector grew in October for the fifth consecutive month, say the nation’s hospital supply executives in the latest Hospital ISM® Report On Business®.
The report was issued today by Nancy LeMaster, MBA, Chair of the Institute for Supply Management® (ISM®) Hospital Business Survey Committee: “The Hospital PMI™ registered 63 percent in October, down 0.3 percentage point from the September reading of 63.3 percent. This was the fifth month of growth following two months of contraction. The Business Activity Index and Employment Index increased in October, and the New Orders Index decreased. The Case Mix Index increased to 61 percent, up 9.5 percentage points compared to the September reading of 51.5 percent. The Days Payable Outstanding Index decreased to 50.5 percent, down 3.5 percentage points from the September reading of 54 percent. The Technology Spend Index registered 56 percent, a decrease of 3.5 percentage points from the September reading of 59.5 percent.
Survey Committee members’ comments about growth continued to be mixed. In October, there were more comments about the negative impact of COVID-19 spikes on capacity and availability of personal protective equipment (PPE) than in the previous month. Despite increased spikes, several panelists commented on growing or stable volumes of elective procedures. Availability and cost of PPE continues to be a primary concern. Last month’s positive comments that shortages might be easing slightly were replaced by concerns about the impacts of the flu and year-end inventory reductions on availability. One panelist wrote, ‘End of the year brings catalog consolidations from vendors, increased mergers-and-acquisitions activity, contract expirations and item shortages for things like flu supplies (which are also COVID-19 supplies). Unfortunately, COVID-19 has exacerbated all of this.’ Shortages and increased use are resulting in more special requests and manual ordering,” says LeMaster.
Hospital PMI™ History
About This Report
The information compiled in this report is for the month of October 2020.
The data presented herein is obtained from a survey of hospital supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.
Data and Method of Presentation
The Hospital ISM® Report On Business® is based on data compiled from hospital purchasing and supply executives nationwide. Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Employment, Supplier Deliveries, Inventories, Prices, Prices: Pharmaceuticals, Prices: Supplies, Backlog of Orders, New Export Orders, Imports, Inventory Sentiment, Case Mix, Days Payable Outstanding, Technology Spend, and Touchless Orders), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed.
The Hospital PMITM is a composite index computed from the following, equally weighted indexes: Business Activity, New Orders, Employment and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A Hospital PMI™ index reading above 50 percent indicates that the hospital sub-sector is generally expanding; below 50 percent indicates that it is generally declining. For the sub-indexes, except Supplier Deliveries, an index reading above 50 percent indicates that the sub-index is generally expanding; below 50 percent indicates that it is generally contracting. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.
The Hospital ISM® Report On Business® survey is sent out to the Hospital Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the fifth business day of the following month.
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About Institute for Supply Management®
Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the ISM Mastery Model®. This report has been issued by the association since 1931, except for a four-year interruption during World War II.
The full text version of the Hospital ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the fifth business day* of every month at 10:00 a.m. ET.
The next Hospital ISM® Report On Business® featuring November 2020 data will be released at 10:00 a.m. ET on Monday, December 7, 2020.
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