Economic health of hospitals continues to improve

July 7, 2022

According to a report from the Institute for Supply Management (ISM), economic activity in the hospital subsector grew in June for the 25th consecutive month.

The report was issued by Nancy LeMaster, MBA, Chair of the Institute for Supply Management (ISM) Hospital Business Survey Committee: “The Hospital PMI registered 58 percent in June, a 1.1- percentage point increase from the May reading of 56.9 percent, indicating a 25th consecutive month of growth. Both the business activity and new orders indexes increased in June compared to May. The Employment Index decreased slightly in June compared to May. The Case Mix Index moved into contraction territory, registering 48.5 percent, a decrease of 4.5 percentage points compared to the May figure of 53 percent. The Days Payable Outstanding Index also fell into contraction at 49.5 percent, down 5.5 percentage points from the 55 percent reported in May. The Technology Spend Index registered 53.5 percent, a 0.5-percentage point decrease from the May reading of 54 percent.”

LeMaster continues, “Most Hospital Business Survey Committee respondents reported a continued decline in COVID-19 cases. The rate of backfill varied, with strong increases in elective procedures at some facilities and lower volumes at others. Supply chain disruptions continued to plague the industry, with many panelists commenting on high volumes of product substitutions and challenges getting product from secondary suppliers. Inflation fueled higher prices, and fuel surcharges increased. With COVID-19 cases leveling off, inventory levels are being reduced and periodic automatic replacement (PAR) levels reevaluated. High wage rates and supply cost increases continue to put pressure on hospital margins.”