Hospital ISM Report On Business October 2020 shows Hospital PMI at 63 percent
Economic activity in the hospital subsector grew in October for the fifth consecutive month, reported the nation’s hospital supply executives in the latest Hospital ISM Report On Business.
The report was issued 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.
The Hospital PMI 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.
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.
