Report On Business® Roundup: July Hospital PMI®
For health-care facilities, July featured the usual recent worries — profit margin pressure and product shortages — that, in many ways, were exacerbated in parts of the country by a hurricane and another high-profile technology outage.
Given those circumstances, it was comforting that the Hospital ISM® Report On Business® data reflected a somewhat normal month. The Hospital PMI® registered 53.3 percent, a 2.5-percentage point decrease compared to June, as business activity and new orders growth slowed but employment was steady.
Storm season is likely to intensify in the late summer months, cybersecurity risk shows no signs of lowering, and the presidential election is a source of anxiety for all businesses. Yet, the July performance suggested hospitals are prepared for more turbulence, Nancy LeMaster, MBA, Chair of the Institute for Supply Management® Hospital Business Survey Committee, told a conference call of reporters on Wednesday.
The Hospital @ISM® Report On Business® for July found a mixed bag on patient volumes, #supplychain performance and inventories, as geography (as in Hurricane Beryl’s path) played a factor. The PMI® of 53.3% was down 2.5 points. https://t.co/sf27mYzOG7 #ISMPMI #economy #healthcare
— Institute for Supply Management (@ism) August 7, 2024
“It was really a tale of two cities,” LeMaster said, referring to respondent’s evaluations of patient volumes, supplier delivery performance and inventories that were predicated on geography. Specifically, many facilities in Texas and the Southeast impacted by Hurricane Beryl experienced lower patient traffic and increased supply disruption.
Wrote a Business Survey Committee respondent, “Some suppliers were impacted by Hurricane Beryl. They lost power, and medicines that required refrigeration were spoiled, leading to delivery delays because we had to reorder from manufacturers.”
While Beryl was disruptive, it was not a superstorm. However, many of the biggest supply chain disruptions occur with flooding in the aftermath, as is the case with Tropical Storm Debby along the Atlantic Coast.
“Of course, people in Florida, New Orleans and other areas are used to this and expect it,” LeMaster said. “But some of these storms are creating more rain inland, in areas that aren’t necessarily used to it. We’ve seen conscious inventory planning and other preparation, which shows how seriously (hospitals) are taking it.”
Meanwhile, the CrowdStrike IT outage wreaked havoc on patient scheduling and other transactions at some facilities, leading to manual record-keeping that could impact the Backlog of Orders Index in August. That index (which measures patients, not products or parts) indicated slight expansion in July.
With some hospitals finally escaping the effects of the Change Healthcare cyberattack, LeMaster said, “I think there’s a lot more focus on having IT and clinical engineering working together to review (cybersecurity). I would expect more pushback on technology manufacturers that they’ve got to make the software safer and be more aware of vulnerabilities.”
In July, the Hospital #ISMPMI Employment Index was up 0.5 percentage point and in expansion territory for a third straight month. Panelists’ comments were mixed: Some facilities added staff; others froze hiring due to margin pressures. https://t.co/V826ylCR7c #economy #healthcare
— Dan Zeiger (@ZeigerDan) August 7, 2024
Another development to watch is a more than 25-percent drop in the national blood supply since the start of July, according to the American Red Cross. LeMaster said hospitals can collaborate to minimize outdated blood and encourage patients to self-donate before procedures. “Hospitals are rehearsed in this,” she said, “but it’s a concern because summer often brings an uptick in gunshot wounds and stabbings.”
In other subindex news, the Prices, Prices: Supplies and Prices: Pharmaceuticals indexes were down a combined 4 percentage points, though they remained in expansion (or “increasing”) territory. “We’ll take any relief we can get,” LeMaster said.
The Technology Spend Index remained in expansion for an 11th straight month, but at 54.5 percent, it indicated much slower growth than in June (61.5 percent). “Hospitals are reporting growth in investing in new technology, but they are being careful with their capital dollars,” LeMaster said. “They may be looking at different financing options.”
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/Gorodenkoff)