Report On Business® Roundup: November Hospital PMI®
As expected in November, the Hospital ISM® Report On Business® reflected a rebound from the supply chain disruptions caused by the back-to-back hurricanes hitting the Southeast region of the country, but IV solutions shortages persisted.
The Hospital PMI® registered 58.5 percent, a 6.6-percentage point increase powered by double-digit boosts in the Business Activity and New Orders indexes. Patient volumes were up, but so were costs — the Prices, Prices: Supplies and Prices: Pharmaceuticals indexes elevated a combined 26.5 percentage points.
The Employment Index moved out of contraction territory, but several panelists commented on their facilities’ efforts to reduce full-time employees, even with volumes projected to remain strong. Such reductions, mostly among nonclinical staff, have been motivated by cost cutting to improve profit margins and in preparation for potential Medicare and Medicaid reimbursement cuts in 2025.
Patient traffic was back up — so were prices — while weather events and the East Coast ports strike lengthened lead times. Those details and more in the Hospital @ISM® Report On Business® for November; the PMI® jumped to 58.5%. https://t.co/GL6L1bL2hh #ISMPMI #economy #healthcare
— Institute for Supply Management (@ism) December 6, 2024
“There’s some uncertainty about what’s next, who will be running (federal agencies),” Nancy LeMaster, MBA, Chair of the Institute for Supply Management® Hospital Business Survey Committee, told a conference call of reporters on Friday. “And the way companies typically react to it, especially in health care, is to be conservative, try to preserve cash and manage down expense to provide wiggle room to navigate through the uncertainty.”
While cuts to Medicare and Medicaid reimbursement rates is a constant source of indigestion for hospitals, clinics and physicians, it’s heightened in the wake of the 2024 election. Members of the Republican Party majority in the U.S. House of Representatives are indicating cuts to both programs are “on the table.”
Asked if concerns have increased among the health-care community, LeMaster said, “Yes. Very much so.”
On Friday, the federal jobs report revealed a nonfarm employment increase of 227,000 in November, including a gain of 54,000 health-care positions. However, LeMaster said she was not surprised by the full-time employee reduction efforts at some facilities, citing potential reimbursement cuts.
She added, “Hospitals always have to be cautious about how they manage their cost structure, Also, a lot of hospitals are on calendar fiscal years, so they’re getting their numbers in order before closing out the year.” Wrote a panelist, “Budget cuts have resulted in a hiring freeze, so we’re unable to backfill vacant positions.”
While the industry braces for what’s potentially to come from Washington, an immediate concern is what hasn’t been coming, at least not at normal levels: IV solutions. While hurricane-damaged plants in North Carolina and Florida have restarted production, hospitals still had to postpone surgeries, rely on imported fluid and conserve their inventories in November.
“Just because hurricanes had passed through didn’t mean that there weren’t challenges to transportation and getting products,” said LeMaster, noting that the Supplier Deliveries Index increased 2.5 percentage points to remain above 60 percent, indicating slower lead times. “Plus, there may have been some ripple effects from the East Coast ports strike.”
Hospital #ISMPMI survey respondents: “Major shortage of IV fluids because one of the major national providers has been out of operation due to the floods in North Carolina.” Also, “We're reeling from IV solutions shortages.” https://t.co/cKOtxBSrOU #economy #healthcare
— Dan Zeiger (@ZeigerDan) December 6, 2024
In other subindex news:
- The Backlog of Orders Index reflected the procedure delays due to the IV fluid shortage, as it registered above 60 percent, an increase of 13.5 percentage points.
- The Prices: Pharmaceuticals Index made history in October, dropping 7.5 percentage points to land in contraction territory for the first time since Hospital ISM® Report On Business® data collection began in April 2018. But a 14-point increase in November elevated the index above 60 percent.
- Supply chain sluggishness impacted the Days Payable Outstanding Index, which rose 8.5 percentage points to 54 percent. LeMaster said she expects that index to stay higher if those issues present, as longer lead times also slow payment processes.
In case you missed the Report On Business® Roundup on the release of the November Manufacturing PMI®, you can read it here. The Roundup on the release of the Services PMI® can be read here.
Also, the ISM Supply Chain Planning Forecast (formerly the Semiannual Economic Forecast) for the manufacturing and services sectors will be released on December 16. 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)