Report On Business® Roundup: December Hospital PMI®

Although many facilities were still contending with supply shortages and patient backlogs stemming from Hurricanes Helene and Milton, the Hospital ISM^® Report On Business^® reflected a typical December.

The Hospital PMI^® registered 56.3 percent, a 2.2-percentage point decrease compared to the previous month, as patient traffic remained robust. That was due not only to treatments being delayed due to the storms, but also patients scheduling elective procedures before their insurance deductibles reset at the end of the year.

“There was definitely a bounce from the cases in October that were pushed back,” Nancy LeMaster, MBA, Chair of the Institute for Supply Management^® Hospital Business Survey Committee, told a conference call of reporters on Thursday. “From a supply chain perspective, hospitals are still feeling the impact of the IV solutions shortage.”

Demand was typically robust as the year ended, while staffing levels and product shortages remained challenges, the Hospital @ISM® Report On Business® found in December. The PMI® was 56.3%, and the #Employment Index increased. https://t.co/rrC6Ua647X #ISMPMI #economy #healthcare

— Dan Zeiger (@ZeigerDan) January 9, 2025

The Business Activity and New Orders indexes decreased in December but remained in strong expansion territory. So did the Supplier Deliveries Index, which indicated slower lead times, but an 8.5-percentage point decrease reflected improved performance.

Meanwhile, the Employment Index increased 3 percentage points to move into growth territory, as many facilities seemed to walk a tightrope with staff levels — big enough to handle demand, but not too big to adversely impact margins.

“Hospitals closed the year with definitely a lot of pressure on employment and supply deliveries, due to the various shortages throughout the year,” LeMaster said. “Volume was a little uneven, but in some ways the unevenness is part of a normal that comes with everyone trying to manage the cost of health care in general.”

A saving grace has been a delayed start to flu and respiratory syncytial virus (RSV) season. Some areas of the country have been hit hard, but mild weather to start to the winter likely pushed back a national surge in respiratory cases. That appears to be quickly changing, and the norovirus stomach bug is also spreading.

“With many parts of the country now in a deep freeze, people are inside more, which we all know increases the likelihood of those viruses getting passed around,” LeMaster said. “So, I think hospitals a preparing in the first quarter for a surge in flu and other cases. We might be behind the pace right now, but a comparison of overall cases to previous seasons is something we won’t be able to make until at least March.”  

In other December data:

• The Inventories Index increased 3.5 percentage points and the Inventory Sentiment Index was up 5.5 points, with both in strong expansion. Some of that movement was due to typical end-of-year buying, LeMaster said, but some survey respondents indicated a desire to get ahead of a potential ports strike on the East and Gulf coasts. That was averted by a temporary labor agreement announced on Wednesday.
• The three prices indexes — Prices, Prices: Supplies and Prices: Pharmaceuticals — decreased a combined 9.5 percentage points, but all hovered around 60 percent. “There’s no meaningful decrease on prices,” LeMaster said, “and that’s not likely to happen soon with concerns over potential tariffs that will impact many items in the hospital supply chain.”
• The Case Mix Index increased 3.5 percentage points to 53.5 percent; LeMaster said this reading is consistent with delayed elective procedures and surgeries that typically require longer patient stays.

Hospital #ISMPMI survey respondents: “The Thanksgiving through Christmas period is time for a lot of elective procedures, as people have met their insurance deductibles.” Also, “Conserving IV solutions has reduced elective surgeries.” https://t.co/wFIF0g8Bd3 #economy #healthcare

— Institute for Supply Management (@ism) January 9, 2025

With the calendar turning, hospital supply chains are “in a good place,” LeMaster said, a sign of resiliency after a year of cyberattacks, weather-related disruptions and continuing lessons from COVID-19. Uncertainties remain, particularly regarding Medicare and Medicaid reimbursement rates and other health-care policies as a new administration takes power.

“I think there will be more discussion about the right balance of inventory, which has been a focus since the pandemic,” LeMaster said. “I’m hearing it again for a different reason: It just feels like there’s more instability in the supply chain, and there’s a lot of discussion about improvements on communication between suppliers and hospitals, trying to bridge that gap.”

In case you missed the Report On Business^® Roundup on the release of the December 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/Dlewis33)