Report On Business® Roundup: January Hospital PMI®

The Hospital ISM^® Report On Business^® reflected a typical January, Nancy LeMaster, MBA, Chair of the Institute for Supply Management^® Hospital Business Survey Committee, told a conference call of reporters on Friday.

The Hospital PMI^® registered 53.5 percent, a 2.8-percentage point decrease compared to the previous month, amid many of the usual calendar-turning dynamics in health care — among them, increased patient traffic from seasonal respiratory cases, insurance deductibles resetting and price pressures from increases in pharmaceutical costs.

Respiratory cases were up, as was #tariffs anxiety, and the IV fluid shortage continued to delay some elective procedures. Those details and more in the Hospital @ISM® Report On Business® for January; the PMI® registered 53.5%. https://t.co/KbteHxRLWi #ISMPMI #economy #healthcare

— Dan Zeiger (@ZeigerDan) February 7, 2025

The dynamics outside the hospital subsector, however, were anything but typical, and their impact on the PMI^® data could be felt in the coming months.

Those include a new administration that has paused some federal funding processes, impacting some health systems and shutting down clinical trials; frozen health agencies from public communication and guidance; imposed additional tariffs on products from China, a source of many pharmaceuticals and health-care supplies; and nominated a prominent vaccine skeptic to head the U.S. Department of Health and Human Services. And a lethal bird flu strain has spread to cows and is not being ruled out as a health threat to humans.

“There’s a degree (of uncertainty) that exists any time there’s a change in presidential administrations,” LeMaster said. “Medicare and Medicaid will always be targeted (for spending cuts), but I think there is an elevated concern based on the role of some of the members and advisors in the (Trump administration) and how that will impact hospital reimbursements.”

With the halt in clinical trials as well as ongoing research, she added, “One wonders what the impact on public health will be. So, there are a lot of unknowns, which are causing very high-level anxiety. That’s the best way I could put it at this point.”

Still, hospital executives and supply managers had a lot to be pleased with in the January data, which suggested an end to the cycle of patient backlogs and delayed procedures stemming from the hurricane-induced IV fluid shortage. The Backlog of Orders Index (which measures patient service, not products) decreased 3.5 percentage points to move into contraction territory.

“It looks like hospitals have caught up, and those backlogs should be pretty much through the system,” LeMaster said. “The shortages of IV fluids and bags have been tailing off, but syringes are still a problem.”

However, after a mild start to winter, respiratory cases arrived with a vengeance in January. While noting that its website content “is being modified to comply with President Trump’s executive orders,” the U.S. Centers for Disease Control and Prevention reported on Friday that, nationwide, emergency room visits for influenza are at a “very high” level and could increase in many states over the next two weeks.

“In the panelists’ comments, there were signs of a pullback in elective procedures to deal with flu and other particular respiratory diseases,” LeMaster said. “We expect those cases to be at a very strong level in February.”

.@ISM’s Nancy LeMaster: “The most frequently mentioned issue by panelists was (#tariffs). There was significant concern that even companies not directly impacted by tariffs will use them as an excuse to raise prices.” #ISMPMI https://t.co/j8f7AytqcB #economy #healthcare

— Institute for Supply Management (@ism) February 7, 2025

In other January data:

• Despite looming tariffs, manufacturing and services inventories didn’t go up. For hospitals, that was not the case, as the Inventories Index increased 4 percentage points to register above 60 percent.
• The prices indexes — Prices, Prices: Supplies and Prices: Pharmaceuticals — have historically seen big gains in January or stayed somewhat stable. This year brought the latter, as the three gauges increased a net 0.5 percentage point. However, the Prices and Prices: Pharmaceuticals indexes were close to 60 percent and the Prices: Supplies Index above 60 percent, so pressures remain.
• The Technology Spend Index continued to indicate robust capital investment from health-care systems, increasing 3 percentage points to 57.5 percent.
• The Days Payable Outstanding Index — which could be a reading impacted by new federal policy, LeMaster said — fell into contraction territory, at 48 percent.

In the meantime, hospitals are buckling up for “an environment that could be unlike anything we’ve experienced before,” LeMaster said.

She added, “It could take a while for people to adapt and figure out the best path forward, how to run facilities as efficiently as possible and be as proactive as possible.”

In case you missed the Report On Business^® Roundup on the release of the January 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/Smith Assavarujikul)