Report On Business® Roundup: March Hospital PMI®

The Hospital ISM^® Report On Business^® for March indicated that patient traffic can slow even as seasonal respiratory ailments remain prevalent, with economic uncertainty impacting the health-care decisions of many consumers.

The Hospital PMI^® registered 51 percent, down 5 percentage points compared to the previous month. A combined 23-percentage point drop in the Business Activity, New Orders and Backlog of Orders indexes exemplified the magnitude of the reduction in volumes.

Given the recent environment of tariffs turmoil, stock market volatility and continuing cuts of funding and head counts at federal agencies that are critical to the Health Care & Social Assistance industry, it’s likely things could get worse before they get better.

Lead times quickened, patient traffic slowed and #employment was mixed as anxiety over #tariffs and federal funding cuts continued. Those details and more in the Hospital @ISM® Report On Business® for March; the PMI® was 51%. https://t.co/fXDYPQeY7m #ISMPMI #economy #healthcare

— Dan Zeiger (@ZeigerDan) April 7, 2025

“Some softening in elective procedures in the first quarter is not unusual, but there are still a lot of respiratory cases out there,” Nancy LeMaster, MBA, Chair of the Institute for Supply Management^® Hospital Business Survey Committee, said during a conference call of reporters on Monday. “There’s some speculation and concern with so much economic upheaval that people may be especially cautious about having elective procedures, not wanting or able to take time off work, or just not having the money for copays.”

LeMaster said the anxiety is prompting health-care systems and facilities to cut costs in their two biggest areas: labor and supplies. As a result, the Employment Index remained in contraction territory in March, and the Inventories Index decreased 6 percentage points to also land below 50 percent. Sagging demand will exacerbate the situation, LeMaster said.

“Systems are undertaking multimillion-dollar cost-cutting efforts to put themselves in a stronger position to weather the storm,” she said. “But if people postpone treatments, that will be a third rail that we’ll have to see how it plays out. Like in any other business, in times of great upheaval, you pause and don’t invest. You look to cut your cost as low as you possibly can.”

Regarding investment, the Technology Spend Index increase of 6 percentage points to 55 percent was a ray of sunshine. That index went into contraction territory in February after 17 consecutive months in expansion.

That pharmaceuticals were largely exempt from the latest round of tariffs from the Trump administration was another break for health care. The Prices: Pharmaceuticals Index was up 1 percentage point to remain in mild expansion (or “increasing”) territory in March.

But drugs are not manufactured in a vacuum, so costs could still go up thanks to tariffs on other goods. And LeMaster said health-care executives remain concerned about duties on medical equipment and devices.

“One of the challenges is that it’s very hard to get good information on country of origin for a lot of medical products, so you almost have to estimate the tariff impact,” she said. “We’ve also had reports of hospitals finding price increases under the guise of tariffs when those tariffs hadn't even been put in effect. So, there’s a lot of noise in the supply chain right now.”

Hospital #ISMPMI survey respondents: “Upper respiratory infections have been consuming our inventory faster than we can replenish it.” Also, “(Our facility) has had a lower number of scheduled treatments due to economic pressures.” https://t.co/BfJwrhA291 #economy #healthcare

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

In other March data:

• The Supplier Deliveries Index decreased 8 percentage points to land in contraction territory (indicating faster lead times) for the first time since August 2023.
• The Inventory Sentiment Index elevated 4.5 percentage points into strong expansion territory, indicating that despite recent reduction efforts, panelists believe their facilities’ stock levels are too high.
• The Days Payable Outstanding Index remained volatile, moving between expansion and contraction for the fifth time in six months; in March, it decreased 3.5 percentage points to 47.5 percent, indicating facilities are paying suppliers more quickly.

“At this point, until we get more stability around the tariffs situation and more understanding of where the courts are going to rule related to withholding grants and research funds, we’re still looking for that silver lining and haven’t quite found it yet,” LeMaster said. “But we'll see what April brings our way.”

In case you missed the Report On Business^® Roundup on the release of the March 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/FG Trade)