Hospital PMI® at 47.5%; August 2023 Hospital ISM® Report On Business®

TEMPE, Ariz., Sept. 8, 2023 /PRNewswire/ -- Economic activity in the hospital subsector contracted in August for the second time in four months after 35 consecutive months of growth, say the nation's hospital supply executives in the latest Hospital ISM^® Report On Business^®.

The report was issued today by Nancy LeMaster, MBA, Chair of the Institute for Supply Management^® (ISM^®) Hospital Business Survey Committee: "The Hospital PMI^® registered 47.5 percent in August, a 5.8-percentage point decrease from the July reading of 53.3 percent, indicating contraction after two consecutive months of growth. The Hospital PMI^® is in contraction territory for just the fourth time (with the index also registering below 50 percent in May 2023 and both April and May 2020) in more than five years of Hospital ISM^® Report On Business^® data collection. Business activity was unchanged in August compared to July. The New Orders and Employment indexes moved into contraction territory. The Supplier Deliveries Index also returned to contraction (which indicates faster delivery performance). The Case Mix Index reading of 51 percent is down 2 percentage points compared to the July figure of 53 percent. The Days Payable Outstanding Index returned to expansion territory at 51.5 percent, up 3 percentage points from the 48.5 percent reported in July. The Technology Spend Index reading of 47.5 percent is a decrease of 5 percentage points compared to the 52.5 percent recorded in July. The Touchless Orders Index registered 47 percent, equaling its July reading."

LeMaster continues, "Hospital Business Survey Committee respondents indicated their facilities had soft volumes in August, consistent with historical summer trends. Margin challenges continued to be top of mind. High costs of pharmaceuticals and supplies were singled out as a primary issue. Panelists indicated they are reducing use of agency labor as a strategy to cut labor costs. Some organizations were slowing hiring or have had small-sized layoffs. Supplier deliveries were a bright spot in August, with panelists enjoying faster deliveries, as well as fewer split orders and back orders. Such positive developments, however, did not translate into an improvement in touchless orders. Concerns remain regarding potential freight cost increases."

About This Report
The information compiled in this report is for the month of August 2023.

The Hospital PMI^® was developed in collaboration with the Association for Health Care Resource & Materials Management (AHRMM), an association for the health care supply chain profession, and a professional membership group of the American Hospital Association (AHA).

The data presented herein is obtained from a survey of hospital supply executives based on information they have collected within their respective organizations. ISM^® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation
The Hospital ISM^® Report On Business^® is based on data compiled from hospital purchasing and supply executives nationwide. Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Employment, Supplier Deliveries, Inventories, Prices, Prices: Pharmaceuticals, Prices: Supplies, Backlog of Orders, Imports, Inventory Sentiment, Case Mix, Days Payable Outstanding, Technology Spend, and Touchless Orders), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Beginning in January 2021, the Report On Business^® staff and consultants are gathering market information to better validate the Exports Index. Exports Index data are still being collected.

The Hospital PMI^® is a composite index computed from the following, equally weighted indexes: Business Activity, New Orders, Employment and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A Hospital PMI^® index reading above 50 percent indicates that the hospital sub-sector is generally expanding; below 50 percent indicates that it is generally declining. For the sub-indexes, except Supplier Deliveries, an index reading above 50 percent indicates that the sub-index is generally expanding; below 50 percent indicates that it is generally contracting. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

The Hospital ISM^® Report On Business^® survey is sent out to the Hospital Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM^® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM^® then compiles the report for release on the fifth business day of the following month.

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About Institute for Supply Management^®
Institute for Supply Management^® (ISM^®) is the first and leading not-for-profit professional supply management organization worldwide. Its community of more than 50,000 in more than 100 countries manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 by practitioners, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM empowers and leads the profession through the ISM Report On Business^®, its highly-regarded certification and training programs, corporate services, events and the ISM Supply Chain Capability Modeltm. The ISM Report On Business^®, Manufacturing, Services, and Hospital, are three of the most reliable economic indicators available, providing guidance to supply management professionals, economists, analysts, and government and business leaders. For more information, please visit: www.ismrob.org.

The text version of the public Hospital ISM^® Report On Business^® is posted on ISM^®'s website at www.ismrob.org on the fifth business day* of every month at 10:00 a.m. ET.

The next Hospital ISM^® Report On Business^® featuring September 2023 data will be released at 10:00 a.m. ET on Friday, October 6, 2023.

*Unless the New York Stock Exchange is closed.

SOURCE Institute for Supply Management