October Hospital PMI Declines Slightly, Reflecting Mixed Signals

Economic activity in the hospital subsector continued its growth streak in October 2024, with the Hospital PMI® registering 51.9%, according to the latest Hospital ISM® Report On Business®. While this marks the 14th consecutive month of expansion, the index dropped by 3.1 percentage points from September's 55.0%, reaching its lowest level since August 2023. This decline reflects mixed results across several key areas, such as business activity, new orders, and employment, signaling both growth and challenges within the hospital industry.

Nancy LeMaster, Chair of the ISM® Hospital Business Survey Committee, explained that while growth continues, some indicators have shifted toward contraction. October’s reading highlights slowing expansion in certain areas, with the Business Activity Index, New Orders Index, and Employment Index all moving into contraction territory after previous months of growth. Meanwhile, the Supplier Deliveries Index remained in expansion, indicating slower delivery times for hospital supplies—a consistent trend over the past year.

External factors impacted October’s data, with hurricanes in late September and early October affecting the healthcare supply chain. Damages to the Baxter IV solutions plant in North Carolina and the B. Braun plant in Florida led to supply disruptions and elective procedure cancellations. LeMaster noted that emergency measures are underway to import necessary IV fluids, as the North Carolina facility also produces critical peritoneal dialysis supplies.

In other sub-indices, the Case Mix Index, which measures the complexity of patient cases, expanded to 52%, up from 48.5% in September. This rise indicates a slight increase in complex cases handled by hospitals, despite operational pressures. Conversely, the Days Payable Outstanding Index dropped to 45.5%, marking a return to contraction as hospitals faced challenges in managing outstanding payments.

Technology spending was a notable bright spot, with the Technology Spend Index reaching 61%, an increase from 56.5% in September. This rise reflects hospitals’ continued investment in digital and touchless solutions to improve efficiency. The Touchless Orders Index also moved back into expansion, indicating hospitals are increasingly relying on automated systems to streamline ordering processes.

LeMaster emphasized the role of data provided by hospital supply executives to understand the sector’s dynamics. The ISM® Hospital PMI® gathers insights from purchasing and supply professionals nationwide, reflecting month-to-month changes in activity. This composite index provides a snapshot of trends and challenges in the hospital subsector, helping stakeholders make informed decisions amid ongoing supply chain volatility.

As the industry moves into the final months of 2024, the Hospital PMI® highlights both resilience and areas of concern. The slight decline in October underscores the need for adaptable supply chain solutions and continued investment in technology to support hospital operations in the face of unforeseen disruptions.