Gartner Announces Rankings of Its 2012 Healthcare Supply Chain Top 25

Cardinal Health Retains the No. 1 Slot in the Fourth Annual Healthcare Supply Chain Top 25 Ranking

STAMFORD, Conn., November 30, 2012— Gartner, Inc. has released the fourth annual Healthcare Supply Chain Top 25. The research focuses on the healthcare value chain’s pursuit of high-quality patient care at optimal economic cost. The Top 25 for 2012 ranking identifies organizations leading the way in transforming their supply chains to meet the new value requirements in healthcare — patient outcomes and quality, and service and cost improvements. 

“The Fourth Annual Healthcare Supply Chain Top 25 ranking features organizations in the midst of transformations that will fundamentally alter the business practices of the past,” said Barry Blake, senior research analyst at Gartner. “Now that the U.S. 2012 election cycle is over, organizations have greater clarity on one important element responsible for this uncertainty — the U.S. healthcare reform landscape. All segments of this value chain understand that reform is now moving to implementation, and the good news is that most organizations on our ranking anticipated and prepared for an era of accountability in healthcare.”

Cardinal Health captured the No. 1 spot again this year in the Top 25 (see Table 1). Analysts said its financial performance is consistently impressive, even though its inventory turn performance fell slightly. Continuing its upward trend from last year, Cardinal Health was the top vote winner from both peers and the analyst community. Its pharmaceutical and medical segments have unique capabilities based on the value requirements of its varied customer base. The company overall is considered a leader by upstream and downstream trading partners, which is validated by some deeply collaborative relationships on both fronts.

Table 1. The Healthcare Supply Chain Top 25 for 2012

Rank

Company

%

Three-Year Weighted ROA (2009-2011)

One-Year

Inventory Turns (2011)

Bond Rating

 

Truven Health Analytics Percentile

Score

Peer Opinion

Gartner Opinion

Composite Score

1

Cardinal Health

4.1

13.1

 

 

957

290

8.59

2

Mayo Foundation

 

 

AA

98.8

549

249

7.66

3

BD

12.8

3.0

 

 

805

272

7.18

4

Intermountain Healthcare

 

 

AA+

67.1

609

195

6.79

5

Owens & Minor

6.0

9.6

 

 

645

217

6.52

6

Abbott

8.4

4.7

 

 

778

211

6.38

7

Johnson and Johnson

10.7

3.2

 

 

739

192

6.02

8

Novartis

8.0

3.2

 

 

399

272

5.58

9

Mercy (MO)

 

 

AA-

27.1

490

221

5.58

10

Geisinger Health Systems

 

 

AA

94.2

409

122

5.52

11

McKesson

 

4.2

11.5

 

 

459

136

5.23

12

Amerisource-Bergen

4.4

14.2

 

 

508

82

5.20

13

Pfizer

 

4.7

1.9

 

 

381

266

5.05

14

UMPC Health System

 

 

A+

70.6

357

138

4.75

15

Cleveland Clinic

 

 

 

AA-

8.2

573

132

4.69

16

Boston Scientific

 

-1.2

2.9

 

 

555

205

4.66

17

CVS Caremark

5.5

8.6

 

 

443

115

4.66

18

AstraZeneca

 

16.5

3.3

 

 

456

84

4.44

19

Bristol-Myers Squibb

10.7

4.0

 

 

384

129

4.37

20

Baxter

10.8

2.6

 

 

546

71

4.08

21

Walgreens

8.9

6.4

 

 

313

98

4.02

22

Amgen

 

9.3

1.0

 

 

559

83

3.91

23

Memorial Hermann Healthcare System

 

 

A+

100.0

99

97

3.87

24

Advocate Healthcare

 

 

AA

89.4

223

43

3.80

25

Kaiser Permanente

 

 

A+

0.0

427

113

3.76

Source: Gartner (November 2012)

At No. 2, Mayo Foundation moved up from No. 4 in last year’s ranking. Mayo’s quantitative metrics are very strong, and it received a large increase in recognition from peers and the analyst community. It has one of the more sophisticated technology infrastructures of any provider and is making tremendous headway in linking financial, operational and clinical data systems to provide patient outcome and procedure cost intelligence to drive decision making.

BD maintained the third position. Even though its return on assets (ROA) dropped slightly, its overall financial performance is fairly consistent, and the company continues to earn enormous recognition from both peers and analysts. Intermountain Healthcare (No. 4) moved up three places from last year due to commendable financials, but more significantly, a large increase in recognition from peers and analysts. Owens & Minor (No. 5) maintained its place in the Top 5 again this year. A slight increase in its ROA buoyed its financial score since its inventory performance decreased somewhat. While its peer recognition score fell slightly again this year, the analyst community continues to regard O&M highly.

“The leaders on our ranking have a great opportunity to define the future framework of the healthcare and life sciences value chain. This framework includes many fundamental capabilities, including the ability to correlate supply chain cost and service data, patient outcomes and quality intelligence, and reimbursement patterns,” said Mr. Blake.

All the leaders on Gartner’s ranking have elements of the following key capabilities incorporated in their supply chain strategies:

·         Data standardization and interconnectivity: Leaders from manufacturers, distributors, healthcare providers and pharmacies are all involved in efforts to standardize transactional data between trading partners. The data driven value chain is integral to the development of the outcome driven value chain.

·         Visibility and collaboration: All segments of the value chain represented on the Top 25 ranking are focused on developing greater visibility to key data exchanged between upstream and downstream trading partners. This visibility can only be created when the partners collaborate on sharing and utilizing this data.

·         Process standardization: Many integrated delivery networks (IDN) are focused on implementing industrywide standard supply chain processes and excellence in supply chain management. In doing so, they are looking to their manufacturing and distribution partners to bring them up to speed more effectively. 

·         Segmentation, segmentation, segmentation: Customer, supply chain and supplier segmentation are initiatives many of the organizations on the list have embarked on in 2012. The value chain is expected to pursue these opportunities in greater numbers over the coming years to simplify an increasingly complex supply.

·         Maturing supply chain metrics strategies: Many of the leaders across all segments on the ranking have committed to improving their supply chain performance management strategies. This year many healthcare providers and manufacturers are developing greater clarity and connectivity between their supply chain metrics cascade, while distributors are focusing on developing the few critical metrics that capture the primary value expected by their customers.

These capabilities are all interrelated to some degree, and all are dependent on robust and credible data from interconnected clinical, operational and financial systems. While this interconnectivity is at the early stages, data driven capabilities in the healthcare supply chain are emerging, and will lay the foundation for the outcome driven value chain that will take shape over the next few years.

More detailed analysis is available in the report “The Healthcare Supply Chain Top 25 for 2012.” The report is available on Gartner’s website at http://www.gartner.com/resId=2257915.

About the Healthcare Supply Chain Top 25 Methodology
Consistent with Gartner’s Top 25 research methodologies, the Healthcare Supply Chain Top 25 ranking is derived from two main analyses: quantitative measures and opinion. Quantitative measures provide a view into how companies have performed in the past, and establish proxy connections between financial health, performance and supply chain excellence. The opinion component offers an eye to value chain leadership and demonstrated supply chain performance — crucial characteristics of our Top 25 ranking. These two components are combined into a total composite score.

Health systems have vastly different operating models. Access to common, public financial data is not easily captured, compared to publicly traded manufacturers, distributors and pharmacies. Therefore, Gartner utilized different assessment methodologies for these two major segments of the healthcare value chain.

 

Contacts:

Christy Pettey
Gartner
+1 408 468 8312
christy.pettey@gartner.com

Rob van der Meulen
Gartner
+44 0 1784 267892
rob.vandermeulen@gartner.com

About Gartner:
Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in 12,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 5,000 associates, including 1,280 research analysts and consultants, and clients in 85 countries. For more information, www.gartner.com.