Press Release
Intermountain Healthcare Takes No. 1 Slot for Second Year in a Row
Gartner, Inc. has released its ninth annual Healthcare Supply Chain Top 25 ranking. The ranking recognizes companies across the healthcare value chain that demonstrate leadership in improving human life at sustainable costs.
'The importance of supply chain leadership has manifested itself in a very literal way in 2017,' said Stephen Meyer, research director at Gartner. 'A number of supply chains made changes at the top of their organizations that resulted in radical shifts in strategy. In many cases, these shifts seemed to be very myopic and siloed rather than focusing on the outside-in strategies that are important for moving healthcare collectively forward. Conversely, supply chains with strong leadership, like those recognized in our 2017 ranking, are embracing external partnership along with exploring the benefits that new abilities, like digital technology and advanced analytics, can bring.'
Intermountain Healthcare remained in the top spot in the Healthcare Supply Chain Top 25 for 2017 for the second straight year (see Table 1). Intermountain Healthcare has a history of using supply chain strategically to support its corporate mission. New developments from the leadership team led by the new CEO, Dr. Marc Harrison, continue to demonstrate the relationship of supply chain to Intermountain Healthcare's mission of 'Helping People Live the Healthiest Lives Possible.' Supply chain is an integral part of the shared support services foundation that helps connect its change from a geographic structure of care to one based on two segments: a community care group focused on wellness and primary care and a specialty care group focused on inpatient and specialty care.
Table 1. The Healthcare Supply Chain Top 25 for 2017
2017 Rank | Company Name | Three-Year Weighted ROA (2014 to 2016) | One-Year, End-of-Year Inventory Turns (2016) | Bond Rating | IBM Watson Health 15 Top Health Systems Study |
Peer Opinion |
Gartner Opinion | Composite Score |
1 | Intermountain Healthcare | AA+ | Top Quintile | 994 | 298 | 8.88 | ||
2 | Mayo Foundation | AA | 15 Top | 850 | 304 | 8.52 | ||
3 | Cardinal Health | 3.7% | 10.9 | 1,161 | 272 | 8.10 | ||
4 | McKesson | 6.0% | 12.3 | 820 | 252 | 7.26 | ||
5 | Johnson & Johnson | 11.8% | 2.7 | 1,228 | 259 | 7.00 | ||
6 | Mercy | AA- | 15 Top | 519 | 251 | 6.68 | ||
7 | CVS Health | 5.8% | 10.1 | 698 | 241 | 6.62 | ||
8 | Cleveland Clinic | AA- | Third Quintile | 732 | 250 | 6.29 | ||
9 | Owens & Minor | 3.6% | 9.3 | 668 | 222 | 6.10 | ||
10 | AmerisourceBergen | 2.2% | 13.3 | 537 | 184 | 5.70 | ||
11 | Walgreens Boots Alliance | 5.8% | 9.8 | 514 | 199 | 5.70 | ||
12 | Medtronic | 3.6% | 2.8 | 760 | 230 | 5.15 | ||
13 | Ochsner Health System | A- | Top Quintile | 397 | 204 | 5.12 | ||
14 | BD | 4.6% | 3.8 | 630 | 234 | 5.12 | ||
15 | Banner Health | AA- | Second Quintile | 331 | 207 | 5.07 | ||
16 | Advocate Health Care | AA+ | Top Quintile | 325 | 123 | 4.64 | ||
17 | Pfizer | 4.5% | 1.8 | 515 | 214 | 4.25 | ||
18 | Henry Schein | 8.2% | 5.1 | 235 | 177 | 4.03 | ||
19 | Duke University Health System | AA | Second Quintile | 329 | 117 | 3.89 | ||
20 | Novartis | 8.3% | 2.8 | 502 | 128 | 3.77 | ||
21 | GSK | 7.0% | 1.8 | 588 | 123 | 3.67 | ||
22 | Abbott | 5.7% | 3.7 | 687 | 62 | 3.60 | ||
23 | Stryker | 7.3% | 1.9 | 551 | 105 | 3.43 | ||
24 | Texas Health Resources | AA | Top Quintile | 220 | 30 | 3.24 | ||
25 | Scripps Health | AA | 15 Top | 72 | 44 | 3.19 |
Notes:
Source: Gartner (November 2017)
ROA (return on assets):
((2016 net income/2016 total assets) * 50%) + ((2015 net income/2015 total assets) * 30%) + ((2014 net income/2014 total assets) * 20%)
Inventory Turns: 2016 cost of goods sold/2016 inventory
Bond Rating: All ratings were mapped to the Standard & Poor's (S&P) rating system using an industry-standard mapping system.
IBM Watson Health 15 Top Health Systems Study: Based on score in IBM Watson Health's 2017 15 Top Health Systems Study
Peer Opinion and Gartner Opinion: Based on each group's forced-rank ordering of performance to Gartner's Healthcare Supply Chain Capabilities Model
Composite Score, Health Systems: (peer opinion * 35%) + (Gartner opinion * 35%) + (Bond Rating * 15%) + (IBM Watson ranking * 15%)
Composite Score, Nonhealth Systems: (peer opinion * 30%) + (Gartner opinion * 30%) + (ROA * 20%) + (Inventory Turns * 20%)
2016 data was used where available. Where 2016 data was unavailable, latest available full-year data was used.
All raw data was normalized to a 10-point scale prior to composite calculation.
Mayo Foundation returned to the No. 2 position in the 2017 ranking. Mayo Foundation realizes that strong foundational capabilities are a necessity, and it has worked to bolster its fundamentals primarily through expanding the capabilities and reach of its Upper Midwest Consolidated Services Center (UMCSC). While the service center has been in use for nearly 10 years, Mayo Foundation has made strides to increase its use beyond its own health system. Mayo Foundation's role as the provider of sourcing and contracting for the UMCSC continues to expand, and membership has grown to over 60 hospitals in the region.
Cardinal Health moved down one spot to No. 3 in this year's ranking. While Cardinal Health's pharmaceutical wholesale business faces significant downward pressure on its generic drug pricing, the balance of the business is on the move to expand its capabilities. Cardinal Health continues a strategic shift in supply chain toward the patient in services offered to the patient in nonacute settings and toward more vertical integration of manufacturing in its medical products segment.
McKesson continues its dedication to developing a strong supply chain, moving up one spot to No. 4 in 2017 from No. 5 in 2016. Long known for its distribution expertise, McKesson is demonstrating its dedication to solving healthcare problems by providing solutions that leverage its scale, with a goal of driving efficiency and quality.
Johnson & Johnson made a leap into the top five this year, up three spots year-over-year, paralleling a big jump in the Global 2017 Supply Chain Top 25. While the company has never struggled in developing its supply chain strategy, the challenge in recent years has been in implementing that strategy due to its varied business units, global footprint and matrixed organization. However, Johnson & Johnson has proven in the last two years that it can successfully propagate supply chain strategy across the supply chains of its three distinct business units: Janssen (pharmaceuticals), MD&D (medical devices), and consumer.
'Many questions regarding the future of healthcare are unresolved and likely will remain that way for at least the near term,' said Mr. Meyer. 'Despite this uncertainty, Gartner expects leading supply chains to move forward decisively and seek out willing partners, leverage digital technology, and obsess over their customers to find new ways to make their supply chains an essential part of the future of healthcare.'
More detailed analysis is available in the report 'The Healthcare Supply Chain Top 25 for 2017.' Additional analysis on the Healthcare Supply Chain Top 25 is also available in the complimentary Gartner webinar 'Healthcare Supply Chain Top 25.' Accompanying this year's Healthcare Supply Chain Top 25, Gartner introduced four new awards based on the peer vote component of the ranking. J&J and Boston Scientific were recognized by health system peer voters for Best Manufacturer and Honorable Mention Manufacturer, respectively. Manufacturer peer voters recognized Intermountain Healthcare as the Best Health System and BJC HealthCare as the Honorable Mention Health System.'
About the Healthcare Supply Chain Top 25 Methodologies
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 Gartner's Top 25 ranking. These two components are combined into a total composite score.
Gartner analysts will further discuss supply chain initiatives in healthcare at the Gartner Supply Chain Executive Conference 2018 taking place May 14-17 in Phoenix, AZ. and September 27-28 in London. Follow news and updates from the events on Twitter using #GartnerSCC
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Gartner Inc. published this content on 16 November 2017 and is solely responsible for the information contained herein.
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