(Gartner: Stamford, CT) -- Gartner Inc. has released the findings from its third annual Healthcare Supply Chain Top 25. The research focuses on the health-care value chain’s pursuit of high-quality patient care at optimal economic cost. The Top 25 rankings for 2011 identifies organizations using their supply chains to improve the patient care experience.
“Value chain leadership in a range of foundational and collaborative capabilities has allowed these organizations to make great strides in enabling high-quality patient care at optimal economic cost,” says Barry Blake, research analyst at Gartner.
“This year we see commonality between the strategies that supply chain organizations from different segments are pursuing,” Blake says. “Supply chain and customer segmentation, working capital optimization, resiliency, talent management, standardization, and of course, collaboration are mentioned in nearly every strategic supply chain document we’ve reviewed. Health care can learn about these capabilities from other industries, but ensuring success in execution depends on the experience and expertise of leadership within the industry.”
For several years Gartner has advocated the importance of joint value creation as the force that can lead to the adoption of “patient-based moments of truth” and a more cost-effective, quality-driven value chain. While this message is sometimes met with skepticism by practitioners who struggle to quantify the benefits of joint value creation, Gartner’s ranking highlights the leaders pursuing these goals and reaping benefits from them.
“In analyzing our list this year, we see a ranking that demonstrates the importance of maintaining focus on both internal and external collaboration as the vehicle to drive industrywide change,” Blake says. “Leaders here are persistent in applying smart and thoughtful pressure to persuade their organizations to adopt processes and metrics that ultimately will lead to cost and quality enhancements for the patient.”
Cardinal Health, a Fortune 19 company that helps pharmacies, hospitals, and ambulatory care sites focus on patient care while reducing costs, improving efficiency and quality, and increasing profitability, captured the No. 1 spot this year. A complex combination of connected businesses, Cardinal Health combines the varied strengths of a medical surgical distributor, a pharmaceutical wholesaler, and a large manufacturer. Its financials, relative to peers, remained impressive, even though its return on assets dropped this year, and its inventory-turn performance remained essentially the same. Cardinal made significant gains in the opinion component of the poll, a reflection of the credibility it has established with health care providers, manufacturers, and the analyst community. Cardinal has the closest thing to a “one-stop shop” in serving providers and gets credit for having a unique ability to support its trading partners.
The Healthcare Supply Chain Top 25 for 2011
Mercy, the eighth largest Catholic health care system in the United States, which is supported by its supply chain division, Resource Optimization & Innovation (ROi), moved up from its third-place rank in 2010 to take the No. 2 position this year. It did well based on the strength of its opinion score, and it remains the highest-ranked health system for the third year in a row. Mercy’s laser-like focus on supply chain excellence and the credibility it has achieved with both its clinical and business leadership is admirable by any industry’s standards. Mercy’s respect in the industry overcame a relatively low quality-of-care score compared with its peers in the Top 25.
Becton, Dickinson and Co. (BD), a global medical technology company that develops, manufactures, and sells medical devices, instrument systems, and reagents, ranked No. 3, moved into the top five for the first time in Gartner’s ranking. Consistent financial performance in both return on assets and inventory turns, along with a strong surge in peer recognition, particularly from health care providers, fueled its move up the ladder.
Mayo Foundation, nonprofit worldwide leader in medical care, research, and education, moved up from eighth place in last year’s ranking to fourth place based on the strength of its quantitative metrics and a large increase in recognition from peers and the analyst community. Mayo continued to relentlessly focus on supply chain excellence and standardization across all its facilities.
Owens & Minor, a national distributor of medical and surgical supplies to the acute-care market and a health care supply-chain management company, rounded out the top five. Its drop from the No. 1 spot for 2010 was driven more by the relative strength of the top four companies than any specific weakness at Owens & Minor. Its decline can be primarily attributed to a slight decrease in inventory turns and a larger drop in peer recognition over the previous year. However, recognition from analysts increased over the prior year.
Gartner advises companies aspiring to hold a Top 25 ranking to seek out leaders and learn key value-chain lessons from Top 25 organizations.
“Build a supply-chain vision and strategy that connects your current and aspirational supply chain capabilities to the pursuit of high-quality, cost-effective patient care,” Blake says. “Ensure your organization can sustain the journey to more patient-centric value chain strategies by establishing the execution discipline and governance to maintain consistent momentum for your change initiatives.”
More detailed analysis is available in the report “The Healthcare Supply Chain Top 25 for 2011.”
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. The opinion component offers an eye to supply chain leadership and demonstrated value chain collaboration, which is a crucial characteristic of the supply chain ranking. These two components are combined into a total composite score.
Health systems have vastly different operating models compared with manufacturers, distributors, and pharmacies. Therefore, Gartner utilized different quantitative assessment metrics for these two major segments of the health care value chain.
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