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Gartner Announces Rankings of the 2018 Healthcare Supply Chain Top 25

Cleveland Clinic Takes No. 1 Slot; 4 Companies Move to New Masters Category

By ·
By ·

Gartner, Inc. has released its 10th annual Healthcare Supply Chain Top 25 ranking. The ranking recognizes organizations across the healthcare value chain that demonstrate leadership in improving human life at sustainable costs.

“Healthcare supply chains today face a multitude of challenges: increasing cost pressures and patient expectations as well as the need to keep up with rapid technology advancement, to name just a few,” said Stephen Meyer, senior director at Gartner. “In order to be successful, supply chains must sport a specific skill set that consists of patient focus, collaboration and network visibility. The top supply chains in this year’s ranking have embraced those skills and excelled in executing them.”

Cleveland Clinic takes a big leap forward and jumps from No. 8 to the top spot (see Table 1). The organization has been in the top 10 of the ranking for the past three years and its continuous efforts to improve and innovate paid off. Cleveland Clinic’s model is built on collaboration across stakeholders. With a large span of control for supply chain across most areas of spend, supply chain is woven into the fabric of patient care, supporting a patient-first focus at the organization.

In 2018, Cleveland Clinic continued improving its services and employed RFID technology for high-value medical devices and a less-expensive solution for commodity products.

“In the 10th year of the Healthcare Top 25 ranking, we follow in the footsteps of the Global Supply Chain Top 25 and introduce a Masters Category to honor continuous excellence,” said Meyer. “The initial Masters class consists of Cardinal Health, Mayo Foundation, Intermountain Healthcare and Owens & Minor.”

The Masters category is not a permanent appointment. Organizations must requalify every year and continue to innovate. Cardinal Health, for example, expanded its digital capabilities and introduced a cloud-based patient engagement platform called “CollectSource” to gain better insights into the patient experience and treatment journey.

Table 1. The Healthcare Supply Chain Top 25 for 2018

2018 Ranking

Company Name

Three-Year Weighted ROA (2015 to 2017)1

One-Year, End-of-Year Inventory Turns (2017)2

Bond Rating3

Watson Health 15 Top Health Systems Study4

Peer Opinion5
(77 Voters)

Gartner Opinion5
(20 Voters)

Composite Score6A,6B

1

Cleveland Clinic (OH)

AA-

Top Quintile

687

263

7.19

2

CVS Health

6.3%

10.2

638

263

7.10

3

Johnson & Johnson

6.2%

2.8

1,115

273

7.05

4

Mercy (MO)

AA-

15 Top

375

268

6.68

5

McKesson

3.6%

12.1

559

236

6.63

6

AmerisourceBergen

1.7%

13.0

531

166

5.75

7

Walgreens Boots Alliance

6.1%

10.0

502

138

5.44

8

Medtronic

3.6%

2.5

676

244

5.35

9

Banner Health (AZ)

AA-

2nd Quintile

388

197

5.35

10

Duke University Health System (NC)

AA

2nd Quintile

439

140

4.97

11

Ochsner Health System (LA)

A-

2nd Quintile

297

211

4.59

12

BD

3.1%

3.4

453

196

4.42

13

Advocate Health Care (IL)

AA+

2nd Quintile

258

108

4.09

14

Henry Schein

7.0%

4.7

233

169

4.05

15

Stryker

6.5%

1.7

566

137

4.03

16

Ascension Health (MO)

AA+

3rd Quintile

250

156

3.89

17

Pfizer

8.3%

1.4

621

77

3.63

18

Novo Nordisk

37.9%

1.1

127

106

3.45

19

Novartis

7.1%

2.5

312

129

3.45

20

Abbott

3.3%

3.2

567

59

3.34

21

Bristol-Myers Squibb

6.5%

5.1

377

38

3.19

22

GlaxoSmithKline

5.6%

1.7

388

103

3.15

23

AbbVie

8.4%

4.2

199

86

3.13

24

Spectrum Health (MI)

AA

Top Quintile

64

38

3.13

25

Providence St. Joseph Health

AA-

2nd Quintile

106

89

3.12

Notes:
1 ROA: ((2017 net income / 2017 total assets) * 50%) + ((2016 net income / 2016 total assets) * 30%) + ((2015 net income / 2015 total assets) * 20%)
2 Inventory Turns: 2017 cost of goods sold / 2017 inventory
3 Bond Rating: All ratings were mapped to the Standard & Poor’s (S&P) rating system using an industry-standard mapping system
4 IBM Watson Health 15 Top Health Systems Study: Based on score in IBM Watson Health’s 2018 15 Top Health Systems Study
5 Peer Opinion and Gartner Opinion: Based on each group’s forced-rank ordering of performance to Gartner’s Healthcare Supply Chain Capabilities Model
6A Composite Score, Health Systems: (peer opinion * 35%) + (Gartner opinion * 35%) + (bond rating * 15%) + (IBM Watson health score * 15%)
6B Composite Score, Manufacturers, Distributors, Retailers: (peer opinion * 30%) + (Gartner opinion * 30%) + (ROA * 20%) + (inventory turns * 20%)
2017 data used where available. Where unavailable, latest available full-year data used.
All raw data normalized to a 10-point scale prior to composite calculation.

Source: Gartner (November 2018)


Mayo Foundation heavily invested in digital supply chain as a core differentiator. Intermountain Healthcare had a lot of progress on the analytics front of supply chain, by enhancing its ability to visualize key data points such as supply expense or contract compliance, which allows for better decision making. Distributor Owens & Minor has tackled one of the chronic issues for manufacturers: the visibility of inventory. Through key partnerships, the company has brought in advanced technology to enhance its strong logistics and inventory management capabilities

In an interview with SCMR, Meyer noted that the end result of their research, the ranking itself, doesn’t hold any real surprise.

“Building a leading supply chain in healthcare is a very deliberate exercise that takes years of effort and lots of resources,” he said. ” We have been watching the organizations that make up this year’s ranking evolve over time, even the ones that have made the top 25 for the first time.”

What is surprising, he added, was the number and breadth of future disruptions facing healthcare supply chains:

  • The growing consumerization of healthcare
  • Personalized medicine and the idea of manufacturing supplying one product to one patient that has been customized with information or material from that patient
  • Amazon’s continued push into healthcare
  • The blurring of roles in healthcare – like providers pushing into pharmaceutical manufacturing (Civica RX) and pharmacies becoming payers (CVS Health’s acquisition of Aetna)

“Leading healthcare supply chains will have to take most or all of these into account as they look to maintain their rankings over the coming years,” concluded Meyer.

 


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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