G00291961
The Healthcare Supply Chain Top 25 for 2015
Published: 18 November 2015
Analyst(s): Eric O'Daffer, Stephen Meyer, Lisa Callinan, Andrew Stevens
Gartner's seventh annual Healthcare Supply Chain Top 25 ranking
recognizes companies across the healthcare value chain that demonstrate
leadership in improving patient outcomes and lowering costs. Leaders are
showing progress by aligning to patient care, company strategy and future
revenue models.
Key Findings
■
Mayo Clinic attained the No. 1 spot in our ranking, becoming the first healthcare provider to
reach this milestone.
■
Cardinal Health, Intermountain Healthcare, Owens & Minor and Mercy rounded out the top five
spots in the ranking.
■
Henry Schein, Duke University Health System and Baptist Health South Florida were all new to
the Top 25 ranking this year. Medtronic and BJC HealthCare came back after a multiyear hiatus.
Distributors, as a group, added one company to the list, while manufacturers lost one compared
to last year's ranking.
■
Alignment to patient outcomes, company strategy and future revenue models in healthcare are
the themes for 2015. We see innovation coming from mature supply chains that have stable
organizations and strong talent. These organizations are most ready to successfully lead in
consolidation and collaboration initiatives that will advance the healthcare value chain.
Recommendations
■
Align your supply chain strategy directly to your organization's mission and key objectives on
which senior leaders are focused. Supply chain has to tie directly to improved performance on
metrics that matter.
■
Revisit your supply chain maturity through demand-driven supply chain and patient-driven value
network assessments. Knowing your strengths and weaknesses, as well as how to map out
strategic initiatives to advance, is critical to your organization's success, and ensures you are
aligned to your customer's needs.
■
Build collaboration capabilities now within supply chain, across your organization and with the
broader healthcare value chain.
■
Determine where your organization lies in the path of mergers and acquisitions. Proactively map
out how supply chain can help in the most likely scenarios.
Table of Contents
Analysis.................................................................................................................................................. 3
Overview.......................................................................................................................................... 3
Alignment to Company Strategy....................................................................................................... 3
Alignment to Patient Outcomes........................................................................................................ 4
Alignment to Future Revenue Models in Healthcare.......................................................................... 5
Inside the Numbers.......................................................................................................................... 7
The Top Five............................................................................................................................... 7
Retailers......................................................................................................................................... 10
Distributors/Wholesalers................................................................................................................. 11
Manufacturers................................................................................................................................ 12
Healthcare Providers...................................................................................................................... 14
Healthcare Value Chain Capabilities................................................................................................ 17
The Healthcare Supply Chain Top 25 Methodology.........................................................................18
Manufacturers, Distributors and Pharmacies.............................................................................19
Health Systems........................................................................................................................ 19
Opinion Component................................................................................................................. 20
Polling Procedure..................................................................................................................... 22
Composite Score......................................................................................................................23
Gartner Recommended Reading.......................................................................................................... 23
List of Tables
Table 1. The Healthcare Supply Chain Top 25 for 2015...........................................................................6
List of Figures
Figure 1. Healthcare Value Chain Capabilities Model.............................................................................17
Figure 2. Peer Opinion Panel Composition: Value Chain Segment........................................................ 21
Figure 3. Peer Opinion Panel Composition: Role...................................................................................21
Page 2 of 24
Gartner, Inc. | G00291961
Figure 4. Peer Opinion Panel Composition: Revenue............................................................................ 22
Analysis
Overview
The Healthcare Supply Chain Top 25 for 2015 reflects the progress leaders have made in laying the
foundation for success. Their effort is similar to advancing the ball in many sports. Team success is
tied to the ability to advance the ball down the field so that in the future they can score. Similarly,
while no company can claim to have solved the puzzle of optimized healthcare in the 21st century,
leading companies are building the foundational capabilities and making investments that will pay
off in the future. Supply chain leaders are educating their teams, trading partners and company
leadership on the value of supply chain to improve service, lower costs, and enable growth and
sustainable profits. Leaders demonstrate capabilities that advance the industry toward alignment
with:
■
Company strategy
■
Patient outcomes
■
Future revenue models in healthcare
Alignment to Company Strategy
Leaders in our ranking understand the value of supply chain and how it fits into the organizational
mission and financial objectives. At manufacturers, distributors and retailers, this is usually service-,
revenue- and profit-driven alignment. At healthcare providers, the alignment is to serving patients
and sustainable margins.
In both cases, we see supply chain taking a lead through constant contact with senior leadership on
the strategy of supply chain in supporting a bigger mission other than cost logistics. Healthcare
providers like Mayo Clinic, Intermountain Healthcare and Banner Health know what their
organizations need, and build capabilities to ensure that they measure and communicate how
supply chain supports those goals. Leading organizations don't leave a lot to chance, and
communicate constantly. Banner even ties it to marketing materials it distributes that show the
organization's vision, and how supply chain aligns strategically and through metrics.
Manufacturers, distributors and retailers also recognize that supply chain has a direct and growing
impact on growth and profitability. Improved costs and service are steppingstones to the bigger
objectives. Supply chain leaders at BD, Medtronic and AmerisourceBergen help achieve growth
through expansion into new geographies, mergers and acquisitions (M&As), and collaboration
opportunities with customers that bring revenue and productivity gains back to the organization.
In a growing number of cases, this organizational alignment to strategy includes managing
significant M&A initiatives. Eleven of Top 25 companies are involved in large-scale M&As, with
Gartner, Inc. | G00291961
Page 3 of 24
supply chain playing a prominent role in delivering value in the transition. With organic growth
slowing for most organizations and bigger being seen as better almost across the board, we expect
this pace to continue. Supply chain organizations building capabilities to set, manage and deliver on
expectations from these acquisitions will continue to be a critical skill (see "How to Deliver Supply
Chain Value During Healthcare Provider Mergers and Acquisitions" and "Increasing M&A Activity in
Life Sciences Requires Strong Supply Chain Leadership and Preparation").
Alignment to Patient Outcomes
Leaders are aligning to patient outcomes not only in new technology but also in thinking about how
a company can best impact the quality and cost of care. In this area, we see the ball being
advanced not by a long pass but more by the groundwork to just make progress. Manufacturers
have been historically slow in understanding this value but many integrated delivery networks (IDNs)
and more progressive manufacturing leaders demonstrated progress on this front in 2015. The
challenge is achieving scale through repeatable collaborative initiatives that go beyond decisions
just about products.
Manufacturers understand, and are documenting internally that supply chain collaboration is good
for the patient and good for business. Companies like Medtronic and Smith & Nephew built
businesses to take a product offering and build a supply chain and business operation structure
around it connected to the provider customer and the patient experience. These offerings go
beyond product selection and cost to the root efficiency, efficacy and profitability of a care pathway.
On the provider front, many of the health systems in the Top 25 made progress in using data and
analytics in a scalable manner to make decisions that reduce variability, decrease complexity and
allow for improved decisions that impact product cost and the total cost to serve. We see examples
of providers deconstructing all the costs of a procedure, and using this data to establish a "must
cost" model for their suppliers. We expect this to continue to evolve and expand at healthcare
providers, and for them to get more into the specification setting for a product than reacting to what
manufacturers bring to market. Organizations like Novant Health define these product categories as
"workhorse" products that will make up 80% to 90% of the volume across various procedures,
which allow them to source and optimize the total cost across the value chain for those products,
while allowing for some variance in special cases.
Intermountain Healthcare has made similar strides in some categories, and has taken supplier
collaboration to a more systematized and connected methodology. Intermountain chose 13
strategic suppliers, and requested a different kind of supplier response to address problem
statements in different care pathways, to help lower costs and improve the quality of patient care.
One easy-to-understand initiative was the development of a new patient gown that took 42 SKUs
down to five SKUs, improved the patient experience in terms of comfort and modesty, and helped
reduce expensive central line infections by 150 per year.
Among retailers, Walgreens has introduced a novel system by expanding its customer loyalty
program, Balance Rewards, into the wellness management arena. By adding rewards for healthy
choices, Walgreens has transformed the classic loyalty program that encourages customers to
make purchases at their online and brick-and-mortar stores into one that promotes healthy
behaviors like exercising, healthy eating and managing chronic conditions like asthma and diabetes
Page 4 of 24
Gartner, Inc. | G00291961
to earn rewards. The program makes good use of technology, both via mobile apps and integration
with wearable devices. Clearly, there are opportunities to cross-sell and build loyalty, so the move
isn't borne out of pure altruism, but it is a thought-provoking way to promote healthy habits by
leveraging an established retail program to reduce long-term healthcare costs.
Alignment to Future Revenue Models in Healthcare
Although not as mature as alignment to patient outcomes or corporate strategy, leaders made the
most advancement year over year in alignment to future revenue models. In the coming five years,
this alignment is the single area that separates leaders from laggards.
Most organizations agree that future revenue models will have a total decrease in gross dollars
available, and that the payment will de-emphasize cost per acute procedure and focus more on
total cost to serve — from preadmission through acute care to postadmission. Healthcare providers
are learning to live in these worlds, and are starting to capture and align costs that go across the
continuum of care. With this information, healthcare provider supply chain leaders know they can
help their organization make trade-offs in supply chain costs that align with a lower total cost of
patient care. Data and analytics play a role here, as well, as a deeper understanding of how the
revenue model is changing. UPMC formed an executive advisory board for supply chain this year
that includes senior executives from finance, hospital presidents, and uniquely included a senior
representative from its health plan. The new demand signal for a growing part of its business is
health plan revenue. Supply chain can play a role in lowering cost through supply chain services in
pharmacy, procedures and home care.
Likewise, CEOs of large companies like Medtronic understand that they can no longer just be
leaders in product development, but have to help their healthcare provider customers thrive in the
new revenue environments. Medtronic's CEO and a team of senior managers are actively reaching
out and meeting with large health systems around the country to act collaboratively in care
pathways and supply chain. This shift from a product-centric company selling to clinicians to a
company that is looking for alignment with the health system's challenges is a great step forward.
We see a shift in models that move from transactional collaboration, to operational collaboration, to
more of strategic partnerships that recognize the new issues in supply chain that tie to patient
outcomes. Increased cost for 30-day readmissions, hospital-acquired infections, and care
avoidance pre- and postoperation are not just issues for the health system, but ones the
manufacturers can help address, as well. Sales strategies for manufacturers need to change.
Historically, instances of readmittance — and the repeated procedures that accompany them —
meant additional sales for pharma or medical device companies. Manufacturers need to realize that
helping providers get it right the first time is an enabler of long-term relationships.
Leaders are aligning their capabilities to advance the ball in supply chain. Companies on our list are
putting themselves in the proverbial "position to score" through building improved capabilities. We
wish these leaders and the healthcare industry great success in the coming year. And now we
present the Healthcare Supply Chain Top 25 for 2015 (see Table 1).
Gartner, Inc. | G00291961
Page 5 of 24
Table 1. The Healthcare Supply Chain Top 25 for 2015
2015
Ranking
Company Name
ThreeYear
Weighted
ROA
(2012 to
2014)1
OneYear,
End-ofYear
Inventory
Turns
(2014)2
Bond
Rating3
Truven
Health
System
Percentile
Score4
Peer
Opinion5
(88
voters)
Gartner
Opinion5
(21
voters)
Composite
Score6A,6B
AA
98.26
897
324
8.43
1340
310
8.35
934
292
8.27
848
291
6.87
556
284
6.57
1
Mayo Clinic
2
Cardinal Health
3
Intermountain
Healthcare
4
Owens & Minor
5
Mercy
6
CVS Health
6.2%
9.6
746
242
6.38
7
McKesson
2.9%
11.7
730
214
6.15
8
AmerisourceBergen
2.3%
13.6
498
226
5.69
9
Johnson &
Johnson
11.1%
2.8
1118
181
5.63
10
Walgreens Boots
Alliance
6.1%
9.0
447
209
5.29
11
Banner Health
299
191
4.97
12
BD
822
189
4.96
13
Advocate Health
Care
267
106
4.35
14
UPMC
619
156
4.24
15
Medtronic
5.7%
1.8
642
190
4.08
16
Pfizer
8.1%
1.7
537
194
4.03
17
BJC HealthCare
375
114
3.73
18
Henry Schein
192
157
3.70
19
Cleveland Clinic
627
85
3.67
Page 6 of 24
3.6%
10.5
AA+
3.6%
9.5
AA-
AA10.0%
80.00
83.91
2.8
AA
93.91
AA-
20.87
AA
8.2%
93.04
43.48
5.6
AA-
32.17
Gartner, Inc. | G00291961
2015
Ranking
Company Name
ThreeYear
Weighted
ROA
(2012 to
2014)1
OneYear,
End-ofYear
Inventory
Turns
(2014)2
Bond
Rating3
Truven
Health
System
Percentile
Score4
Peer
Opinion5
(88
voters)
Gartner
Opinion5
(21
voters)
Composite
Score6A,6B
20
Abbott
6.3%
3.5
625
106
3.65
21
AbbVie
11.4%
3.9
271
141
3.61
22
Duke University
Health System
300
35
3.58
23
Ascension Health
175
158
3.55
24
GlaxoSmithKline
334
172
3.49
25
Baptist Health
South Florida
111
68
3.46
9.7%
AA
89.57
AA+
26.96
1.7
AA
90.43
Notes:
1 ROA: ((2014 net income / 2014 total assets) * 50%) + ((2013 net income / 2013 total assets) * 30%) + ((2012 net income / 2012 total
assets) * 20%)
2 Inventory Turns: 2014 cost of goods sold / 2014 inventory
3 Bond Rating: All ratings were mapped to the Standard & Poor's (S&P) rating system using an industry-standard mapping system
4 Truven Health System Percentile Score: Data taken from the Truven Health Analytics 15 Top Health System Percentile Score
5 Peer Opinion and Gartner Opinion: Based on each panel's forced-rank ordering against the definition of "high-quality patient care at an
optimal economic cost"
6A Composite Score, Health Systems: (peer opinion * 35%) + (Gartner opinion * 35%) + (bond rating * 15%) + (Truven ranking * 15%)
6B Composite Score, Nonhealth Systems: (peer opinion * 30%) + (Gartner opinion * 30%) + (ROA * 20%) + (inventory turns * 20%)
2014 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 2015)
Inside the Numbers
The Top Five
Mayo Clinic
Mayo Clinic takes the top spot for 2015 after three years at No. 2. Mayo's supply chain continues to
be a model of steady improvement for this $9.8 billion healthcare provider across 22 hospitals and
associated care sites in five states. Mayo focuses on the strategic alignment of supply chain with
the cost and quality of patient care through its one-year and five-year rolling strategic plan refresh
process. In addition to documenting $163 million in savings last year, Mayo continues to be a leader
in using analytics to make balanced decisions across the organization. This year culminated a five-
Gartner, Inc. | G00291961
Page 7 of 24
year initial analytics project in supply chain, with progress made in aligning all costs to a procedure,
and sharing that data to stakeholders in its managing to reimbursement project. Analytics
capabilities were so strong in supply chain that the larger organization promoted a key supply chain
leader up in the organization to expand that role.
Other highlights in the past year include increasing collaboration initiatives with suppliers that
replace sales representatives with utilization representatives, and aligned an iterative savings goals
in cost to serve over a longer five-year term of an agreement. In addition, Mayo tackled new
projects that extend a formulary concept in pharmaceuticals to lab, medical device and equipment.
Mayo also has a focus on sustainability, with one initiative on centralizing managed print yielding
$400,000 in savings and reducing usage of paper and toner by 40%, while substantially reducing
the number of machines.
Mayo has deep partnerships with several strategic suppliers/service providers that the company
orchestrates to serve needs over five states. We anticipate that these strategic relationships will
continue to grow and that Mayo will be a leader for years.
Cardinal Health
Cardinal Health drops to the second spot after a four-year run in the No. 1 spot. Cardinal touches
almost everyone in the healthcare value chain at some point. It is a pharmaceutical wholesaler,
medical-surgical distributor, solution provider and technology company. Despite the loss of $25
billion in the Walgreens business, Cardinal seems to be managing the transition well. Inventory turns
remained steady at 10.5 along with return on assets (ROA) at 3.6%, while most of its wholesaler
counterparts dipped a bit.
Cardinal continues to build on collaborative solutions with healthcare providers, retailers and
manufacturers. Its Red Oak Sourcing joint venture for generic sourcing with CVS Health continues
to make progress in ensuring supply and lowering costs. The Hospital Solutions Group and national
Logistics Network strive to serve medical device manufacturers in new ways. Some of these
medical device solutions serve healthcare providers, as well, through WaveMark, and by enabling
three-way relationships like one with Cook Medical and BJC HealthCare.
Cardinal continues to quicken the pace on acquisitions. It continued assimilating AssuraMed for
homecare and WaveMark in point-of-use, RFID-driven technology. In addition, Cardinal continued to
get deeper into manufacturing, with the $2 billion acquisition of Cordis in 2015, on top of its
AccessClosure acquisition last year, to deliver on its objective to standardize mature medical device
segments of cardiology, wound management and endoscopy. Connecting the end-to-end supply
chain with more owned manufacturing capabilities keeps Cardinal on the innovation frontier.
Intermountain Healthcare
Intermountain Healthcare retains the third ranking for 2015 during a year of progress and change. It
bought the group purchasing organization (GPO) Amerinet, promoting its leader of supply chain to
lead that new effort. In a testament to solid talent in supply chain, Intermountain's succession plan
included an internal leader who stepped in by design to continue the vision of Intermountain supply
chain. The goals of Intermountain's supply chain going forward speak volumes: extraordinary
Page 8 of 24
Gartner, Inc. | G00291961
service, world-class performance and to serve as a model to the industry. Intermountain is a leader
in organizational understanding that investing in supply chain people, process and technology
across all nonlabor spend contributes to the balance of patient care, cost and profitability.
Initiatives that supported these goals in 2015 include the standardization at 95%+ of 60 categories
of spend across 22 hospitals and 200 clinics. In the operating room, it developed a program entitled
ProComp that delivered $57 million in savings by guiding decisions that intersected cost and quality
near the point of use to reduce variability. Collaboration initiatives advanced, as well, with the
establishment of a 13-member supplier council to help solve "problem statements" in different care
pathways. These strategic relationships go beyond a bigger group of transactionally collaborative
suppliers to think about the resources of each company, and how they can bring those resources to
Intermountain to reduce costs and improve quality.
Owens & Minor
Owens & Minor takes our fourth spot for the second year, and marks its seventh year in a row in the
top five. Ranking fifth in peer votes and solid on analyst votes kept them in this spot, despite a
declining ROA over the past four years — from 6.0% in 2012 to 3.6% this year — and inventory
turns that declined to 9.5 from 10.3 versus last year. Owens & Minor's strategic vision of
"connecting the world of medical products to the point of care" exemplifies an interconnected and
interdependent healthcare value chain in the Gartner Healthcare Value Chain Capabilities Model.
Owens & Minor has expanded, and now has $9.4 billion in revenue coming through 23 international
distribution centers to complement the 43 in the U.S.
Owens & Minor made progress in collaboration with providers, expanding its consolidated service
center (CSC) network and capabilities to include pharmaceutical cross-docking at Advocate Health
Care, and extending and expanding a decade-long CSC operations partnership with UnityPoint
Health. We call that a sustainable collaboration. Owens & Minor also acquired ArcRoyal to expand
its custom-kit operations on top of what the Medical Action Industries acquisition brought. Owens &
Minor is also enabling container direct shipments to IDNs on high-volume products, saving 7% to
15% on those large purchases. Lastly, Owens & Minor is utilizing Amazon in a unique partnership to
get its medical products to nonacute buyers through a different channel type.
Owens & Minor is a leader in supply chain education, as well. Thousands of people have attended
Owens & Minor University (OMU) and taken one of the 120 supply chain courses available.
Mercy
Mercy is back in the top five after three years of being out but still in the top 10. Mercy's branded
supply chain division, ROi, delivers value for this $4.6 billion, 22-hospital, 700-point-of-care and
increasingly virtual/digital-care-centric provider, while seeking to sell the benefit of its capabilities to
other IDNs. This pushes Mercy to think about what is best for its own operation as well as what
could benefit other systems. In 2015, Mercy innovated in a number of areas that fit into this model.
First, it opened its first partnership consolidated service center (CSC) with Franciscan Missionaries
of Our Lady Health System (FMOLHS), where Mercy runs the CSC operation in partnership with
FMOLHS supply chain management. In addition, the "repless" Spine Distribution model Mercy
Gartner, Inc. | G00291961
Page 9 of 24
pioneered in 2014 expanded to total joints with a focus on total cost reduction and standardization
(see "Healthcare Supply Chainnovators, 2014: Fresh Approaches to Major Challenges"). Mercy
expanded its successful custom-kit operation in partnership with a medical device manufacturer to
form Synchronis Medical, to lower costs on that front for Mercy and others, with improved visibility
across the operation for all. On the alignment of costs, patient outcomes and revenue, Mercy
launched its perioperative dashboard for improved analytics, saving more than $12 million in total
cost to serve.
Perhaps most interesting to watch in the coming years will be how Mercy's leadership in advanced
analytics and virtual care play out. Mercy is investing heavily in these areas, and while it is early,
how it aligns the supply chain response to the changing care delivery models and access to data
should be compelling.
Retailers
Retail pharmacies continue to innovate ways to deliver patient care, leveraging their proximity to
populations and enormous customer bases. The major players aren't content with either size or
scope; they are leveraging key acquisitions and collaborations in an effort to establish new care
pathways. The big players continue to get bigger as CVS Health and Walgreens Boots Alliance
continue to make acquisitions. While some mass merchants and grocery stores continue to provide
pharmacy services to their customers, Target's exit of the pharmacy business may be an indication
that the pharmacy business is best left to the specialists.
These companies are arguably the most innovative when it comes to care delivery, and their retail
heritage has helped them develop their supply chains as competitive advantage. The pharmacies'
direct interaction with a "wired" population has led the major players to explore new ways to
promote population health and the products they sell at the same time, via connected devices.
At the core, direct competition may be the biggest driver of innovation. In the U.S., the
omnipresence of CVS, Walgreens and Rite Aid (along with Walmart and regional options Kroger and
Safeway) gives consumers significant choice of what many view as a commodity service. With the
exception of a few high-end drugs, all companies are able to provide the drugs patients need,
leaving the companies to compete on value-added services. Patients, and the healthcare system as
a whole, stand to benefit.
CVS Health (No. 6) is ranked in the top 10 for the third consecutive year, thanks to strong analyst
support and their inventory turns performance. As we have come to expect, CVS continues to
innovate when it comes to healthcare. Through partnering with leading hospital systems in Rhode
Island, Pennsylvania, and Kansas and the U.S. Department of Health and Human Services, CVS is
looking to expand the care that its Minute Clinics are positioned to deliver while being affordable.
The development of its Digital Innovation Lab looks to create cutting-edge pharmacy and health
experiences for its customers, and a partnership with IBM leverages the cognitive computing power
of Watson for analysis to support chronic disease care. The acquisition of Omnicare will lead to
greater revenue and purchasing synergies, along with the access to expertise in specialty pharmacy.
CVS also continues to focus on foundational activities, with active partnerships to reduce the cost
of sourcing generic drugs.
Page 10 of 24
Gartner, Inc. | G00291961
Walgreens Boots Alliance (No. 10) makes the top 10 with solid financials and analyst support. Of
particular note is its improved inventory turns year over year, improving from 7.5 to 9.0. This
represents a decrease in inventory of over 11%, while the cost of goods sold increased by 7%.
Walgreens' relationship with AmerisourceBergen, now in its second year, is clearly paying dividends.
Thanks to its strategic acquisitions, Walgreens is a global business with 370 distribution centers and
180,000 pharmacies in 20 countries. Its recently announced acquisition of Rite Aid, if it passes
regulatory scrutiny, will continue its expansion. Walgreens continues to focus on its core business,
now in the middle of a three-year initiative to deliver $1 billion in savings in corporate, field,
distribution and store costs. Walgreens is also embracing the power of technology, looking to
leverage tools that improve health. Notable solutions include an Apple Watch app that reminds
patients to take their medication, and a partnership with WebMD that integrates medical advice with
products it provides.
Distributors/Wholesalers
Distributors and wholesalers have always been well-represented in our ranking. They combine
reasonable ROAs with significantly better inventory turns than manufacturers in healthcare. 2015 is
no different, and we added an additional distributor to our mix that focuses on serving medical
practices. As population health models proliferate in the U.S., we see wholesalers and distributors
working more on initiatives to serve patients in nonacute settings. We see examples this year in how
these companies are connecting more to adherence, and getting products efficiently to the lowest
cost points of care-like clinics, retail and even the home. Globally, we see these companies
expanding rapidly compared to a few years ago. With effectively two customers — a provider/
retailer and the manufacturing community — these companies are building capabilities to serve
manufacturers across growing geographies.
McKesson (No. 7) jumps two spots this year, its seventh year in a row in the Top 25. Analyst opinion
improved while peer opinion fell slightly. ROA declined to a six-year low of 2.9%, while inventory
turns hit a six-year high of 11.7. McKesson is another company with a big and growing footprint in
wholesaling, oncology practice management, specialty pharmacy, medical products distribution to
offices, technology solutions and a growing global presence. Many supply-chain-driven initiatives
were delivered in 2015 to improve efficiency and to collaborate with customers. On the operations
front, McKesson realized $150 million in Six Sigma savings in its U.S. pharmaceutical business,
while driving 99.98% order accuracy to customers. On the technology solution side, McKesson
launched a strategic supply sourcing program designed to intersect formulary-driven value analysis
process close to point of use with a beta customer in St. Luke's Health System. It added 500 Health
Mart pharmacies, and developed several adherence programs designed to improve the profitability
of independent pharmacies and better connect to patient outcomes. McKesson has built a
collaborative relationship with Rite Aid, which may be threatened in 2016 by the announced
acquisition by Walgreens.
AmerisourceBergen (No. 8) holds steady this year. Its ROA of 2.3% is lower than peers and
declining from 3.5% in 2014, but its 13.6 inventory turns are best among the Top 25.
AmerisourceBergen focused heavily on the integration of the Walgreens business in Year 2 of a 10year agreement and its role as internal logistics provider, while setting a platform for global growth.
This partnership's breadth and depth are shining examples of the value of collaboration.
Gartner, Inc. | G00291961
Page 11 of 24
AmerisourceBergen's stated goal is to "lead the market through knowledge, reach and partnered
innovation." It has supported that stance with additional acquisitions globally of Xcenda and World
Courier to support pharmaceutical manufacturers' development and growth. Like McKesson,
AmerisourceBergen developed new programs aimed at independent pharmacies, creating the
Elevate Provider Network, which is aimed at improving business practices, profitability through
better revenue capture and patient care.
Henry Schein (No. 18) made the ranking for the first time after a steady progression toward the
Healthcare Supply Chain Top 25 over the past several years. Inventory turns are stable year over
year at 5.6, while ROA has climbed consistently over the years from 6.5% in 2009 to 8.2% in 2015.
At the same time, peer and analyst recognition have increased as people better understand the
capabilities of this $10-billion, office-based, medical- and dental-practice-focused distributor.
Henry Schein has refined its model, and is as good operationally across the supply chain as any
company in healthcare. With small average order sizes and 1 million customers, it has adopted
some of retail's best practices in shaping demand through promotions in its business, which has
several sales channels — including external reps, inside sales, catalog and online across medical
and dental, and other office-based practitioners. Henry Schein leverages its partner UPS effectively
to improve service and lower costs, and operates a 20,000 SKU private label program with an
effective balance of cost and quality. Henry Schein qualifies as a company on track for metrics
mastery measuring how it does business with a customer from multiple angles. In 2015, it took on
Cardinal's office-based business in a long-term deal to benefit both parties and their customers in
serving this growing and segmented market for many IDNs.
Manufacturers
Manufacturers in the healthcare industry continue to operate in an environment of uncertainty. Their
customers (all of them — providers, patients, payers and distributors/wholesalers) are becoming
savvier, and require tailored responses. The manufacturers see the "writing on the wall," and know
that they need to drive costs out without sacrificing customer value. This is where most supply
chains struggle — optimizing the balance of inward and outward focus.
Collaboration with downstream partners to improve care is actively pursued, but supply chains are
finding it a challenge to implement scalable solutions. Many companies find the basic
communication difficult — getting the right parties to interact at both the provider and the
manufacturer.
The need for growth and cost control remain significant business drivers impacting supply chains
for life science companies. Companies are pursuing growth both organically (especially via
expansion to new markets), developing products outside and by acquisition.
Johnson & Johnson (No. 9) is once again our highest ranked manufacturer. Buoyed by the second
overall highest peer recognition, Johnson & Johnson claims this honor along with the distinction of
being the only healthcare company included in the Gartner Global Supply Chain Top 25 for 2015.
With a supply chain organization larger than many whole companies on this list, Johnson &
Johnson's size is both a blessing and a curse. The benefits include seemingly endless best
practices that can be discovered, promoted and adopted companywide, and the critical mass to
Page 12 of 24
Gartner, Inc. | G00291961
launch initiatives with the talent and resources to be successful. The downsides relate to the
complexity it creates. Significant time and effort are spent making sure that the broad organization
is "on the same page." Johnson & Johnson deserves recognition for its centralized supply chain
strategy, embrace of innovation, and talent initiatives. Johnson & Johnson has multiple customer
interface initiatives, clearly understanding the importance of collaboration to the future of healthcare
delivery. Specifically, its initiatives in the pharma and logistics areas are delivering key insights on
how to build value with their varied customer base.
BD (No. 12) joins the ranking, thanks to the second-highest peer recognition for manufacturers.
Functionally, logistics and distribution continue to be a source of strength. Projects in this area
delivering value include mode analysis and network optimization in North America and Europe. As
with many life science companies, the scope of the global supply chain doesn't include the entire
plan-source-make-deliver spectrum, and visibility can be a challenge as a result. BD continues to
leverage its Signature Solutions group for building specific solutions for key customers that help it
optimize clinical and operational activities. The future will be interesting for BD as it continues the
integration of CareFusion. In an industry where M&A has become the norm, BD is an anomaly —
this acquisition is the first in its 118-year history. This integration will have significant supply chain
ramifications, especially in the U.S., where CareFusion's business is essentially the same size as
BD's.
Medtronic (No. 15) is back on our list for the first time since 2009. For this year's ranking, Medtronic
is evaluated as a combined entity with Covidien, which was ranked 19th last year. The integration of
Covidien will be a significant focus for the next few years at Medtronic. The acquisition has already
paid off in the area of customer collaboration, where the combined organization is leveraging best
practices to improve its customer support model. Acknowledging a need to improve inventory
efficiency, many of Medtronic's recently completed initiatives focus on improving inventory
utilization by standardizing metrics, safety stock methodology and vendor relationships. Medtronic
Hospital Solutions won the Gartner 2015 Healthcare Chainnovator award for manufacturers. This
solution is novel to the industry, in that Medtronic leveraged the voice of the customer to develop a
set of capabilities that extends its classic business model. Along with providing medical devices,
Medtronic now can help customers by leveraging a suite of services that range from materials
management to training to financing.
Pfizer (No. 16) rose five spots from last year, thanks primarily to analyst recognition of their efforts to
advance its supply chain. Inventory efficiency continues to be a challenge, as this year's inventory
turns of 1.7 were the lowest of the companies in the Top 25. Much of Pfizer's recent efforts to
improve its supply chain are focused with managing the complexity of its business. Pfizer has
recently completed an initiative to move from a collection of separate entities to designed, end-toend supply chains. This will define accountability, manage trade-offs and align expectations, while
keeping customer needs squarely at the center of all supply chain activities. After acquiring nearly
20 companies in the last 10 years, there was a multitude of processes and systems. Pfizer has
successfully migrated to a single ERP platform, leverages end-to-end governance and metrics, and
has a "control tower" solution to give enterprisewide visibility. Its recently proposed acquisition of
Allergan is potentially another test of Pfizer's integration abilities.
Gartner, Inc. | G00291961
Page 13 of 24
Abbott (No. 20) leverages strong peer opinion to make this year's list. The company has
comparatively strong — albeit slightly declining — inventory turns compared to last year, with a
result of 3.5. This is a good indicator of supply chain efficiency, helped by rising revenue. Abbott's
Clonmel, Ireland, site was recognized for its continuous improvement accomplishments with the
prestigious Shingo Prize last year. It was able to implement significant improvement to productivity,
lead times and cost through a commitment to continuous improvement. Abbott deserves
recognition for its efforts around sustainability. It is the leading life science company in the 2014
Dow Jones sustainability index, a measure that considers economic, environmental and social
factors. Like many companies in the industry, Abbott continues to pursue growth in ways that prove
challenging to supply chains — in emerging markets and through acquisition. Last year, Abbott
added new manufacturing capability in North America, Europe and Asia.
AbbVie (No. 21) is in the second year of being assessed as a stand-alone entity. It had the highest
three-year weighted ROA (11.4%) and inventory turns (3.9) of any of the ranked manufacturers. Both
numbers are slightly lower year over year, as its revenue has grown but its cost of goods sold
(COGS) has shrunk. Absolute inventory decreased, but not quite at the same rate as COGS. AbbVie
has solid plans to increase supply chain efficiency and continue its focus on patient outcomes.
Programs to improve foundational abilities, like a common ERP platform and a new procurement
process, are building better efficiency. The company prides itself on patient-centricity, and is
leveraging distinctive ways to connect to patients, like myHumira, which assists with treatment
financing. Logistics is a key focus of the AbbVie supply chain, as it simultaneously ceases
leveraging shared services from its former parent company and introduces innovation in cold chain
and security.
GlaxoSmithKline (GSK) (No. 24) is the final manufacturer in this year's ranking in part due to Gartner
analyst opinion and ROA. Struggling again with declining top-line growth, GSK has made significant
investment in strategies and initiatives to build solid foundational supply chain capabilities. This
should provide a more efficient cost structure while facilitating organic growth. Of particular note is
the GSK Production System, which is a corporatewide initiative to implement standardization to
improve quality, reduce cost and launch products on schedule. GSK has also embraced
segmentation, developing differentiated supply chain responses for varied products, customers and
geographies. Collaboration is also a key component of GSK's strategy, partnering to develop
solutions to key global challenges like malaria and Ebola.
Healthcare Providers
Healthcare providers remain the same number of companies in our ranking, at 11 this year.
Healthcare providers continue to build on past success to deliver additional innovations for 2015.
Many of these innovations involve collaboration. About half of the advanced IDN supply chains have
some focus on the development of new revenue models or commercial offerings. All of them seek to
sustain their leadership and find clearer ways to show their value beyond sourcing and logistics for
their organization. Leaders continue to build talent, which showed its importance this year, as at
least five of our ranked health systems had turnover in a top-three leadership position in supply
chain in the past 12 months. These leaders will continue to get larger, as well, with four of the 11
deeply involved in mergers in 2015 or looking into 2016.
Page 14 of 24
Gartner, Inc. | G00291961
Banner Health (No. 11) is a big mover for this year's ranking, moving up 13 spots on top quintile
Truven scores and improved peer and analyst votes. Banner has been quietly racking up recognition
from multiple industry groups in the past few years as they have shown a light on its unique
alignment to Banner's Corporate Vision 2020. This sustained alignment — as Banner has grown and
moved from an acute care focus to a clinical quality focus, and now a population health
management company — is consistent and value-driven. Banner now has $6.3 billion in revenue in
29 hospitals and 293 clinics after the successful completion of the University of Arizona Health
Network acquisition. Banner's capabilities center on a vertical supply chain across the care
continuum, engaging physicians, educating stakeholders and developing a culture of supply chain
competency. Key initiatives in the past year include continued progress in the pharmaceutical
supply chain; a dyad with clinical support services to improve the effectiveness and connectedness
of value analysis to a formulary; and how supply chain supports the "Triple Aim" in healthcare:
improving patient outcomes, improving health of populations and reducing the per capita cost of
healthcare.
Advocate Health Care (No. 13) holds its spot on consistent year-over-year performance across the
categories of any company. Great quality of care scores and bond, along with steady peer and
analyst opinion, put Advocate in the Top 25 for the fourth year in a row. Advocate continues to build
out operational supply chain capabilities along with analytical skills to support good decision
making for supply chain and patient care pathways. This year saw continued improvements in
Advocate's CSC partnership with Owens & Minor. Advocate has also been a pioneer in controlling
all logistics centrally through a third-party partnership that has been a model for deployment around
the country. Aligning the cost of products, utilization and outcomes have been a continued focus
with gains made from its SharedClarity investment in 2015, and further development of a clinical
product research tool to engage the IDN on making decisions based on data at the intersection of
cost, quality and outcomes. Early work on the appropriate cost and utilization of robotic technology
yielded savings of over $1 million in 2015 across the system.
UPMC (No. 14) moves up three spots this year. Flat but strong peer votes plus an uptick from the
analysts offset a still-languishing Truven score that just kept UPMC above the bottom quintile for
quality of care. UPMC is a big organization at $12 billion across 21 hospitals and 500 medical
offices. In addition, it is the payer/health plan for $2.7 million people, and has an advanced view of
how to make trade-offs between supply chain cost and total cost of patient care. Many recognize
UPMC for its efforts over the past seven years to build central supply chain services in distribution
through a CSC, pharmaceutical wholesaling/group purchasing organization (GPO), biomedical
insourcing, supply chain transaction services, procure to pay with 100 suppliers, and even
employee transportation. In addition, UPMC has direct alignment to clinical departments through
more value analysis teams than most IDNs would even try to operate. New developments in 2015
include a comprehensive review of shoulder procedures, and the development of a bundled group
of supplies for each procedure at a cost that allows UPMC to go from losing money to making
money. UPMC also formed the supply chain executive advisory board consisting of senior-level
people in finance, care quality, hospital presidents, physicians, health plan leaders and technology
leaders to help align decisions and manage change through supply chain. UPMC does this with
deep talent in key areas of supply chain and a passion for developing the next game-changing
innovation.
Gartner, Inc. | G00291961
Page 15 of 24
BJC HealthCare (No. 17) is back in the Top 25 for the fourth time in the seven years of the ranking
after a three-year hiatus. BJC's already strong supply chain talent has been supplemented in the
past four years to include a new chief supply chain officer (CSCO) and strong direct line leaders.
Projects like its end-to-end supply chain visibility pilot with long-term distribution partners Cardinal
Health and Cook Medical earned BJC a Gartner Healthcare Supply Chainnovator award this year for
its efforts in taking inefficiencies out of the supply chain for stents (see "Healthcare Supply
Chainnovators, 2015: Collaborative Models in Medical Devices Rise to the Top"). This project was
successful enough to merit expansion and a $10 million investment from BJC to build it out. BJC
continues to tackle standardization opportunities, and launched projects to address blood
management and lab services to address cost through utilization management, standard
procedures and cost across the system. In addition, the company has implemented an OEM
reprocessing initiative to reduce costs and improve sustainability for medical devices.
Cleveland Clinic (No. 19) drops three spots this year. Cleveland Clinic is a leader in healthcare, with
a strong brand name and lofty supply chain ambitions. It developed a new regional GPO model
called Excelerate Strategic Health Sourcing two years ago with VHA, and continues to build out that
business. The system also joined the Midwest Health Collaborative this year — along with
OhioHealth and ProMedica — to share data and best practices, and to reduce overall costs in the
region. This collaboration may leverage Excelerate, as well as a big data spin-off from Cleveland
Clinic called Explorys designed to use data to see what products truly have an impact on patient
outcomes. Cleveland Clinic also is breaking new ground in co-developing products with
manufacturers like Lubrizol for cardiology and Parker Hannifin for medical technology.
Duke University Health System (No. 22) is a newcomer to the Top 25, but is a familiar leader on
multiple fronts in the industry. Duke was an early advocate and influencer in illuminating the benefits
of better data standards and unique device identification (UDI) for manufacturers and health
systems. More an academic medical center with regional affiliates than some of the more sprawling
providers in the study, Duke has made supply chain discipline a cornerstone of what it does, which
can be a challenge at an academic medical center focused on innovation at any cost, in some
cases. It has long self-contracted for medical products, purchased services and even
pharmaceuticals. In addition, supply chain is integrated into the flow of patient care uniquely at
Duke, with supply chain sitting on the care redesign team to help balance supply chain costs with
patient care metrics. Duke has strong analytics that connect product decisions in value analysis
with patient care and drive compliance across the three locations, where the surgeons may all have
procedures on a given day.
Ascension Health (No. 23) dropped 11 spots due, in large part, to a significant drop in its Truven
ranking. Keeping quality of care high across the largest health system in our study is challenging.
With 131 hospitals, 1,900 clinics and $20 billion in revenue, the supply chain operation is larger than
many entire health systems in our study. Seeing the opportunity to bring value to Ascension, the
supply chain group has branded itself The Resource Group, and has accelerated its supply chain
capabilities aggressively over the past five years, growing from 30 people to 330 people. Strong
leadership has driven industry-leading levels of compliance and standardization, with consistent
dashboards allowing everyone to know where they stand with the organization's goals. Suppliers
have taken note, and Ascension has chosen partners knowing that whatever they decide on has to
be scalable to diverse regions. Ascension calls it "user-directed strategic sourcing," and it has
Page 16 of 24
Gartner, Inc. | G00291961
helped the company standardize and even launch its own GPO/supply chain services business
moving away from a national organization to enter the market.
Baptist Health South Florida (No. 25) is a new entrant to the Top 25. This $2.1 billion, seven-hospital
system is set to merge with Bethesda Health System in late 2015. Long a technology leader and
one of HealthCare's Most Wired health systems for many years in a row, Baptist has built supply
chain leadership regionally through the Premier South Florida Regional Collaborative, and has
aligned with sustainability initiatives led by its affiliation with Practice Greenhealth to look for supply
chain solutions that are environmentally friendly, in areas from the operating room to the lunch room.
Healthcare Value Chain Capabilities
For the Healthcare Supply Chain Top 25 for 2015, we maintained our model for value in healthcare.
Our model is designed to highlight activities in the healthcare value chain that enable high-quality
patient care at optimal cost, driven by the following core set of capabilities (see Figure 1).
Figure 1. Healthcare Value Chain Capabilities Model
Source: Gartner (November 2015)
■
Patient focus — A patient-back supply chain strategy focused on market accessibility, patient
outcomes, care quality and cost impacts all intraorganizational and interorganizational
functions, from product development to partner collaboration.
Gartner, Inc. | G00291961
Page 17 of 24
■
Collaboration — Trading partners must enter into sustainable, collaborative relationships with a
shared vision and transparent set of mutual goals to create win-win improvements influencing
the entire value chain.
■
Network visibility — Trading partners must create bidirectional visibility to key information,
such as inventory, demand, compliance, outcomes and cost.
■
Dynamic supply — Because high-quality outcomes aren't static targets, all organizations must
create agile, value-added supply chain responses tailored to multiple customer and channel
segments.
■
Change management — Value in healthcare is a long-term quest, and organizations must have
the vision, strategy, execution discipline and strong governance to sustain change in the face of
ingrained beliefs and process habits.
■
Foundational excellence — To drive toward higher-level capabilities, organizations need to
focus on the basics and optimize their operational excellence and business process
harmonization initiatives. Moreover, they need to ensure that their systems are capable of
supplying credible data on which to implement higher-level capabilities that affect outcomes
and cost. Developing future supply chain talent requirements is important at the foundational
layer as well.
This model is also used to guide both peer and analyst voters as they consider companies to select
for the ranking. The organizations that received the most recognition have established either a
strong and credible foundation, an innovative vision for future success, or are already pursuing and
realizing benefits from joint initiatives with trading partners. Although our model cannot ensure
success in execution, the industry overall recognizes that the path toward a future healthcare
system — one that is cost-efficient and focused on patient outcomes — is based on the principles
captured in our model. Wherever a company sits in the value chain, and wherever one falls on this
year's ranking, this model can be used to frame and set parameters to supply chain strategic goals.
At the same time, leaders must develop the skill sets most conducive to executing against initiatives
that involve an end-to-end understanding of processes, and culturally ingrain a "patient back"
perspective within their company.
The Healthcare Supply Chain Top 25 Methodology
Consistent with our Global Supply Chain 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 compared to publicly traded manufacturers,
distributors and pharmacies. Access to common, public financial data is not easily captured;
therefore, we utilized different assessment methodologies for these two major segments of the
healthcare value chain.
Page 18 of 24
Gartner, Inc. | G00291961
Manufacturers, Distributors and Pharmacies
The first step in our Top 25 methodology was to identify a population of companies to include in the
analysis. Consistent with prior years, we derived our 2015 master list of 89 manufacturers,
distributors/wholesalers and retail pharmacies from a combination of external sources. Compared
to the methodology for our global cross-industry Supply Chain Top 25, the annual revenue threshold
required for inclusion is lower at $1.5 billion in sales to ensure that we cast as wide a net as
possible. However, one factor remained constant: All companies must publish audited financials
specific to a healthcare business to be included in the Healthcare Supply Chain Top 25.
The second step in our methodology was to determine the quantitative measures to utilize in our
analysis. Consistent with prior years, we utilized ROA and inventory turns for operating and supply
chain effectiveness, respectively. Publicly available, audited financial data was collected for each
company for the years 2012 through 2014. This data was used to calculate a three-year weighted
average for ROA and a 2014 end-of-year measure of inventory turns.
The third step in our methodology was to determine the weighting applied to the quantitative
measures versus the opinion score. We strongly believe that the collective wisdom of the healthcare
crowd points the way to supply chain excellence and successful trading partner collaboration. We
also believe that repeated, bidirectional and genuine collaboration between trading partners is a
crucial ingredient to achieving value in healthcare. So, consistent with last year's methodology, we
applied a 40% weighting to the quantitative measures and a 60% weighting to the opinion score.
Health Systems
Our methodology used to select the 74 health systems in our study changed slightly, while the
methodology used to rank them remained the same. As we have for the past five years, we
partnered with Truven Health Analytics on two components of the process: to determine a
meaningful group of health systems to analyze, and to determine a proxy for quality-of-care score
for the health systems. Our goal for this year was to better align the size of the health systems with
that of the manufacturers, distributors and retailers ($1.5 billion and above), while including only
those companies in the top 80% of the Truven Health Analytics 15 Top Health System study. We
openly discuss this methodology with key executives from health systems, and the majority of these
executives support this change. We have kept the primary components of our analysis intact, but
placed the focus on the more complex health systems while continuing to exclude the health
systems that scored poorly in the Truven study.
Truven Health has collected quantifiable public data in 10 key areas of patient care for the last 21
years. The results are published in its 15 Top Health Systems report on patient care, which is part of
its 100 Top Hospitals program. This percentile score is based on publicly available data across 10
measurements of patient care performance, including mortality, complications, patient safety, core
measures, 30-day patient readmits, 30-day mortality, average length of stay (ALOS), expense,
operating profit margin and Hospital Consumer Assessment of Healthcare Providers and Systems
(HCAHPS).
As previously mentioned, we used the Truven Health report for two purposes. First, we included the
systems that were in the top four quintiles of the Large Health Systems category ($1.5 billion and
Gartner, Inc. | G00291961
Page 19 of 24
above) of the study. To be consistent with our previous Top 25 rankings, we also included two
midsize systems that scored very well in the peer and analyst voting from The Healthcare Supply
Chain Top 25 for 2014, and were in the top 80% of Truven scores. Second, we used the percentile
score from the study to develop a force-ranked score for the quality of patient care for each hospital
system.
As we did last year, we chose bond rating as a proxy for operational efficiency at the health system
level. Although a bond rating is not a perfect proxy of operational efficiency, it does reflect the
financial discipline and management effectiveness of a health system. We used ratings from
Standard & Poor's (S&P), Moody's and Fitch to develop an aggregate bond-rating composite score.
For consistency purposes, we mapped all bond ratings to the S&P scale, which is reflected in Table
1.
The last step in our health system methodology was to decide how to balance our quantitative
measures and opinion scores. To maintain consistency with last year's methodology, we applied a
30% weighting to the quantitative measures and a 70% weighting to the opinion score. Here, once
again, the wisdom of the collective healthcare crowd should prevail.
Opinion Component
The goal of the opinion component is to draw on the extensive knowledge of the professionals who
interact and have direct experience with the organizations being ranked. Any supply chain leader
from a manufacturer, distributor, pharmacy or health system is eligible to vote. However, only one
vote is accepted per company.
This year, we received peer votes from 88 supply chain leaders. Voters came from the most senior
levels of supply chain organizations from across the value chain. To keep the voting composition
consistent with the representation from the different segments in the value chain overall and the
historical averages of the voter population, we allocated an aggregate percentage vote to four key
areas this year. Manufacturers have a 43% weight, Health System voters a 33% weight,
Wholesalers/Distributors 8%, Retailers 4% and Other (including experts, academics and
consultants) a 12% weight (see Figures 2 through 4).
Twenty-one Gartner analysts representing various industry and functional specialties cast analyst
opinion votes as well. These analysts drew on their primary field research and work with healthcare
value chain companies when casting a vote.
Page 20 of 24
Gartner, Inc. | G00291961
Figure 2. Peer Opinion Panel Composition: Value Chain Segment
Source: Gartner (November 2015)
Figure 3. Peer Opinion Panel Composition: Role
Source: Gartner (November 2015)
Gartner, Inc. | G00291961
Page 21 of 24
Figure 4. Peer Opinion Panel Composition: Revenue
Source: Gartner (November 2015)
Polling Procedure
Peer panel polling was conducted during September 2015 via a Web-based, structured voting
process. Voters were taken through a four-page system to identify their final selection of leaders.
Here's a breakdown of the four-page system:
■
The first page provided instructions and a description of our model for value in healthcare.
Specifically, they were asked to consider the following:
■
Which organizations are developing and implementing strategies to support the delivery of
high-quality patient care at optimal costs?
■
Which organizations are building and implementing supply chain capabilities in the areas
depicted on our healthcare value chain capabilities model?
■
The second page solicited demographic information from voters.
■
The third page provided panelists with a complete list of the organizations to be considered. We
asked them to choose 25 to 50 that, in their opinion, most closely achieved the ideal of value in
healthcare.
■
After the subset of leaders was chosen, the panelists were then asked to force-rank the
companies from No. 1 to No. 25.
Page 22 of 24
Gartner, Inc. | G00291961
Individual votes were tallied across the entire panel, with 25 points earned for a No. 1 ranking, 24
points for a No. 2 ranking and so on. The analyst panel and the peer panel used the exact same
polling procedure.
By definition, each person's expertise is deep in some areas and limited in others. Despite that,
voters weren't expected to conduct external research to place their votes. The polling system is
designed to accommodate differences in knowledge, relying on what author James Surowiecki calls
the "wisdom of crowds" to provide the mechanism that taps into each person's core kernel of
knowledge and aggregates it into a larger whole.
Composite Score
All this information — that is, the quantitative measures and opinion votes — is normalized onto a
10-point scale and then aggregated using the aforementioned weighting into a total composite
score. The composite scores are then sorted in descending order to arrive at the final Top 25
ranking.
Gartner Recommended Reading
Some documents may not be available as part of your current Gartner subscription.
"The Healthcare Supply Chain Top 25 for 2014"
"Healthcare Supply Chainnovators, 2015: Collaborative Models in Medical Devices Rise to the Top"
"Introducing the Patient-Driven Value Network Model for IDN Supply Chain"
"Now Is the Time for IDNs to Build Patient-Outcome-Driven Supply Chains"
"How to Deliver Supply Chain Value During Healthcare Provider Mergers and Acquisitions"
"The Gartner Supply Chain Top 25 for 2015"
Gartner, Inc. | G00291961
Page 23 of 24
GARTNER HEADQUARTERS
Corporate Headquarters
56 Top Gallant Road
Stamford, CT 06902-7700
USA
+1 203 964 0096
Regional Headquarters
AUSTRALIA
BRAZIL
JAPAN
UNITED KINGDOM
For a complete list of worldwide locations,
visit http://www.gartner.com/technology/about.jsp
© 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This
publication may not be reproduced or distributed in any form without Gartner’s prior written permission. If you are authorized to access
this publication, your use of it is subject to the Usage Guidelines for Gartner Services posted on gartner.com. The information contained
in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy,
completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This
publication consists of the opinions of Gartner’s research organization and should not be construed as statements of fact. The opinions
expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues,
Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company,
and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner’s Board of
Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization
without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner
research, see “Guiding Principles on Independence and Objectivity.”
Page 24 of 24
Gartner, Inc. | G00291961