GARTNER Cardinal Health Retains No. 1 Slot in the Sixth Annual Healthcare Supply Chain Top 25 Ranking
Gartner, Inc. has released its sixth annual Healthcare Supply Chain Top 25 ranking. The 2014 ranking identifies organizations across the value chain that are focused on reducing supply chain inefficiencies, while improving the quality of healthcare. Healthcare supply chain leaders continue to optimize their capabilities, while preparing for changes that population health models will drive through the supply chain.
"The Healthcare Supply Chain Top 25 for 2014 reflects the metaphorical middle part of a marathon journey to build patient-driven supply networks," said Eric O'Daffer, research vice president at Gartner. "The participants know the route, but the excitement of the starting line has worn off and a few aches and pains have set in. Each company knows the real pain is coming later in the race, and that the only path is forward - there is no going back."
Cardinal Health retained the top spot in the Healthcare Supply Chain Top 25 for the fourth consecutive year, despite facing stiff headwinds as it absorbed the loss of $25 billion in business at Walgreens (see Table 1). Cardinal continues to have the widest breadth of any company in healthcare. It is a manufacturer, wholesaler, distributor, retail pharmacy and a connector at many points in between. Cardinal continues its heritage of customer collaboration, especially in medical products distribution by further integrating the acquisition of home healthcare company, AssuraMed, and, in 2014, getting deeper in medical devices through the $320 million acquisition of AccessClosure.
Table 1. The Healthcare Supply Chain Top 25 for 2014
Rank | Company | Three-Year Weighted ROA(1) (2011-2013) | One-Year Inventory Turns (2) (2013) | Bond Rating (3) | Truven Health Analytics Percentile Score (4) | Peer Opinion (5) 91 Voters | Gartner Opinion (5) 17 Voters | Composite Score (6A, 6B) |
1 | Cardinal Health | 3.5% | 10.4 | 1261 | 301 | 8.30 | ||
2 | Mayo Foundation | AA | 98.18 | 858 | 259 | 7.92 | ||
3 | Intermountain Healthcare | AA+ | 73.64 | 924 | 262 | 7.89 | ||
4 | Owens & Minor | 5.0% | 10.3 | 934 | 325 | 7.84 | ||
5 | CVS Caremark | 6.0% | 9.3 | 754 | 313 | 7.18 | ||
6 | Mercy | AA- | 46.36 | 687 | 285 | 6.53 | ||
7 | Johnson & Johnson | 9.6% | 2.8 | 1186 | 218 | 6.28 | ||
8 | AmerisourceBergen | 3.5% | 12.2 | 513 | 230 | 5.97 | ||
9 | McKesson | 3.2% | 9.7 | 796 | 145 | 5.60 | ||
10 | Walgreens | 7.3% | 7.5 | 669 | 168 | 5.36 | ||
11 | BD | 10.8% | 2.8 | 665 | 239 | 5.31 | ||
12 | Ascension Health | AA+ | 69.09 | 226 | 153 | 4.69 | ||
13 | Advocate Health Care | AA | 99.09 | 244 | 108 | 4.61 | ||
14 | Kaiser Foundation Hospitals | A+ | 91.82 | 526 | 65 | 4.36 | ||
15 | Abbott | 7.2% | 3.7 | 639 | 144 | 4.30 | ||
16 | Cleveland Clinic | AA- | 24.55 | 684 | 114 | 4.27 | ||
17 | UPMC | AA- | 11.82 | 613 | 127 | 4.14 | ||
18 | Geisinger Health System | 49.04 | 646 | 46 | 4.11 | |||
19 | Covidien | 8.7% | 3.1 | 595 | 133 | 4.07 | ||
20 | AbbVie | 16.4% | 4.0 | 417 | 92 | 4.02 | ||
21 | Pfizer | 9.8% | 1.6 | 564 | 159 | 4.01 | ||
22 | Providence Health & Services | AA | 72.73 | 184 | 90 | 3.75 | ||
23 | GSK | 12.2% | 2.2 | 385 | 137 | 3.69 | ||
24 | Banner Health | AA- | 86.36 | 187 | 79 | 3.68 | ||
25 | Amgen | 7.7% | 1.1 | 398 | 170 | 3.48 |
Notes:
1 ROA: ((2013 net income / 2013 total assets) * 50%) + ((2012 net income / 2012 total assets) * 30%) + ((2011 net income / 2011 total assets) * 20%)
2 Inventory Turns: 2013 cost of goods sold / 2013 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%)
2013 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 2014)
In the No. 2 spot for the third year in a row, Mayo Foundation is a model of consistency, combining the balance of high quality of healthcare scores and solid bond rating with top echelon peer and analyst scores. Mayo continues to demonstrate leadership in the healthcare value chain by retaining and developing top talent. Its Clinical Care Network group has successfully linked value in supply chain to quality and controlled cost of patient care. The company's refresh of its strategic plan in 2014 shows an organization not resting on its achievements.
Intermountain Healthcare climbs one spot into the No. 3 position in this year's ranking based on continued peer and analyst recognition of its capabilities, along with a tremendous bond rating and solid quality-of-care scores. Intermountain represents one of the closest things to a literal "City on a Hill" in the world of healthcare providers through its $40 million investment in its supply chain center.
"Discipline to stay the course and incrementally build capabilities are the hallmarks of companies on this year's ranking," said Mr. O'Daffer. "Companies near the top differentiate themselves by realizing that core capabilities are necessary but not sufficient, so they look for innovation. Organizations that retain talent and keep a focus on how supply chain supports their organization's mission and aligns with the business strategy are the ones that are able to sustain excellence in their supply chain."
Mr. O'Daffer said that making it into the Top 25 ranking takes strong quantitative performance along with recognition of peers and analysts. With 21 of 25 organizations repeating from Gartner's 2013 study, consistency and capabilities resonate, but innovation puts companies near the top of the list.
Consolidation has been a well-documented trend of healthcare providers for some time; however, manufacturers have joined in mergers and acquisitions (M&A) in 2014 in full force. These manufacturers seek to be indispensable to providers and find complementary product lines that can help them impact care at their largest integrated delivery networks (IDNs). And it appears that the big deals seem to be getting even bigger as organizations across the value chain see the benefit of scale in their relationships.
More detailed analysis is available in the report "The Healthcare Supply Chain Top 25 for 2014." The report is available on Gartner's website at http://www.gartner.com/document/2916617.
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.
Contacts- Janessa Rivera
- Gartner
- janessa.rivera@gartner.com
- Rob van der Meulen
- Gartner
- rob.vandermeulen@gartner.com
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. We deliver the technology-related insight necessary for our 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, we are the valuable partner to clients in over 9,000 distinct enterprises worldwide. 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, USA, and has 6,400 associates, including more than 1,480 research analysts and consultants, and clients in 85 countries.www.gartner.com.
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