Med-surg supplier leads healthcare supply chain "Top 25" list

Owens & Minor, a national distributor of medical and surgical supplies to the acute-care market, lead the 2010 list of the "Top 25" Healthcare Supply Chain operations issued by research and advisory firm Gartner, Inc.

The current list is Gartner's second annual Healthcare Supply Chain Top 25, and is meant to identify organizations striving for high-quality patient care at optimal economic cost.

Gartner ranks healthcare manufacturers, distributors, wholesalers and retail pharmacies based on quantitative assessments of their supply chain costs, productivity and efficiency. The organizations are evaluated according to the opinions of supply chain leaders from the most senior levels of healthcare organizations, as well as a selection of Gartner analysts.

Owens & Minor was ranked number 1 due to its "solid financial performance and respect from value chain peers," Gartner said. The company manages "self-distribution" for a few health systems' consolidated service centers and has bolstered its value-added services to hospitals in recent years. Owens & Minor has also grown its HealthCare Logistics business unit, providing warehouse and logistics capabilities for life sciences manufacturers looking for capacity or exceptional service to hospital customers.

Last year's leader in the Top 25 list, Johnson & Johnson, fell one notch to number 2 this year. The company "continues to develop supply chain strategies that focus on patients as the end customers of their various business value streams," Gartner said. Despite some very public quality and compliance issues in its consumer business, its healthcare value chain peers still recognize Johnson & Johnson as having a resilient supply chain and as a leader that continues to drive internal supply chain excellence and external value chain collaboration, said officials. The company had a strong return on assets and inventory turn performance.

At No. 3, Sisters of Mercy Health System, a non-profit healthcare organization delivering services to communities across Arkansas, Kansas, Missouri and Oklahoma, was recognized as the highest-ranked health system for the second year in a row.

According to Gartner, Mercy's "relentless pursuit of excellence and value chain evangelism are beacons for supply chain innovation and leadership." Its recent progress on vendor collaboration and a strategic move into design and assembly of custom surgical packs put it on the leading edge of the healthcare supply chain. Future innovations in managing physician preference items, strategic sourcing and how supply chain intersects with patient outcomes will likely keep it there, Gartner analysts said.

"Leadership in the healthcare value chain requires a laser focus on enhancing internal supply chain capabilities and a relentless pursuit of joint value with trading partners," said Wayne McDonnell, research director at Gartner. "Two themes emerged from our review of this year's Top 25: The time has come for value chain intermediaries to lead the extension of best practices across the value chain, and several health systems are illuminating a path to supply chain excellence for all value chain organizations to follow."

McDonnell said that healthcare value chain organizations must also expand their views of supply chain excellence, since many have historically held rather insular views. Life sciences manufacturers have measured success by the discovery and marketing of life-saving innovations, and distributors and wholesalers by the efficient utilization of working capital to preserve razor-thin profit margins. At the far end of the value chain, healthcare providers have measured success by the ability to balance cash out for treatments and cash in from reimbursements.

Click on the next page to see the top 25 list.