Information technology research and advisory company Gartner, Inc. has released its second annual Healthcare Supply Chain Top 25, which identifies organizations striving for supply chain excellence and better patient care.

The "2010 Healthcare Supply Chain Top 25" ranks healthcare manufacturers, distributors, wholesalers and retail pharmacies based on quantitative assessments of their supply chain costs, productivity and efficiency. The organizations were then 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.

"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.

"Granted, these achievements are critical to sustainable business success, but independently, they don't deliver value chain excellence when the measuring stick is marked by patient care, collaboration for value creation and continuous, end-to-end cost improvements," he said.

Gartner recognized Owens & Minor, a national distributor of medical and surgical supplies to the acute-care market and a healthcare supply chain management company, as the new No. 1 of the 2010 Top 25 ranking due to its solid financial performance and respect from value chain peers. The company is managing "self-distribution" for a few health systems' consolidated service centers (CSCs) and has bolstered its value-added services to hospitals in recent years. Owens & Minor also continues to grow its HealthCare Logistics business unit, providing warehouse and logistics capabilities for life sciences manufacturers looking for capacity or exceptional service to hospital customers.

"This recognition of our efforts to improve the supply chain and help our healthcare provider customers provide high-quality patient care at optimal cost is an honor for all of us at Owens & Minor," said Craig R. Smith, the company's president and CEO. "We continue to support our healthcare provider and supplier customers with innovative cost-effective ways to manage their supply chains. One of the newest options we offer is OM HealthCare Logistics, which provides the healthcare market with advanced third-party logistics services."

Last year's No. 1 in the Top 25, Johnson & Johnson, fell one notch to No. 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. 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 (ROA) 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. Mercy's relentless pursuit of excellence and value chain evangelism are beacons for supply chain innovation and leadership, said officials. 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 (PPIs), strategic sourcing and how supply chain intersects with patient outcomes will likely keep it there, analysts said.

"Excellent supply chain capabilities reduce the time required to sense and respond to patient demand, and then produce a profitable, right-first-time supply response to that demand," McDonnell said. "Take the next step toward Top 25 recognition by realizing your organization is part of an interdependent and interconnected value chain. With this realization, develop patient-driven value chain strategies for future business success."

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