Evolutionary Changes for Gartner’s Healthcare Supply Chain Top 25

Gartner has revised its methodology that guides the process of assessing organizations in the Healthcare Supply Chain Top 25 for the United States market. This new methodology reflects our changed focus from across all of healthcare supply chain to only health systems.

Your initial reaction might be, “Why is Gartner making this change?”

Since 2009, Gartner has kept the Healthcare Supply Chain Top 25 Ranking much the same. But 2021 is different. Changes in the world of the healthcare supply chain and its place in the global, all-industry supply chain mean the time is now to evolve and make some changes. The main change is that we are moving our Healthcare Supply Chain ranking to an all healthcare provider ranking for 2021 and beyond. And while the focus has shifted to health systems, the goals of the Healthcare Supply Chain Top 25 remain the same (see Figure 1).

We are not making this move lightly. There are three primary reasons why we are making this change.   First, the healthcare supply chain has made progress, and we desire to add more health systems to our ranking. Many are larger through mergers than ever before and the maturity of this group has improved since 2009. Second, there is greater recognition of life science companies in our global Supply Chain Top 25 ranking, with four companies making the global ranking in 2021 versus only one in 2009. Third, with the growing number of life science companies in the global ranking, we want to reduce confusion between the Healthcare Supply Chain Top 25 and the Global Supply Chain Top 25, in terms of companies included and the methodology used to rank them in each study.

The following are specific methodology changes for the Healthcare Supply Chain Top 25:

• Our focus going forward will be 100% on health systems in the United States. Manufacturers, distributors and retailers with above $12 billion in revenue will still feature in our global Supply Chain Ranking (see The Gartner Supply Chain Top 25 for 2021: Masters, Top 25 and Industry Leaders – available to Gartner Supply Chain clients).
• We are expanding the group of healthcare providers in the ranking from 72 to 171 by removing the qualification that a health system has to be in the top three quintiles of the IBM Watson Health 15 Top Health Systems Study. We will keep a minimum operating expense target of $2 billion for the health systems. Overall, this allows more health systems to be ranked.
• We will increase the weight of the IBM Watson Health 15 Top Health Systems Study ranking — rising from 15% to 20% for 2021 — based on our increasing belief in the connection of the supply chain to the quality of care. Offsetting this increase will be a small decrease in the peer and analyst opinion component to 32.5% each, respectively.
• The Healthcare Supply Chain Top 25 ranking continues to be based on a combination of quantitative data and opinion data. The quantitative data gives us an objective basis, on top of which we place the community peer vote component.
• We made a number of changes to the Healthcare Supply Chain Capabilities Model that guides our peer and analyst opinion. This model was last revised in 2016. It’s a good time to reflect on any changes. The focus has narrowed to health systems, and there are areas where we made additions or weighted certain capabilities differently. Big changes include increasing the emphasis on “effective governance” in terms of foundational capabilities, along with the addition of “digital supply chain” to that section of the model. Two other highlights: there is a revised and increased focus on “resiliency and/or risk management” in the network visibility section; “environmental, social and governance (ESG)” has been added to the section that focuses on collaboration.

Continued focus on collaboration in the healthcare supply chain

We did not want to lose the opportunity for peers and analysts to recognize “healthcare trading partner collaborators in the U.S.” Highlighting the interconnected, interdependent nature of the healthcare supply chain is still a primary focus of our efforts. While these manufacturers, distributors and retailers will no longer be formally ranked, we will be more directly highlighting those organizations that collaboratively support the mission of “improving human life at sustainable costs.” This collaborator designation also allows us to recognize privately held companies and/or companies where the primary business is not healthcare but that have a large healthcare division.

Since making this announcement in late July, it has mostly been met positively. We will be able to recognize more U.S. health systems and eliminate any confusion for life science companies that were in both the Global and Healthcare Supply Chain Top 25s. I’m glad to answer any questions at eric.odaffer@gartner.com.

Eric O’Daffer
VP Analyst
Gartner Supply Chain