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Stock Strategist

Premier's in Prime Position

Its place at the intersection of purchasing and analytics creates a narrow moat.


 Premier (PINC) is one of the few entities in the U.S. healthcare system that has both the financial incentive and the business expertise to improve the cost of care on a national scale. Between its supply chain business and its performance services segment, Premier can connect the dots between costs and outcomes for its hospital clients and help drive measurable cost savings on a facility-by-facility basis. We think this will be an increasingly enviable position as care providers are required to transition more fully into a value- and outcomes-based reimbursement model, which we view as a structural eventuality for the industry.

In our opinion, Premier has fortified its positioning in this market over the past decade under the leadership of CEO Susan DeVore. By restructuring the company under a single sales organization, improving the company’s access to capital, and establishing capabilities that span a facility’s entire supply chain, Premier has positioned itself as a premier partner for care providers looking to deliver high-quality, low-cost healthcare. DeVore’s strategy has centered on internal development, accelerated through external acquisitions, to round out the company’s procurement reach (specialty pharmacy, direct sourcing, ambulatory group purchasing) and add market-leading capabilities to its technology platform (physician reporting, budgeting modules, labor productivity). We think this has been an effective route to bettering Premier’s position as a comprehensive solution to all problems emanating from a healthcare provider’s supply chain.

Jake Strole does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.