With a career in healthcare distribution spanning the years 1952 to 1991, Bob Barnes of Durr-Fillauer witnessed and created a great deal of change in the industry. Born and raised in Birmingham, Ala., Barnes attended the Alabama Polytechnic Institute (which later became Auburn University). After graduating and spending a year and a half in the Army, he became a sales rep for American Hospital Supply. Soon after, he joined a much smaller company, Durr, which had just opened a branch in Birmingham. Barnes carried a bag for 13 years before becoming a regional sales manager and later, manager of the company’s entire med/surg division.
Barnes both witnessed and facilitated the industry’s transition from personal, relationship-based, product selling, to systems selling. He encouraged his company (and, as HIDA chairman, the industry) to help hospitals reduce total costs – that is, the cost of acquiring, receiving and using products. He worked closely with Tampa (Fla.) General Hospital to create an inventory-reduction and low-unit-of-measure program, which became a showcase for Durr’s approach to the market. At the same time, he streamlined and automated his company’s relationships with key manufacturers.
When Barnes died in 2006, he was remembered by colleagues as generous, cool under pressure, funny, popular, a mentor to young people and a lifelong learner.
Selected at age 37 to be CEO of American Hospital Supply, Karl Bays was a big man with big ideas. Born in 1933 in rural Kentucky, Bays turned down an offer to play professional football to pursue a business career. He became a salesman for American and quickly made his mark there. He built the company’s presence in Europe and Asia prior to being selected CEO in 1971.
Bays believed in establishing “ruthless priorities” for himself and others. His mantra was “set objectives, plan, organize, motivate and control.” He multiplied the number of American’s distribution facilities around the country, established a corporate program to reward customers for buying from American’s multiple companies, and developed the TelAmerican automated order-entry system, so customers could order products using IBM punch cards.
But it was Bays’ personal touch that distinguished him from others. It is said that when he ate in the company’s cafeteria, he would make a point of sitting with people he had never met, often workers from the warehouse or offices. He also had a passion for staying close to the customer, and spent much of his time in the field.
Bays had one final big idea — to create a healthcare company that encompassed not only manufacturing and distribution, but patient care as well. In 1985, he made an offer to buy HCA, the for-profit hospital company. The idea was revolutionary, and indeed, met with resistance from many of American’s customers. In the end, Wall Street rejected the plan. Instead, nearby Baxter Travenol bought American. Bays left one year later, and died of a heart attack in November 1989.
Pat Kelly, an orphan, was a fighter from the early days, while growing up at the Virginia Home for Boys in Richmond. A Marine and one-year high school biology teacher, he took his first medical distribution job with General Medical. He left to join Intermedco and became interested in starting a distribution company focused on physicians.
He founded Physician Sales and Service in 1983 promising 24-hour delivery. Lacking branded products or an established customer base, the new company could hardly afford experienced salespeople. For that reason, Kelly began recruiting college grads with little or no experience selling medical products, and proceeded to aggressively train them on product knowledge and selling skills. Training young reps was to become part of the company’s culture. Early on, PSS distinguished itself as an equipment-driven company, and its reps expanded the market for physician-office-lab products.
Success in Florida emboldened Kelly to expand the young company’s reach. He began opening up new centers, and then aggressively buying companies around the country. By the time he left PSS in 2000, the company had nationwide coverage and more than $1 billion in annual sales.
Ron Stephenson, Indiana University professor of marketing, is credited with teaching the industry how to read a balance sheet and raising the financial bar for distributors.
Soon after Stephenson joined the staff at IU, the Medical Surgical Manufacturers Association asked the school to develop an MSMA-sponsored executive education program for distributors. Stephenson, who was working on projects for the National Association of Wholesalers, took on the task. At that time, the industry consisted primarily of owner/managers who had been star sales reps prior to starting their own companies. Stephenson soon realized that while these execs understood markets and customers, they were financially unsophisticated. It was clear that any training program would have to help them learn how to manage margins, etc.
At around the same time, Stephenson made a proposal to take over management of the annual financial survey of the members of the American Surgical Trade Association (later called HIDA). Stephenson began conducting the survey around 1970, and continued to do so every year until 2000. The relationship between Stephenson and ASTA grew. He began conducting seminars for the association’s members, and did consulting work for some of them. In 1978, he conducted the first manufacturers’ seminar, a venue in which manufacturers meet distributors and learn how best to work with them.