Free Spirit

Edition: August 2001 - Vol 9 Number 08
Article#: 1016
Author: Mark Thill

Jenise Luttgens is her father's daughter, and then some. Luttgens is president of Temecula, CA-based Professional Hospital Supply. Her father, John Hoffee, founded the company twenty years ago.


An energetic salesman and entrepreneur, Hoffee is enjoying retirement in Hawaii. His daughter, meanwhile, is enjoying slugging it out with the national players on the West Coast.


PHS is a $300 million general-line distributor serving primarily the acute-care market. It services California, Nevada, Arizona, Oregon, Washington, Idaho and parts of New Mexico and Colorado from three distribution centers: Temecula (Southern California), Fairfield, CA (Northern California) and Phoenix, AZ.


Hoffee started the company in 1981 with the intention of building a small specialty dealer in Southern California, says Luttgens. ''But he saw a real need for a service organization,'' she says. ''When hospitals placed an order and we promised it would be there first thing the following morning, it truly was.''


Hoffee imbued the company with his unique brand of energy and creativity.


Luttgens, who was in college when her dad started the company, picked up quickly on the energy.


''When your dad is in sales, you learn very young that whenever you pick up the phone, it's a potential customer,'' she says.


While studying finance at school, she came home most weekends to help out at the business, doing such things as filing inventory cards, looking over the books, labeling patient-charge items.


''We would assemble crutches for our customers as a value-added service,'' she says. ''My dad was always thinking about value-added services.''


For example, he created an organization called AMMA, which provided outsourced materials management services for several hospitals in Southern California. It was as bold an idea then as it is now.


Hoffee also jumped on stockless purchasing, which still accounts for roughly 35 percent of the company's revenues.




Controlling Their Destiny


''When I was going to school, I had no idea I would stay in the family business,'' says Luttgens. But she couldn't resist.


Going to work full-time with a total work force of four people left her no choice but to learn about the business from the ground up.


''With four of us, we would each take orders, call manufacturers, put orders in the truck, make sure they got there the next day,'' recalls Luttgens.


In some ways, that's a far cry from today's $300 million operation, but in others, it's not.


''We still believe strongly in controlling our own destiny,'' says Luttgens.


For example, the company owns its trucks and facilities, and has written in-house much of the software it uses to run its business. Each rep is equipped with a laptop computer that can be


connected to the corporate database to access pricing and inventory information, generate requests for inventory, and provide individualized account information.


The company is also a leader in the manufacture of sterile and non-sterile custom packs, which are assembled in a 170,000 square-foot facility. PHS also offers a Custom Procedure Cart™ system for pre-assembling of supplies needed for surgical cases.


''We battle the national competition every day, and we strive every day to be different and to give our customers another choice,'' she says. ''And that's been our key to success.''


''We make decisions quickly, we have a lot of flexibility, and we're just as competitive as the big guys,'' she says. ''In fact, because of their sheer size and shareholder focus, they're limited in what they can do. And I feel that's a big advantage of ours.


''We're here 24x7,'' she continues. ''We will take an order and service a customer at any time. There are no hard, fast rules, no order cutoff times. We have dedicated employees who will do whatever it takes to service the customer.''


The company is proud of the recognition it received recently when it was named a regional distributor for Novation.


''We're excited that they're listening to their customers about the importance of regional distributors and how they can bring efficiencies to them,'' says Luttgens. ''We're hoping more GPOs will follow suit.''




The Difference


Although in some companies it might be a platitude, in PHS it's not: People do make the difference.


Visitors to its website (www.phsyes.com) can immediately tell as much, given the photos of its employees that reside on the site.


''Even through our dramatic growth over the past 20 years, our people remain very ambitious and have a lot of energy,'' says Luttgens. ''They come to work with their eyes wide open, eager to learn.


''Our industry has changed, and our people are willing to change with it and come up with the business ideas to make us different.''


Despite its size, PHS has managed to keep alive a vital team spirit, says Luttgens.


''We're constantly coming up with various incentive programs,'' she says. Employees earn PHS dollars for good attendance, safety, new ideas and other things.


''Everyone is proud of the company because they're a part of it,'' she says. Almost everyone has some PHS paraphernalia on their desk or bodies – coffee mugs, desk fans, rulers, T-shirts.


''Everyone takes complete ownership in what they do. We don't have a lot of layers of management. Everyone truly can contribute to the success of the company, whether they're picking orders or mopping floors.


''We love to bring our customers in,'' she continues. ''People say they can feel the energy in the air.


''My dad created an organization with lots of energy. It was here when we were an organization of five, and it's here now with 800.''




No Deal


Luttgens' phone rings from time to time with offers to buy the company, but such a deal isn't in the cards.


''I believe very strongly in keeping this company and passing it on from generation to generation,'' she says.


''To offer to the next generation the opportunities that were afforded to me and my management team is something that is special and unique – and that is part of the PHS philosophy.''


Rather than sell out, PHS is looking ahead.


Expect the company to grow, ''possibly with additional facilities serving additional markets,'' says Luttgens.


''We'll maintain our same philosophy of flexibility and speed. And with that comes a variety of additional programs that we can offer.


''We're always on the forefront of something new and innovative,'' she says. ''That's how PHS is.''


Sales-Driven




PHS was founded by a salesperson. And that's made all the difference.


''My dad [PHS founder John Hoffee] was in sales all his working life,'' recalls Jenise Luttgens, president. ''He created an organization very focused on sales, with lots of energy. And that spirit still imbues the place.''


''The energy level hasn't changed,'' agrees Vice President of Sales John Luyben. ''In fact, it has increased.''


Luyben joined the company in 1986 to manage its sales growth. Today, he is responsible for 40 reps.


''We do business in a lot of the same ways we used to,'' he says. ''We're still always searching for an advantage and looking to promote our company on the same grounds as those on which it was founded – attention to the customer.''


''We've never been afraid to take on a task that could be viewed as different, like stockless purchasing,'' he adds.


Simply by virtue of being a regional distributor, PHS can provide that attention better than the nationals, maintains Luyben.


''The nationals can't do what we do,'' he says. For example, while some companies are reducing SKUs, PHS brings in brands for its customers.


''We don't limit or restrict ourselves,'' says Luyben. ''We will honor the customer's wishes if there's a cost-savings or clinical advantage.''


PHS can react to customers' needs far more quickly than bigger firms, he adds. For example, it can implement a stockless program ''at a lightning pace,'' he says. PHS has installed such programs in as little as 45 days.


What's more, the fact that PHS is regional allows it to offer programs tailored to its customers' individual circumstances, he says.


''Unless you're an expert in smoke and mirrors,'' no distributor can dictate how a program will work for customers throughout the country, he says. ''A hospital in California has totally different needs than one on the East Coast.''




Salesperson as Entrepreneur


As a regional distributor, PHS has more flexibility in the tools it gives its sales reps, adds Luyben.


For example, all reps are equipped with laptops so they can get live information on GPOs, product costs, product movement, usage history and substitute products. ''They can use that laptop as a resource for investigating products or substitute products,'' he says.


Luyben's management style reflects the company's ''free spirit'' approach to its employees and the market.


''We don't micromanage or baby-sit our reps,'' he says. ''They are responsible individuals who understand our company's initial success, and who can take advantage of that.''


In fact, says Luyben, PHS looks to its reps for new direction and growth. ''We're very much a sales company. That's the way it was founded, and the way Jenise [Luttgens] and I are.''