A Local Concern: District Healthcare

Edition: October 2001 - Vol 9 Number 10
Article#: 1064
Author: Repertoire

District Healthcare is a small, minority-owned business that takes advantage of opportunity when and where it presents itself. Founded in 1985, the company has carved out a niche for itself as a locally owned minority supplier in metropolitan Washington, DC. Today, Founder Pernell Williams and his brother Paul are looking forward to building upon that niche, by bringing to market innovative new products, some of them private-label-manufactured.


District, located in Lanham, MD, was founded by Williams following a 2.5-year stint as a sales rep for Medline Industries. A former insurance salesman as well as a former sales rep for American Hospital Supply (now Allegiance Healthcare), Williams saw opportunity for himself and for Medline if he we were to quit the firm, but continue to sell its products as an independent distributor.


''The politics of the time were correct,'' says Williams. The District of Columbia had passed a law specifying that businesses and institutions that received any government subsidies had to buy a certain percentage of their goods from local and minority businesses. What's more, big government health care facilities, such as Bethesda Naval Hospital and Walter Reed Army Medical Center, had local/minority goals of their own.


After talking to some of his customers, Williams felt he had enough of a committed customer base to move ahead with his plans, and he talked to Medline executives about it. ''I told them I wanted to stay in the industry and get business they couldn't, while maintaining my relationship with them,'' recalls Williams. ''As a local company, I would bring them business that they otherwise couldn't get.'' Medline bought the idea, so he left the company's employ and started his own business.


Williams showed up at his customers' doors with the entire Medline catalog at his disposal, only now, he sold them as District Healthcare, a Medline supplier, not as Medline itself.


It was a one-man operation. Working out of his town home and car (equipped with pager), Williams worked long days and nights calling on hospitals and long-term-care facilities. He wrote his own invoices. ''There were more independent distributors then, and there was enough business for all of us,'' he recalls. Medline extended generous payment terms to help him deal with slow-paying government facilities.


As the business grew, Williams contracted with a local public warehouse – Tolson Storage and Warehouse – to inventory his company's products and deliver them to his customers. Tolson installed a separate phone line to handle calls from District's customers.


Growth


During Williams' third year in business, he took his company to the next level. A customer introduced him to Donald Washington, also African-American, who sold janitorial supplies. Recognizing the crossover in customers and products (antimicrobial soaps, liners, gloves, etc.), the two joined forces. Later, they formed a relationship with a manufacturer to produce a private-label line of liners, which go by the brand name ''DHC.'' Following up on that, they introduced a DHC line of disposable washcloths. (Both private-label brands are carried by Owens & Minor today.)


In the early 1990s, Williams sensed another opportunity, this time in South Florida, where the local government and business community were insisting that businesses employ local people. Williams asked a friend there – Ken Hopkins, a rep in the seafood industry – to expand District Healthcare to conduct business in South Florida. He did, and today, the company has a branch office and warehouse calling on private and public hospitals in the area.


The operation in metropolitan Washington has continued to grow as well. Today, District employs six people there, four of whom are on the street selling. In just the past year, Williams has handed over bookkeeping duties to an outside accountant. ''I believe in outsourcing,'' he says. ''If somebody can do something better than you can in-house, let them do it.''


Changes


Despite its niche as a local, minority-owned supplier, District has experienced many of the same changes that other suppliers have. ''The culture has changed,'' says Williams. ''At one time, customers would say, 'I enjoy our relationship. I value working with you as a local company.''' But now, many contracts are set up by GPOs or national governmental buyers. ''[These contracts are] nothing either of us had anything to do with,'' he says, referring to District and its customers.


Consequently, the company has lost some of the advantages it once held. ''The empowerment [for buyers] to make decisions at the local level is gone,'' he says. But not totally. For example, District sells some products through national distributors for hospital customers who want to meet diversity and local-company purchasing goals, but who also want to maintain volume commitments with their prime vendors.


Although acute care remains the company's core business, District holds county contracts to provide medical products to indigent home care patients. Though volume is relatively low, the margins are higher than those in acute care, says Williams.


Energized by Selling


Two years ago, District made a decision to join IMCO, the Daytona Beach, FL-based distributor-buying group. ''We saw it as an opportunity to provide products, prices and programs to our customers,'' says Williams.


IMCO brings something else to District as well – small manufacturers that need honest-to-God selling – not just contract implementation – from their distributors. ''In effect, we are their salespeople,'' he says.


Granted, it's a challenge to go up against established brand names, many with big GPO contracts, he says. But working with small manufacturers has its advantages too. ''We've found that in many cases, small manufacturers are aggressively priced, because they lack a big sales force,'' he says. ''And many times, we can talk directly to the owner.'' What's more, small manufacturers tend to react to market changes more rapidly than big ones, he says, pointing to the safety-needle market as one example. ''These small companies have the technology and innovation; they just need market share through sales and distribution.''


Given the right product, he can sell just about anything, he says. ''I believe that if you have a good product, I've got a chance to sell it, to show [the customer] its benefits. It's an opportunity based on their need.'' And any good salesperson has to strike a balance between relationship and need, he continues. If you have one without the other, you don't have a sale.


''When you know there's a product that will fit your customers' needs, you get energized by it,'' he says. ''It's exciting.''


Manufacturing


Pernell and Paul Williams are looking forward to tying themselves even closer to small manufacturers, and not just by expanding the number of private-label lines they sell. In fact, District has partnered with a manufacturing company that will allow it to become involved developing products to other companies' specifications as a manufacturer's representative.


Why manufacturing? ''It gives you a more defined marketplace,'' says Williams. ''It broadens the possibilities, and gives you more control over your costs.''


District Healthcare looks forward to an exciting future distributing select products on behalf of innovative manufacturers, and doing some contract manufacturing of their own. ''You can't stay in business if you're not selling,'' says Williams. ''We've been forced to bring product value to our customers, not just price value.''