Dick Hartig Owner and chief executive officer, Hartig Drug Co. Inc.

TH: What were you like as a kid? DH:I was a normal kid. Nine kids in our family. Middle of nine. Lived at 1010 S. Grandview. Hundreds of kids in the neighborhood. We played baseball every afternoon at Plymouth Park. Larry Fautsch's house had a basketball hoop. We had a game every day during the basketball season. In the fall, we all played football in the front yard on Grandview. We had games sometimes with 20, 25 kids. We used the Interstate Power buses to get downtown to Kresge's to buy the latest hit record for 50 cents, Saturday morning, right across the street. Tremendous youth. Our family was - everybody was - very middle income. Everybody was very conservative. It was a neat time to grow up. It was full of lots of activities. We never were home. We were always out in the yard. At night, right before dark, we'd get a huge game of tag going in the summer every night. It was just a real neat time to grow up. TH:Well, with nine kids, you probably couldn't all fit in the house anyway. DH:I look at that house today, my brother lives in that house, I look at that house today and I think, how did we do it? There were six boys and three girls. The old boys all went downstairs and we had kind of a dorm. We had our own closets but we slept on kind of cots. We didn't know any better, so it was fun. TH:So, was your band, the Night Raiders, any good? DH:The Night Raiders. We had so much inspiration by virtue of the fact that there was so much good music out there. I mean, it was the Beatles, it was the Stones, it was the one-hit wonders. We had them all. We played them all. Johnny B. Goode. We didn't have any money and our parents certainly weren't going to help us fund this rock 'n' roll band. First of all, we practiced in our basement. That was enough right there to drive my dad crazy. Every time we got a little bit of money, we'd play a little party or something, we all borrowed the money to buy our own instruments, first of all. We borrowed it from our parents or whatever. Then we would go down to Frank Faber. Frank Faber had Faber's Music Store. He was down on 4th and Main Street, right now where the Holiday Inn sits. We'd traipse into Frank Faber's and we'd say, "Frank, we'd like to buy that amplifier," and he'd say, "OK, boys." He smoked a cigar, and he'd take his cigar out of his mouth and he'd say, "It's going to be 250 bucks. Can you pay me 25 bucks a week?" We said, "Yes, sir." And every week, after we played, we took our 25 bucks in there on Monday and gave it to Frank. And that's how we got our equipment. So we had a really nice couple of years there, maybe three years there. We started like in 1963 and went until '67. W hen Larry (Faustch) left for Notre Dame, it kind of broke up the band. TH:Were you the drummer? DH:I played the drums. TH:You were a guitar wannabe, but you had to play drums? DH:And it drove everybody crazy because when we went on break, I would go play their guitar. They'd say, "Get out of there. Get back on the drums." I always thought, "Hey, this guitar is kind of neat. You get to be up front and sing." TH:Did the Night Raiders experience teach you a little bit about business and money? DH:Actually, the Night Raiders experience really was a lot of work. It was a lot of practice. A lot of hauling, loading cars, unloading cars, doing a gig, managing our funds. Yeah, it taught us a lot about discipline. And every week we always had to have a new song. So that made us keep practicing. TH:What do you listen to these days? DH:I'm still a throwback. I still like older music. I buy some jazz. But, like in my car right now, I have six CDs and probably three of them are Beatles. I really chose pharmacy from Day 1, not unlike why kids choose it today: You'll always eat. It's a great position to have. You don't have to deal with a lot of blood and a lot of human life directly, more indirect. The care you give you is more indirect. I thought, well, I really want to continue. I liked school, actually. TH:Your nickname is Harv. DH:My nickname's Harv. TH:How did that come about? DH:I don't know. Everybody on Grandview had a nickname, for some reason. Larry Fautsch was Futchie. I don't know how it happened, but I was Harv every since I was in the third grade. TH:Anybody still call you Harv? DH:A lot of people still call me Harv. It tells me right away how long I've known them. When they say, "Hey, Harv, how you doing?" Means I've known them since I was a little kid. That's kind of neat. I have two sons and before I decide I'd like my employees to own this company or like the Telegraph Herald, the ESOP sort of approach, you really want to say, "Well, should my children be interested, wouldn't it be nice to at least offer them the opportunity?" Then if one is interested and the other isn't, we'll probably have to design some mechanism not unlike what I went through. To be fair. DH:OK. When you decide to practice pharmacy, you decide to practice just pharmacy or you decide to run good drug stores, or you can operate clinic-type pharmacies. Our family has always been in the drug store business. We think the corner drug store is here forever. We don't see any reason why that plan, that whole format, taking that vision forward, isn't profitable. Because it should be. People still trust their pharmacist; they're still America's No. 1 trusted professional. They still like the convenience of going down to the corner. They like the relationships they have with the pharmacist. They can talk with people face to face. What I believe, in the context of what we do, is we need to offer more than just prescriptions. We need to give people more reasons to come into our store. We have always been a tremendous photo finishing company. We are one of Kodak's oldest customers. As we are with Hallmark Cards. And we feel that people come in, yeah, they come in for pharmacy services, but they also come in for milk and for greeting cards and for photo and for aspirin and health care products. We just feel like the full-line drug store format fits us. So, in order to really be competitive, and when I talk about a level playing field and bigness and competition, you tend to think right away to the big box stores that are on the outskirts of the town and how they're dominating America, not only from the grocery standpoint and the pharmacy standpoint, but everything. USA DRUG ARRANGEMENT DH:How can I make an offering of products and services that is a direct from the manufacturer to my stores? I used to do that. I used to warehouse all those products in my stores and then ship them out to my own stores. There was a tremendous cost associated with warehousing. There's trucking. There's distribution. There's advertising. There's a lot of costs in that. So in 1935, and we started with Rexall as an affiliation, Hartig-Rexall Drug. We were that from the '30s until mid-80s. When Don Bieler bought Snyder's in Minneapolis, he came to me and said, "We have 50 stores and we sure could use your five or six to help us push product through so we could continue to buy direct from Procter & Gamble and Lever Brothers" and all the companies that were making consumer products. We said, "Great because we're tired of paying those costs." So we did business with them from '85 until '97 until the five guys that owned Snyder's, all friends of mine, decided they were going to exit the market. TH:How many stores are in the USA Drugs system? DH:About 140. TH:Looking at the map, it seemed to be the Midwest... DH:Steve (LaFrance) is in Arkansas and Mississippi and Louisiana and Memphis, Tennessee. My stores in Iowa and Illinois. There are some franchises, maybe a couple of franchisees in Tennessee. The logistics are what's driving that, the freight and the trucks. The reason that my goal and vision for the north is to actually get a little more critical mass in the north so we can actually open a second distribution center in the north, hopefully in Dubuque someday that we can distribute products out of this area, for the northern franchise area. We're getting there. Everything that's in our stores is all mapped. If you find it in our stores, our gondola height in our stores is 60 inches, there's a lot of sameness. We have three sizes of stores. We have a mapping system called plan-a-gramming for each of those three stores. I could show you the picture of a plan-a-gram. We release a plan-a-gram every couple of weeks for each department, so we are constantly changing what we sell in our stores, about every two weeks a new plan-a-gram will come up. Not for the entire store; the entire store is on a one-year cycle. Once you put a wholesale layer in there, Brian, you're talking 15 points. Our market can't support 15 points. I mean, if I've got to sell shoe polish for $1.39 to compete with another company, a big company, I can't all of a sudden throw another quarter on there. There's no way I can do that. Now, shoe polish is a bad example because that's not a price-sensitive item, but if it were Colgate toothpaste or if it were Crest toothpaste, I mean we sell that everyday at what we pay for it. So 15 points on top, we're not even competitive out of the chute, just landing cost. So my arrangement with Steve and USA Drugs was right after the Snyder decision. Actually, Snyder's was still in the distribution business when I switched over to Steve and then they shortly thereafter exited. Actually, as it relates to size, Steve is already the 14th largest in the United States and I'm the 59th. So, I mean, you understand that publicly-held companies really control all the top spots and private companies, I think Bartell with 50 stores is probably the No. 1, so I mean there really is a lot of small regional players that are, which is OK. TH:Lifting other people up. DH:Yeah, this one was the pig that was complaining to the cow. And the pig said, I know you give milk, but I give pork and I give pig skin and I give bacon, I give bristles for brushes. Why are you loved so much more than I am? Well maybe, the cow said sweetly, is because I give while I'm still alive. It has a lot to do with gifting and giving and supporting. In Dubuque, people really don't realize what a gem they have in the companies that are here. How generous they are. You know the companies I'm talking about. They're Dubuque companies. Everytime Loras or Clarke or the U of D or the riverfront or somebody wants something, they come to the same people every time. Those people could get hardened. I guess used, feel used. I don't think they are. I think they're pretty open about it. TH:One question I forgot to ask earlier. You still doing some work behind the counter then? You have to do a certain minimum to keep your license, don't you? DH:No, I'm up, my license is still valid in all three states in which I'm licensed. They're up there. You see them up on the thing there. TH:I've checked them out already. DH:The latest thing that happened in our company was the HIPPA, which was we had to be certified as of April 14, everybody in the company had to take new training to get certified in HIPPA, which is Health Insurance Privacy and Portability Act, which basically is all about consumer privacy. But as far as practicing pharmacy, I don't do it very much lately because Keith is a pharmacist and then we have a director of pharmacy who is a pharmacist. I was in a rotation for vacations and sick leave. And I still could be called in, but I'm less vulnerable, which is wonderful because typically when you're vulnerable, you're always vulnerable on weekends and nights. Just exactly the time you really don't to be vulnerable. So with our hours of operation, I was always vulnerable. Almost a year ago, I became one level from being vulnerable. That pretty much took me out. Right now, I can walk... TH:Is vulnerable a technical... DH:No, vulnerable means that there could be someone that got sick and then the first person goes into rotation so I was vulnerable in that I could go into rotation. I could be called. The idea is to keep all the drug stores open everyday. So if they need a pharmacist, you have to have a pharmacist to open a drug store and it that many pharmacists were sick at one time or are getting married or out on maternity or whatever, they would go down the line to the director of pharmacy, then they would go to Keith and Al, he's a pharmacist, and then they would go to me. So there is a potential for four back ups all being used. So I would be the last choice, by choice. But that doesn't prevent me from going in and working with the pharmacist side-by-side, which occasionally I do for an hour or two just to see what they're up to. Actually, I have never really, I kind of miss it, but all the software and the tools that we use right are still the ones that we've used for quite a bit of time, so I can use all those tools. I can fill a prescription in a minute if I got called in on Sunday or Christmas or something, which I generally do if somebody calls me at home and says can you fill this prescription for me. I say, yeah, sure. But the parts that change in our profession aren't necessarily the process, although they do change a little bit, but are more the therapy. I have to keep up with those anyway. CUSTOMER SERVICE That whole process, we really monitor that whole process every day. We have a checklist called the 106 and that's all our district manager does, is monitor the process. Are they wearing name badges? Are they saying "thank you" after the sale? I go to stores. I spend lots of money in stores and bet my children standing next to me in the checkout line that they won't say "thank you." And I win every time. I win every time. TH:In other people's stores. DH:In other people's stores. I say, "Watch this. I'll spend 200 bucks in here with the groceries and I'll bet you they won't say thank you." "Oh, Dad, they're going to say thank you." I say, "You wanna bet?" The clerk says, "Here's your receipt." I say, "You're welcome." I'm nasty about it. I'm tough on my own people, too. I say exceed expectations. I mean, I expect every patient and customer who comes through our store to walk out and say, "Hey, that was nice, that was good. It was clean. They were friendly. They said thank you. It wasn't a hassle to go through their check-out lines. They're not bogging me down with all these rules." You know, it's really not very tough, it's really pretty easy, but it's got to be in your culture. I just pick up the phone. If I hear about it, I call the customer. The "exceeding the customer's expectation" is all about the 106. I mean, that's how we do it. We have a three in line policy. If a fourth person shows up in line, they have to open a second check out. They've got 30 seconds. They don't open a second check out, they get reprimanded.We have a three-strikes-and-you're-out deal. TH:Is it harder to get good employees now than it was a generation ago? DH:It's easier, much easier. TH:Why? DH:We went through that period when it was impossible. When the world was at full employment and everybody was jumping ship every other week to take a better job with more money and better benefits. That was probably mid-90s. That was the worst period of our life in terms of retention and tenure. Those high-flying dot coms and those companies who were bringing in the big dollars, they started laying people off, and guess where they came back to? They came back to long-standing conservative companies. The Telegraph Heralds and Hartig Drugs of the world where, hey, we just do whatever we do, we do it well. There's nothing real fancy about what we do. There isn't. People say, work in the drug store, that's kind of boring. Well, we don't think so. TH:So that model holds true, whether it's Walgreen's, supermarkets that have pharmacy services, Wal-Mart. DH:Right, they're all the same price. So the point of differentiation is either the location or the people. I mean, it's pretty simple. And one of the interesting parts is a lot of people realize now that refills are important. When you get a prescription filled, usually your health plan will only let you get a month's supply first of all for two reasons. Woodward Communication doesn't want to give Brian a year's supply and then let him quit. Because then the health plan gets stuck with a whole year of drugs for ol' Brian. And the second reason is it doesn't make real good therapeutic sense to start you on a drug or a regimen and then all of a sudden something changes. You have a side effect or adverse reaction to it, and here you've got a year's worth of drug in your medicine cabinet. So people don't like to do that so they make you come in every month. Really, one of the things that's very important, still No. 1, is convenience. How easy is it to get in and get out of there? You know, we have Internet retail service. We have IVRs. Internet Refill Service, people that use it, love it. TH:What's IVR? DH:IVR is when you call the pharmacy, it's called Interactive Voice Response. When you call our pharmacy, all of our pharmacies, you get a computer. And if you want a prescription filled, you just push a button and you punch in your prescription number and it tells you information about your own prescription. "You have three refills left, would you like us to get one ready for you? Can you pick this up at 3 o'clock tomorrow? Basically what it does is it's an organizing tool for your life. IVR says you don't have to sit on hold waiting for someone from our pharmacy staff to get ahold of you. You can do your business and walk away. My friends come up to me and say, "I love it." I've had one patient, Brian, that says, "Well, I had that computer answering the phone business. I want to talk to a person." This was in Dyersville. I said, "Why?" "I don't have a touch-tone phone." I said, "That's OK. I'll send one out to you." And I did. The answer is simple. If she had a touch-tone phone and used this tool, the store never closes. She can call it in at midnight if she wants. We're not there, but we can take the information and get it off of her desk and onto our desk. It's just a tool. And people either love it or they hate it. If they hate it, push 0. Simple deal. We spend a lot of money on technology with our point-of-sale systems and our automatic inventory replenishment systems. Most of the things we're doing right now are technology investments. If they don't make any sense to the customer, I'm not interested in them. Unless they make life easier for the people who work here or the customer, then I'm not interested in them. Most of them do. Fifty-two percent of the products that we sell now are generics, which are a tremendous value for our consumer. But branded products, direct-to-consumer advertising that creates this illusion that everybody needs Nexium, everybody needs Prilosec, everybody needs something to help their urinary incontinence. Everything is on TV. Blue skies. There's Zoloft if you have a little malaise in your life, if you're depressed, you've gotta take this pill. TH:And that gets the consumer to get pester the doctor to... DH:Just like Procter & Gamble. Pull it through the cycle. Don't worry about giving Hartig something to put it on their shelf, the consumer will pull it through the whole distribution channel. The consumer will go to the doctor and get the prescription and take it to the pharmacy. Or send it to our mail order facility. TH:You mentioned that you have a few quotes that you sort of live by or quotes that you think that reflect a philosophy. I was interested in what some of those are. DH:I kind of classified my quotes basically about my life. I can't really say they're not my quotes; they're kind of what I've chosen to do with my own life. It's hard to say some of the things that I say with a degree of humility because I really have a strong faith, not only in Christ, but in my own ability. I mean, I believe I can do a lot of things that maybe I really can't do, but I'm not smart enough to figure that out. It's true, Brian. I've tried to think of things, I think I can do that, they go, are you sure, are you sure you can do that? I say, yeah, I think I can do that. When I bought my home, I was 23 years old. I said, "I'm going to buy that house." They said, "You can't afford that." I said, "Well, I'll have to." When I bought this company, the amount of money I borrowed to buy this company would have blown you away. You wouldn't borrow that money today. "You'll never pay that off." I said, "Well, I have to. I signed the deal." When I look at those things, I take the other side of this thing as being involved in my church, St. Columbkille's, and in Wahlert and in watching my kids grow up. And I look at charity and I look at giving back. I think I shock even my wife when I say we're going to give to this cause or we're going to support this group. Last year, our company supported over 335 charities. I get the biggest kick out of giving money away. I really do get a kick out of it. You can't really do that and feel really good about that unless you do it for the right reason. So you can't really talk about it, either. A gift that you give, thinking you're going to get recognition, is not a gift. But when you lift somebody else up - this is the quote I was getting to - "If you want to lift yourself up, lift someone else up." I see that all the time. TH:Do you have any spare time? DH:Yeah, I do. I have a really neat life. The best part of my life, I mean, I've had 28 of my 30 years, I worked behind the counter. I mean just about every day. I tried to run this company on a part-time, whenever I could get back, shoot-from-the-hip basis. Realized maybe I am smarter than I really think I am that I couldn't do that. My family is extremely important to me. They're No. 1 and this job is No. 2. When I started missing events and I couldn't get to certain things, I said I've got to change things and I was smart enough to go out and say I need to hire somebody to help me here. That's when I brought in Keith (Bibelhausen) and it's been a wonderful thing. It's freed me up to do a lot of the things, unfortunately a lot of it has been freed up to fight battles, but some has been freed up in order to vision and excitingly grow the company. We're going to be adding a couple of more stores, hopefully this year. Those are things that I didn't have time to do before. But now it's just wonderful. TH:Besides family activities, what else do you ... do you still collect cars? DH:No, I still have some old cars that I tinker around with and try to keep running. I like to fish. I like to hunt. I enjoy those things. I enjoy boating. I do enjoy a lot of things. I like to golf. I like to work in the yard. I do a lot of things. I like manual labor. I like the dignity that goes with accomplishing something. I still have people in my company say, Dick, we actually could have somebody do that for us. I just prefer to do it myself. DH: And quite honestly, you have to be a pharmacist to run a pharmacy business. My opinion, but... TH:Why? DH:Pharmacy is a profession that is extremely regulated and it is a very exact science. It is no small matter to know that upon your skill and knowledge, a life may depend. And I think that's true. I see that every day. You have to make good therapeutic-type decisions in order to mitigate any down side. It is no small matter that we have never been sued for killing anyone. That is a huge, huge thing for us. I mean, we make mistakes. All pharmacies make mistakes. But we have a tremendous program in place to try to eliminate, completely eliminate, pharmacy errors. But pharmacists tend to be able to one-up-you if you're not a pharmacist. They could hoodwink anybody that wasn't a pharmacist. There are publicly held companies that aren't run by pharmacists, but most publicly held companies, Walgreen's included, they're run by a pharmacist. I can't tell you that it's absolutely essential. I can just tell you that it's not a bad idea.