Mr. Sabel: Hanger Orthopedic Group is the oldest orthotic and prosthetic company in the United States. It was founded in 1861 by James Edward Hanger, the first Civil War amputee. In 1986, the company started to acquire other small mom and pop practices around the country, and we have now amassed about 25% market share in what is estimated to be a $2.1 billion services market for prosthetics and orthotics. Prosthetics is the provision of custom-made artificial limbs, primarily arms and legs. Orthotics are external musculoskeletal support devices used for arms, legs, extremities. As well as the spine. All of this is done via a referral from a physician. The primary group of physicians are orthopedic surgeons; followed by general surgeons; physiatrists, who specialize in physical medicine; neurosurgeons and neurologists.
TWST: When you've taken over smaller practices ' mom and pop practices '
how much did you alter their methods of doing things?
Mr. Sabel: We've tried to maintain the local clinical presence. So from
a staffing standpoint, the local people and the practitioners remain.
What we have been able to do is synergize a lot of the corporate ' or
what we refer to as the back-office ' support, including accounting,
financial reporting and analysis human resources, marketing, purchasing
and so on. We enjoy substantial economies-of-scale in these functions.
We now have almost 600 locations in 45 states, including the District of
Columbia, and we're able, to bring synergy and economy of scale to bear.
Nonetheless, even though we're a national company, healthcare is still a
very local service based on local relationships, and we strive to
maintain those important relationships.
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