New England O and P Systems Company Grows through Co-Ownership

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By Mary Bach Fleming

Would all of you O&P practice owners harassed by qualified practitioners beating down your doors please raise your hand?  If thats not a problem at your company, you may be interested in a strategy used by New England Orthotic and Prosthetic Systems LLC (NEOPS), a relatively new player in the O&P field. The key is co-ownership, and its more than sharing profits.

Would all of you O&P practice owners harassed by qualified practitioners beating down your doors please raise your hand?
If thats not a problem at your company, you may be interested in a strategy used by New England Orthotic and Prosthetic Systems LLC (NEOPS), a relatively new player in the O&P field. The key is co-ownership, and its more than sharing profits.

The Connecticut-based company also provides attractive salaries, generous health coverage (about 100 percent of family coverage), equal gender opportunities, and the usual slate of professional staff benefits. But it seems sharing profits from the onset is what attracts ambitious and talented practitioners to this five-year-old firm. Managing partner Ron Manganiello couldn't be happier.

"We currently have a waiting list of ABC [American Board for Certification in Orthotics & Prosthetics] -certified practitioners who are applying to join our company. From Day One, a co-owner holds 20 percent ownership and gets 20 percent of the branch's net pre-tax profits. That's in addition to salary and all the other benefits," he related.

A businessman whose expertise is finance, Manganiello started NEOPS in 1998 with investment partners New Canaan Capital and Pat Donnelly, CPO. He and Donnelly opened the first facility in Branford, Connecticut, with Donnelly owning 20 percent of the company. There are 16 branches now.

"As we started to grow, we'd open a new branch with a certified practitioner as a managing partner owning 20 percent of that branch," Manganiello explained. "They don't buy in' as investors--we give them the 20 percent. Nor do we have profit-sharing in lieu of salary--it's in addition to salary and the other perks.

 "In the last five years, we've only had to terminate one partner/manager, and one left for health reasons," Manganiello said. "This has been a very good model which works equally well for the practitioners and for the company.

"For one thing, it retains good practitioners and keeps them involved in the success of their branch," Manganiello continued. "For a practitioner to be named as partner/manager' on a business card not only strokes the person's ego, but it's also good for marketing. When the practitioner is dealing with referral or reimbursement sources, it tells the person on the other side of the desk that this practitioner is someone of consequence who has the ability to make decisions."

Keeping the Reins Loose

Labs are clean, well-organized, and efficient.
Labs are clean, well-organized, and efficient.

Another fundamental NEOPS policy is maintaining a loose rein. "There is no noncompete agreement in our organization," Manganiello stressed. "We feel if someone's not happy working for us, we don't want them to stay. Different people perform better in various working environments, and we appreciate that. Some practitioners don't want any administrative responsibility at all. We tend to attract those of a more entrepreneurial nature.

"We retain people by keeping them happy. And we do that essentially in two ways: we treat them very well, and we give them a stake in the business.

"In today's economy, starting your own O&P practice is extremely difficult because of the need to have insurance contracts, among other things. I'm not saying that's a good thing--but it is a reality. Instead, we give our partner/managers a part of the business. The result is we have virtually no turnover among our owner/managers. And now, since word has spread about us, we're getting more and more resumes from qualified people who want to join the company," he added happily.

Peter DiPaulo, CPO, is partner/manager in NEOP's Hamden, Connecticut, facility.
Peter DiPaulo, CPO, is partner/manager in NEOP's Hamden, Connecticut, facility.

New England Orthotic and Prosthetic Systems consists of 16 offices in four states: seven in Connecticut, five in New York, three in Massachusetts, and one in New Hampshire. Expansion is generally based on either of two situations. NEOPS identifies an area contiguous to an existing location; feedback is then collected from referral sources who often have offices or practice in hospitals in the secondary area. If there is agreement that the new location would generate sufficient work and be a convenience for doctors and therapists, the groundwork begins for a new branch.

In the second scenario, an established practitioner approaches NEOPS about opening a branch at a particular location where the practitioner already has a following.

Shelley Sherbondy, CO, is partner/manager in the Hamden office, along with Peter DiPaulo, CPO.
Shelley Sherbondy, CO, is partner/manager in the Hamden office, along with Peter DiPaulo, CPO.

"We have not solicited one practitioner to join our company, nor have we advertised," the administrative partner emphasized. "They have all found us via word of mouth. And we presently have a backlog of qualified people waiting for an opening."

Under the NEOPS organization, each branch has a certified prosthetist, orthotist, or CPO as a partner/manager. Four are headed by men, five by women, and five have co-partners who share ownership and administrative responsibility. One small branch specializes in compression therapy and is managed by a woman who is a certified compression therapist.

Women Prominent in Organization

About 40 percent of branch owner/managers are women, and in cases in which ownership is shared, four out of five branches feature male/female practitioner duos.

"I'm not sure why this happens. It certainly wasn't by intent--but it tends to work out exceptionally well. They seem to be our best branches," Manganiello noted. "Maybe it's because every patient has the option of being seen by a practitioner of the same sex. At any rate, we do have quite a high percentage of female practitioners compared to the industry as a whole. In fact, our corporate staff consists of two women among the three highest-ranking positions."

Success and Growth Factors

As to how he accounts for his enterprise's success and growth within five years, he responded, "We have all the advantages of a big company in terms of access to capital, buying strategies, sophisticated computer management information systems and communications, and insurance contracts. But we function more like a series of small businesses, with co-owners having a vested interest and a genuine participation. Some of the branches also have staff practitioners who either prefer that arrangement or they're waiting for a new branch to open."

Another policy is that each facility handles its own fabrication. "I agonized over having a central fabrication system for years," Manganiello admitted. "But then we agreed that it's very difficult to make central fab truly work. It's almost impossible to do fabrication a little differently for each practitioner. So we don't do it that way. We let our practitioners control how they want their prostheses or orthoses finished."

Another success factor, Manganiello feels, is the attractive, patient-friendly design and ambiance at the facilities. "Every facility is newly built, and each branch manager has been involved in the design of his or her own facility," he said. The décor features bright colors, attractive plants, and interesting fish tanks. Small kitchens are available to patients as well as staff--so a patient can get a cup of coffee while waiting. A patient hospitality room with a television, computer, and a comfortable couch make often lengthy visits for casting and fitting easier. There are no glass walls separating the waiting room from the office/receptionist area; everything is open. The warm, attractive environment may also be a factor in attracting NEOPS' large percentage of women practitioners, Manganiello noted.

Although he isn't a practitioner, Manganiello gained his knowledge of the field after acquiring the former J.E. Hanger Inc., Washington, DC, in 1985. He added Capitol Orthopedic in 1987 and took the company public, continuing with acquisitions from 1987 through 1995. Today, he and former colleague Ivan Sabel, CPO, chairman and CEO of Hanger Orthopedic Group, remain good friends.

Waiting rooms are designed to be inviting and patient-friendly.
Waiting rooms are designed to be inviting and patient-friendly.

As to NEOPS' further growth, Manganiello dropped his jocular tone and said earnestly, "I know every employee in this company--there's about 60. I know them on a first-name basis; I know their families, their life history. They all have my home phone number; they've been entertained at my home.

"I will stop the growth when it gets to the point that I don't know them this well any more--when we have to hire middle management. I think middle management can ruin a company.

"This company is really a lot of fun for us. I don't ever want it to not be fun any more."

Mary Bach Fleming is the lead writer and manager of editorial services at Ron Sonntag Public Relations, Milwaukee, Wisconsin. A graduate of Marquette University College of Journalism, she has been a newspaper writer, columnist, editor, and acute-care hosp