Editor’s note: This is the final article in a three-part series on the history of Hanger Inc.
To see the first, click here. To see the second, click here.
After James E. Hanger died in 1919, his pioneering prosthetics firm split into four companies.
Although independent of each other, the new firms kept the “Hanger” name and worked together in patient care, advertising and marketing.
L.H. Barghausen, a sales representative, bought the Pittsburgh branch. Paul Coleman, also a sales representative, purchased the Atlanta office. Hanger family members kept the St. Louis and Washington, D.C. operations, but shareholders made certified accountant Michael Cestaro head of the Washington, D.C. office when it faltered in World War II, Bob Parks wrote in Hanger: 150 Years of Empowering Human Potential, a book Hanger Orthopedic Group Inc. published in 2012 to mark the firm’s 150th anniversary.
Unorthodox, yet effective
Until other companies bought the four branches in the 1980s and 1990s, the Pittsburgh, Atlanta, St. Louis and Washington facilities remained separate businesses. Yet “a single marketing brochure went out nationally, listing the locations of all four companies,” Parks explained. “The brochure advertised that any Hanger patient could walk in for an emergency repair while traveling on vacation or business; each office had a reciprocity agreement to handle such circumstances.”
While such a business model might seem unorthodox, it seemed to suit the four firms. In addition, “right up until their acquisitions, the Hangers often shared a single trade show booth at national events,” Parks wrote.
Meanwhile, World War II had led to dramatic innovations and improvements in prostheses. Through World War I and beyond, most artificial limbs were still cumbersome and made of wood, metal and leather.
“When soldiers came back from [World War II]… [the field of] prosthetics grew quickly, and new technology started to come in,” Parks quoted Ted Thranhardt, Coleman’s grandson and former president and owner of Hanger-Atlanta.
At the same time, the federal government established more hospitals for veterans nationwide and contracted with aircraft and aerospace firms to invent and supply new materials and designs for artificial limbs that turned out to be lighter, stronger and more durable than the old models.
New leadership revives creativity
With the new prostheses came new leadership at the Hanger companies. Upon Coleman’s death, Daniel McKeever took over at the Atlanta-based Hanger facility. A son-in-law of Coleman’s widow who chose him to succeed her late husband, McKeever was a graduate of the Atlanta-based Georgia Institute of Technology who had been a colonel in the Army Signal Corps in World War II, according to Parks.
“He became legendary,” the author wrote. “McKeever brought a systems approach to the financial and operational side of the business, with measures such as keeping a book of standard operating procedures in the top right-hand drawer of his desk. He was a friendly and attentive supervisor but ran the financial side of the business with great discipline, as Ted Thranhardt’s father, Howard, and then Ted himself ran the clinical side.”
About 1950, McKeever started Southern Prosthetic Supply as part of the Hanger-Atlanta operation. His idea of business discipline applied to pricing. One day, McKeever was going over what the firm charged for its products with Ron May, who was the SPS chief operating officer.
“The boss wanted to mark down products that were earning more than 50%,” Parks wrote.
May, who told Parks the story, asked McKeever why such substantial profits had to be trimmed. “McKeever put his glasses down on his desk and patiently said, ‘Ron, never get greedy.’ He explained that a good manager puts parameters on everything — even in this case, exorbitant profit — and said he looked at it as an opportunity to instill discipline and integrity into the organization.”
McKeever, according to Parks, practiced personal discipline to the point that the boss “jogged every day into his 80s and enjoyed keeping regular work hours until his death at the age of 87 in 1998.”
In addition to branching into distribution, the Atlanta and Washington J.E. Hanger companies opened modern central fabrication plants for crafting prostheses and orthoses.
“The St. Louis-based J.E. Hanger continued the family tradition with McCarthy ‘Mac’ Hanger, the great-grandson of J.E. Hanger and one of the last family members still involved in orthotics and prosthetics,” Parks wrote. “Mac Hanger made several innovations in digital imaging during his career as a clinician.”
Meanwhile, by 1950, the four Hanger firms operated 50 offices across the United States. There were another 25 offices in Europe, although the modern Hanger corporation does not currently operate internationally, Parks wrote.
National changes shaped company’s future
He added that the 1960s ushered in a “sea change” for the orthotics and prosthetics industry through two major developments: education and Medicare. New York University and Northwestern University began offering courses in orthotics and prosthetics.
“Future Hanger senior managers were some of the first students of these advanced professional programs,” Parks wrote. They included Joseph Cestaro, who would become president of Hanger-Washington; Ted Thranhardt, future president in Atlanta; Wade Barghausen, future president in Pittsburg; and Ivan Sabel, future CEO and chairman of the board of the modern Hanger company.
Medicare, which became part of Social Security in 1965, provided money for the medical expenses of Americans 65 years old and older. The legislation approved by Congress and signed by President Lyndon B. Johnson, also “provided sources for growth and corporate research across the industry,” Parks wrote. He quoted Hugh Panton, CP, FAAOP, a lifelong Hanger clinician: “Before Medicare, patients had a choice of maybe two legs and a prosthetic hand. After Medicare, the choices grew to literally hundreds of lower and upper extremity models.”
Fourteen years after Medicare was established, Sabel, who earned a bachelor’s degree in orthotics and prosthetics from New York University (NYU) in 1967, took over Hanger Orthopedic Group. A year after leaving NYU, Sabel became the founder and president of Washington, D.C.-based Capital Orthopedics; he soon opened several more practices under the same name. In 1969, he became a clinical instructor in orthopedics at Georgetown University Medical School, according to the Hanger website.
In addition, he decided “to transform the O&P profession. Early on, he realized the advantages of numbers, the return on investment of increased scope and scale. So began his journey to advance his business – and in turn, he advanced the profession.”
Forging ahead under one name
In 1986, Capital Orthopedics became part of Hanger Orthopedic Group. A year later, Sabel became president and chief operating officer.
“During a time when practice roll-ups were not working, Sabel forged ahead with an ambitious consolidation strategy,” the website said.
In 1995, Sabel became Hanger’s CEO.
“One by one, the regional Hanger companies once owned by James Edward Hanger were acquired – together again as one Hanger – along with many other key acquisitions,” according to the website. “The company grew and grew and grew – until in 1999, there were only two large O&P competitors. With Sabel at the helm, Hanger Orthopedic Group and NovaCare became one in the largest acquisition in O&P history.”
Sabel was Hanger CEO for 13 years. During that tenure, “the number of employees tripled in size from approximately 900 to more than 3,000,” says the website. Additionally, during that time, Hanger made nearly 100 acquisitions.” In addition, “prosthetic technology advanced exponentially and orthotic patient care was added to Hanger’s expertise. New business channels were acquired and established including distribution through SPS, network management with Linkia, and device development and commercialization with Innovative Neurotronics.”
Thomas F. Kirk succeeded Sabel as CEO in 2008, although Sabel stayed on as chairman of the board.
“Additionally, inspired by his volunteer work with amputees in Vietnam years earlier, Sabel worked with Hanger leadership to found the Hanger Ivan R. Sabel Foundation in 2009, whose mission is to enhance the productivity and quality of life for those, domestically and abroad, who face physical challenges due to disease, war or natural disasters by supporting charitable organizations, programs, and volunteerism that improve human mobility,” the website said.
In 2010, in response to the 7.0 magnitude earthquake that devastated Haiti, killing hundreds of thousands and leaving more than 2,000 people with missing arms and legs, the Hanger Ivan R. Sabel Foundation founded a sustainable prosthetic clinic that has delivered prosthetic care to more than 1,000 Haitian amputees since it started, according to the website.
Now headed by Vinit K. Asar, president and CEO, Hanger Inc. is a $1 billion-plus, publicly traded company that employs more than 4,500 men and women. The firm consists of nine companies specializing in two areas – patient care and products and services.
The website says “Hanger Inc. still honors and abides by the tenets articulated by its founder, James Edward Hanger: ‘There is sound logic in our determination not to extend our activities beyond our capacity. If we have learned no other lesson, we are fully convinced of the wisdom of the policy we have followed all these years, never to allow our output to grow faster than our standards of quality and individual attention will allow.’”
Reference:
Hanger. 2014. Ivan Sabel’s Vision. www.hanger.com.
Parks B. Hanger: 150 Years of Empowering Human Potential. New York: Melcher Media, 2012.
