Setting Yourself Apart: Is a Niche O&P Business for You?

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By Miki Fairley

The O&P EDGE talked to successful professionals in O&P and pedorthic practices, consulting businesses, and manufacturing facilities about why they chose to develop a niche business and how they went about doing so. Their experiences and advice may help you decide what road to take in O&P.

Most entrepreneurs had one of three reasons for starting a niche business: (1) they pursued it, (2) they fell into it accidentally, or (3) circumstances placed them there. However it happened, most of the entrepreneurs backed up their vision with a solid plan--in other words, they didn't jump off a cliff without a rope to hang onto.

First, what exactly is a "niche" business? In most cases, companies that provide a specialty service or product provide other services as well, but the "niche" helped build their reputation, opening doors to referral sources and driving business to their other products or services.

Pursuing a Niche

John Miguelez, CP, FAAOP
John Miguelez, CP, FAAOP

John Miguelez, CP, FAAOP , founder and president of Advanced Arm Dynamics Inc. (AAD), Redondo Beach, California, was drawn to a specialty practice and decided to establish a business in his chosen area of expertise. He says he was attracted to upper-limb prosthetics as a specialty "because I like the patient demographics. Generally they are young and active. There are psychological challenges associated with upper-extremity amputees because generally their limb loss is due to trauma, and with lower-extremity amputees, many amputations are disease-related. When amputation is disease-related, often the person has a period of time to adjust to the idea that he or she may lose a limb. But in traumatic loss, one day everything is fine, and then suddenly the limb is gone. They meet a different challenge. It's fulfilling to be able to help them through that process.

"Everyone has unique requirements. You have to be creative and use state-of-the art technology and progressive techniques," Miguelez continues. "I enjoy finding out what patients' goals are, and figuring out how to help them attain those goals."

Besides its California corporate office, AAD has three Centers of Excellence in the Southwest (Irving, Texas), Midwest (Waterloo, Iowa), and New England regions (Guilford, Connecticut). AAD also offers consulting services to prosthetic facilities throughout the United States and abroad.

Contributing to Miguelez's success is his team. The professional team includes several highly experienced American Board for Certification in Orthotics and Prosthetics (ABC)-certified prosthetists/orthotists, occupational therapists, and a social worker/case manager, who is herself an upper-limb prosthesis user.

Miguelez is a strong believer in "taking care of business" when it comes to billing, reimbursement, and insurance claims. His administrative team includes a national patient coordinator, who has a congenital below-elbow limb deficiency and thus plenty of empathy for AAD's patients. The patient coordinator serves as a liaison between patients, reimbursement agencies, and AAD's prosthetic specialists to ensure that each patient's goals and concerns are carefully addressed.

Other team members include justification and authorization coordinators, a business development manager who serves as a liaison between the company and referral sources, a controller, technical coordinators, and extender/lab coordinators.

Photograph courtesy of Advanced Arm Dynamics Inc.
Photograph courtesy of Advanced Arm Dynamics Inc.

When it comes to reimbursement, insurers are only obligated to provide a certain level of device, Miguelez explains, but if you can show them that a different type of prosthesis will prevent or improve other disabilities or conditions the patient may have--or that the lack of a device might cause other medical or disability issues--the insurer has an obligation to cover these services.

AAD obtains authorization for most treatments. The company's specialized billing staff and careful documentation have attained an enviable 97 percent authorization rate.

Advanced Arm Dynamics has many international patients; some come to the United States for care, and for others, the prosthetic team goes to them. Being willing to travel and have an understanding of different cultures is essential, Miguelez points out.

In fact, willingness to travel, often extensively, is a prerequisite in many specialized practices, since a local or regional area alone may not provide enough support for the business.

The Accidental Prosthetist

Linda Putback-Bean, CEO , of Pediatric Prosthetics Inc., Houston, Texas, became an "accidental prosthetist" when she went to work for prosthetist and inventor Tom Haslam as a receptionist.

Putback-Bean was interested in becoming involved in a medical-related field, and Haslam gave her a clay leg to carve, which she did successfully.

Photograph courtesy of Pediatric Prosthetics Inc.
Photograph courtesy of Pediatric Prosthetics Inc.

She then became Haslam's lab assistant and began a sort of prosthetics apprenticeship. About two months later, Haslam asked her to help fit a couple of children with myoelectric prostheses. Shortly afterward, a father asked Haslam if he could fit his year-old son with a myoelectric hand that had recently been developed by Variety Ability Systems Inc. (VASI) in Canada.

Normally, two electrodes are needed to make a myoelectric prosthesis open and close, which is a problem for small infant arms. With Haslam's urging, engineer T. Wally Williams invented the "cookie crusher" circuit, which uses only one electrode to open the hand and then relax the muscle, so the hand automatically closes.

"The unbelievable success the little boy achieved with his myo generated national media awareness, and the resulting publicity brought hundreds of families to our door," Putback-Bean recalls. "During one 18-month period, Tom and I fabricated and fitted over 600 myos for kids."

Putback-Bean's love for pediatric prosthetics helped propel her into a new venture. In September 2003, she and her husband Ken, along with partner Dan Morgan, CPO, founded Pediatric Prosthetics Inc. "Because the children outgrow their prosthesis every year, I began to build lifelong relationships with all of them and their families. I love that...I'm sort of their redheaded auntie who gives them a hand now and then."

Besides Morgan, who is vice president and chief prosthetist for Pediatric Prosthetics, Jean Gonzalez, CPO, also assists with upper- and lower-limb prosthetic care. "Most of our 21 affiliated clinics around the country have a CPO with some hands-on training in our methods and protocols now," says Putback-Bean.

Ken Bean, who is vice president of operations, handles much of the business side of the company. His management philosophy helps guide the company: "Find the best people in a business or profession, give them the tools to excel, and then thank them a lot for their commitment to excellence."

"Every prosthetics practice must have two faces," Putback-Bean adds. "First and foremost, every successful practice is all about quality patient care. At the very same time, every practice must keep the light bill paid to stay in business."

Bean is also a pilot, flying his own Bellanca plane. "Using our own plane provides considerable savings in travel costs, plus allowing the no-hassle' flexibility to tend to our patients. We can load up the team and go directly to just about any town in the country on our own schedule. Most of the local prosthetists I have worked with over the years genuinely appreciate the fact that we can fly in as needed, fit a child quickly and comfortably, and at a very small cost."

Putback-Bean continues, "I believe we have found a niche in the prosthetics profession that needed filling&. We hope to establish pediatric centers' in every state in the country, working in partnership with a local prosthetist."

Adapting to Circumstance

Photograph of Bob Radocy courtesy of TRS.
Photograph of Bob Radocy courtesy of TRS.

Bob Radocy , president and CEO of TRS Inc., Boulder, Colorado, started a specialized O&P manufacturing company after he lost his left hand about four inches below the elbow in an auto accident in 1971. An avid sportsman and athlete, Radocy experimented with all types of prosthetic devices. He was frustrated by their limited performance, and in 1977, while in graduate school, he applied his engineering and biological sciences education and design experience to create a high-performance prehensor.

In 1979 he founded TRS Inc., and in 1980, the GRIP prehensile hand was first manufactured.

Radocy, along with a minority partner, obtained a Small Business Administration (SBA) loan, which helped him quickly learn the business side of his new venture. He says that he learned about the manufacturing side of the business the hard way. "I was able to produce drawings and design ideas for the products I wanted, but I didn't have much experience in manufacturing," he says. "We made some mistakes in manufacturing techniques and processes, [but]...over a period of time, we became more successful and also learned how to ask the right kinds of questions."

One valuable lesson Radocy learned is that "it's very important to get all the people involved who are ultimately going to help you manufacture the product...early on in the design. Often there are many different ways a product can be redesigned to make it much less expensive to manufacture, more efficient, and better performing. This needs to be evaluated before the final product is manufactured."

Radocy attributes part of his success to the solid relationships his company has built with subcontractors. "We are still using some of the same ones we began with back when we first started manufacturing in the 1980s." A practical part of relationship-building and getting others to want to input and help is "pay them on time," Radocy says. "Also treating employees well is incredibly important in establishing a good work environment and strong teamwork," he adds, noting that two of his staff members have been with him since the 1980s. "One of the reasons TRS has succeeded is because of the caliber of our personnel."

Besides its adult, children, and infant body-powered prosthetic technology, TRS is well-known for its sports devices for a wide variety of activities, including archery/bow hunting, baseball/softball, basketball, bicycling, canoeing/kayaking, firearms and hunting, football/soccer/volleyball, golf, hockey, and custom accessories.

"We believed in an idea and a product concept, and persevered," says Radocy. "It was touch-and-go there for awhile, but we had the support of knowing that we weren't in business just to make money, but also to help make people's lives better.

One Thing Leads to Another

Jeff Jacobs, CPed
Jeff Jacobs, CPed

Jeffrey T. "Jeff" Jacobs, CPed , owner and operator of Foot Dynamics, Queensbury, New York, began his career in the ski industry. His company, formerly known as Peterson Laboratories and Ascent Technologies, pioneered the concept of weight bearing impression casting techniques. The company realized that its method for creating custom footbeds for ski boots could also benefit other orthotic applications. Although the company provides full-service pedorthics, Jacobs' niche is defined by the company's unique foot impression process and its orientation toward the sports area.

The impression technique has been refined with the development of Advanced Casting Technology" (A.C.T.™). With this method, the patient stands on the impression pillow with knees flexed-representing the position of the feet just before toe-off in the gait cycle. Once the subtalar joint is aligned, the impression is made using heat-moldable cork. "The use of this technique, given the patient's weight remains constant, pillow density is constant, and proper alignment is achieved, produces a foot shape that will be reliable each time the impression is taken," says Jacobs. "Consequently the foot model is consistent and reproducible regardless of who takes the impressions and results in a plantar profile very natural to the foot. Our direct experience with over 10,000 patients has demonstrated this consistency."

Photograph courtesy of Foot Dynamics.
Photograph courtesy of Foot Dynamics.

Foot Dynamics is run almost entirely on a cash-only basis. It will provide documentation (L-Code) for patients, but does no insurance billing. The company's customers include universities, corporate rehabilitation centers, large self-insured employers, and about 25-30 other sports medicine clinics around the United States, Jacobs says. About one-third of Foot Dynamics' A.C.T. units are used for its own patients; the remainder are used in its central fabrication business.

"As our reputation grows, those we fit talk to their doctors, the doctors get to know us, and we receive their referrals," Jacobs explains. "So our general practice grows by having done a good job in our specialized sports area. We've built our reputation on our sports orthotics, but our reputation has percolated through the general population."

Changing Course

John Michael, MEd, CPO, FAAOP, FISPO
John Michael, MEd, CPO, FAAOP, FISPO

John Michael, MEd, CPO, FAAOP, FISPO , owner of CPO Services Consulting, is a great example of someone who not only has the courage to change course and accept a new challenge when circumstances warrant, but also the careful planning skills to chart the course.

Michael, who has a graduate degree in psychology, was working at a psychiatric hospital, but after a few years, he decided psychology was not for him. "I was tired of talking to people about getting better; I wanted to help people in a tangible way to get better." He also likes using his hands, and he was advised to look for a career that combines the two. O&P turned out to be an excellent fit. "I was terrified about changing careers," Michael says, but he went to Chicago, Illinois, to enroll in Northwestern University's P&O program.

Over the years, Michael's love for his second profession in all its various aspects has led him to a comprehensive knowledge of clinical care; technical skills; research; education; reimbursement, legislative, and business concerns; and product development. He became involved with international P&O and also has lectured and written extensively about the field.

Going into consulting was a practical decision, Michael says. "Our children were about to go off to college, and we were at a point where we could live anywhere in the United States we liked. We had moved two or three times over the years so I could pursue opportunities in P&O, so now I asked my wife Linda where she would like to live. And her answer was that she would like to move back to Indiana where we have family and where we had gone to high school."

However, towns in Porter County, Indiana, are fairly small, and there was already a thriving O&P practice that was meeting the needs of the area. "There were a lot of exciting things happening in Chicago, but the commute was absolutely impossible." It then occurred to Michael that over the years he had done some consulting, such as being an expert witness in court cases involving amputees, helping a colleague with a difficult fitting, or helping someone organize a presentation for a professional meeting. "I thought if I had enough of those types of things, it could turn into a full-time job.

"I did research, read some books, and talked to consultants in other healthcare fields to get a feel for what is involved. I started my consulting practice while we still lived in Minnesota, and we decided to give it a whirl for 18 months before moving back to Indiana. For the first six months, I was terrified, but by the last six months we were confident we could make it. We had a business plan, and although I made some mid-course corrections, it was clear it would work if I was willing to travel."

Michael didn't burn any bridges; he gave his current employer plenty of notice and had a plan B, which was to work for someone else if the business didn't succeed. He and his wife lived off savings for the 18-month trial period, so they didn't have to take any money out of the business. "I'm willing to take a calculated risk if I've done good planning ahead of time."

Like Michael, all of these niche business owners were willing to take a chance, were backed by realistic planning, and had closely examined the market. Even those who "fell into" a niche recognized the opportunity it offered. All continue to focus on quality patient care or product while following sound business practices and treating employees and suppliers well.

What about you? Is opening a reputation-building, door-opening specialty business within your current practice for you? You might decide to take the plunge-but hang on to the rope!

Miki Fairley is a contributing editor for The O&P EDGE and a freelance writer based in southwest Colorado. She can be contacted via e-mail at  miki@opedge.com

Considerations for Starting a Niche Business

Joyce Perrone and Rob Benedetti of Promise Consulting Inc., Pittsburgh, Pennsylvania, an O&P consulting firm, offer their advice about what to consider if you are thinking about starting a niche O&P business or adding a specialty to your current general practice.

Identifying a specialty that you do well can set you apart from competitors and help you get your foot in the door, notes Perrone. However, avoid "following the money trail, trying to do everything, chasing after everything new." Perrone describes this mindset as "a shotgun-blast mentality," which, if you don't have the necessary experience or expertise, could end up hurting your general practice.

Ask yourself the following questions:

  • What do I do well?
  • What am I trained for?
  • Is there a market for what I'm considering? Who will be my customers (referrals, patients, etc.)?
  • What would be my break-even point? How many do I have to sell or fit to break even? How many before I start making a profit?
  • Am I willing to invest the time in marketing the specialty, visiting referral sources, and offering educational in-services or seminars?

"Niche" can be as simple as offering something that your competitors don't, such as being able to provide more evidence-based documentation for the value of a product or service, having better-educated personnel that keep up with professional continuing education requirements and new technology, and providing in-services and other educational events for physicians and consumers, notes Perrone.

You need to think like your potential customer and ask yourself, "Why should I use you instead of your competitor?" And if the physician has been using the same O&P provider for several years, the physician logically would ask, "This company has been meeting my needs for a long time? Why should I change?"

"If you can't answer those questions, perhaps it is because you have been doing the same thing in the same way for years." Perrone advises asking yourself questions such as, "How can I differentiate myself? What can I offer that is unique and better?"

"It has become necessary [for O&P owners and clinicians] to look for other avenues of revenue generation to augment the core business of orthotics and prosthetics," says Benedetti. Perrone urges O&P practitioners and business owners to have a service mentality, continually asking, "How can I do more, be better?" She stresses the importance of keeping up with new additions to the O&P knowledge base and what's happening in the marketplace.