Tuesday, January 8, 2013

Some Answers to Hearing Aid Costs

Why are hearing aids so expensive?

Not because of the cost to make them
Premium hearing aids cost around $250 to make (materials, labor, machinery maintenance, etc.). 

Not because of manufacturer selling price
Veterans Affairs buys over 500,000 aids each year for less than $350 each.  Does anyone else buy that many aids in a year?  Costco has 420 hearing aid centers with 320 of them in the United States. The Woodinville, WA center sells between 60 and 100 aids each month. Assuming this is a typical range, all centers sell between 300,000 and 500,000 aids per year worldwide, similar to the VA in volume.  Depending on how well Costco can negotiate, it probably buys their best hearing aids between $350 and $500 each. Those aids are sold for $ 1,300 each.

How much do private practices pay for their aids?  Typically private practices buy from “Buyer’s Groups”.  The Group negotiates prices from manufacturers based on volume sold in that group and resells premium aids to private practices for less than $1000 each.  Typically private practices sell premium aids for more than $3000 each.

Not because of time spent fitting the aids 
According to MarkeTrak VIII, a database formed by the Better Hearing Institute, the average number of patient visits to get hearing aids adjusted properly is 2.74. Add another 2 hours for hearing exam and consultation and we have less than 5 hours total. 

Because the market bears the price under medical duress
Hearing aids cost so much because 20% of the hearing impaired cannot function without them.  How much is it worth to hear, or for your child or parent to hear?  When forced to make this decision, aids are purchased even when prices are very high.  Because there is such a high markup, private practices do not need to sell very many in a year to make good money.  A small practice can sell very few aids per month with a $4000 markup per pair.  Practices push up the prices to make up for few sales. That is one reason why the average price of aids more than tripled in the last 20 years and will continue to increase as long as the market bears the price.  And it is not just a one-time cost.  Hearing aids last an average of 5 years. Practices depend on repeat customers.

Articles that follow in this blog discuss hearing aid issues in more detail:

New Avenues Break the Cost Barrier, an article I wrote concerning buying hearing aids on the web:
http://www.hearingloss.org/sites/default/files/docs/HLM_Belcher_SepOct2013.pdf
 
Dispenser Sampler
An overview of various retail options for purchasing hearing aids along with their associated price and quality

Dispensing – Profit versus Quantity and Efficiency
A discussion of a hypothetical retail outlet that does very well for its employees and owners while at the same time provides excellent service and quality products to its customers at prices between 25% and 50% currently charged by private practice

Why do Hearing Aids Cost Six times more than an iPad?
The article compares the elements of manufacturing and retail costs of an iPad and Hearing Aid.   The Coauthor Patrick Freuler makes the article more readable by graphics and better organization.

16 comments:

  1. This comment has been removed by a blog administrator.

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  2. Something to consider...

    Customer A: Follows all instructions from her dispenser by cleaning her hearing aids thoroughly everyday, attends regular follow ups, reports potential defects so her hearing aids can be checked by the dispenser or manufacturer at no charge to her while under warranty.

    She has realistic expectations, using only 4-6 hours of her dispenser's time for the test, fit, and fine-tuning. Maybe she takes another 30-60 minutes each year after that. She ultimately gets about five years out of her hearing aids, which she paid $3000 for. Factor in that maybe she paid another $500 over the years for one or two repairs. So $3500/5 yrs is $700/yr.

    Customer B: Purchases the same pair of aids from the same provider for the same cost, but rarely cleans his aids between his first few follow ups. The dispenser spends extra time at each appointment cleaning the aids and reviewing the importance of proper care with the patient. He cleans them weekly, but only the tips, thus the aids get wax buildup and corrosion, going for "free" repair to be reconditioned, or replaced, every 6 months while under a two year warranty. During year three, he spends another $500 on repairs, which could have been avoided with proper cleaning.

    Having unrealistic expectations in addition to his poor hygiene, "B" ends up requiring twice as many adjustments, taking more than 12 hours of his dispenser's time. After three years, he may decide to update to a fresh pair of hearing aids, assuming that his own attitude did not play a part in his dissatisfaction, and that another model will be better/different. The $1000+/yr cycle begins again.

    MY POINT: Two people (male and female not meant to imply that women take the aids more serious, just an easy differential) who get the same hearing aids, but have very different attitudes, but ultimately paid the same price. Is it fair for "A" to basically be paying for "B"s appointments and avoidable repairs? Absolutely not, but is it also fair for the dispenser to charge more to "B" when he needs a repair than he would charge "A"? Should "A" get a discount on her second set after 5 years, but "B" has to pay full price on his second set after only 3 years just because he is 'high maintenance'?

    I am NOT saying that all (or any) dispensers/audiologists are fair in their pricing, but they do have to consider the cost of the hearing aid plus potential repairs, supplies that they 'give for free' over the life of the aid, warranties, labor hours, rent, utility expenses, etc. Do I think they put too high a price on their labor? YES! Do I believe they are getting all of their hearing aids for $350 and marking up to $3000? NO.

    I've seen one company's invoicing... $325.00 COST for a hearing aid with a $499.99 price tag. $585.00 for $899.99, and so on. You are definitely on to something when you mention a need for more competitive pricing.

    However, an increase in DEMAND would certainly initiate some competition. Not enough folks are serious enough about getting hearing aids due to cosmetic concerns and just plain stubbornness. No one wakes up and says "I WANT hearing aids." That's crazy, and it's a huge step to admit to needing them, but if more people could get to that point, especially if they had family and friends for support, I expect that pricing would actually go down. (My flat screen TV was $1000 in 2008, but now I could buy the same brand/dimension/specs for $500-600).

    I've sufficiently rambled on, and you may have stopped reading a long time ago. I am not a hearing aid professional, but I find the topic very interesting, just don't get me started on personal amplifiers and what a scam those can be!

    All The Best,
    Sandy

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  3. I am fascinated by this subject and on the search for a solution. Most people, especially seniors, CANNOT AFFORD $3000i each per hearing aid, so naturally, it doesn't matter how much the 'demand' is if people can't afford the product. I want to know if getting a prescription and then buying online is an OK thing to do, or is it fraught with difficulty.

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  4. Buying your hearing aids online is much more convenient and beneficial. With a bit of extra precaution and care, you are likely to get the worth for your money. Make an extra effort of checking the product and brand reviews online to make a sound decision and read the product manual which comes with the hearing aid to help you get a better understanding on the technicalities and usage of the device. To check our hearing-aid products, www.mediwala.com

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  5. Well i have visited many of the sites for hearing aid online and i find only one company best for this in UK, USA, UAE, Canada, Australia. and the company name is Mediwala. this is online hearing aid provider

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  6. I've been using hearing aids for years now, and so far I haven't had to many problems. I remember one time during a lecture at school my hearing aid went out, and I missed pretty much all the lecture. My teacher thought I was using that as an excuse to get out of homework, haha.
    http://www.aplushearingcentre.com/products_and_services.html

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  8. I have been looking for some hearing aids for my grandma. She is always asking me to speak up and I think the only reason she doesn't have hearing aids is because she doesn't know how much it will cost. Do people have to go in to get a specific type of hearing aid just like contacts? http://avchearing.net/products

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