WHY DO HEARING AIDS COST SO MUCH?
Posted by CENTURY HEARING
WHY DO HEARING AIDS COST SO MUCH? I recently had a customer tell me that an Audiologist offered to sell him a pair of hearing aids for $8000. This post is going to explain why the prices are so high.
First....The main reason is that the hearing aid manufacturers and audiologists have a self-preserving high margin deal to keep the price for hearing aids as high as the market will bare—what you are willing to pay.
In the United States, the licensing of hearing professionals is governed and the responsibility of the each state. The audiologist and dispenser lobby groups have had a history of success with their lock-hold on who is allowed to dispense hearing aids. The Audiologists and lobbies are a powerful group and use the full weight of the law to enforce the Licensed Dispensers rule. Some states require an audiologist or dispenser in that State to dispense a hearing aid, and some allow reciprocity from other States i.e. a person in one state can purchase from an audiologist in another State. There are a small number of States that do not require a licensed audiologist or dispenser for a person to purchase a hearing aid.
There was apparently some interpretation a federal statute as labeling hearing aids as potentially prescription devices. This apparently was some misreading of statute and the market is now opening up with a Waiver--the Waiver procedure was granted and allows audiologists and dispensers to have a patient sign the Waiver that essentially says that they (the patient) waive their right to visit a physician for a checkup before a hearing aid is dispensed by an audiologist.
The FDA requires the waiver to be signed and kept on file at a dispensers office. Most States follow the FDA requirements and require that all purchasers of hearing aids sign the Waiver before purchasing a hearing aid. For Century Hearing Aids, this at the checkout process. Some states, like Connecticut and Maryland, do not allow online sellers to sell into their respective states.
Hearing Aids range in price from $300 to $8000, and the cost to manufacturer with profit included is between $75 and $500. You can have hearing aids manufactured in China or India for about $6 - $15 and sell on eBay for a as low as $20 but they are historically unreliable—and low quality—the maxim applies: you get what you pay for—forget about asking for repairs—just buy new ones.
Just as Intel supplies chips to 95% of all Personal Computers today, the chip inside of most hearing aids in made by one-two companies. So 90% of all hearings aids that are made today—have the same technology inside. So, regardless of the advanced blue-tooth features on a hearing aid, the shiny rainbow of color casings; regardless of all the massive marketing and advertising budgets, hearing aids costs less than $250 to manufacture.
So why do hearing aids cost so much?
Lets take 10,000 foot view of the hearing aid supply chain...which is how the products are made and delivered to the customer...
First, the Hearing aid manufacturer: A hearing aid manufacturer will mark up his hearing aid between 75% and 150%, depending on features and competition. So the manufacturer earns between a healthy 35% and 75% gross margin. This means that the cost of the hearing aid to a reseller will be somewhere between $150 and $600 on the average (some of the newer "open fit" hearing aids are sold to the reseller for up to $800).
Next, the Hearing Aid Reseller Chain: At the present time, 90% of all hearing aids are sold through Audiologists and Hearing Aid Specialists. There are also a few ENT (Ear Nose, Throat) physicians and some family doctors who team up with resellers to sell hearing aids but this only accounts for 2% of all hearing aid sales. There are only about 9,000 audiologists and about 3,000 dispensers in the USA. There are over 10 major hearing hearing aid manufacturers with the top 3 being Starkey, Siemens, and Phonak. Audiologists and Dispensers are courted aggressively by the manufacturers as once a product is chosen, it takes a lot of effort for another manufacturer to dislodge the manufacturer in place at that office.
So who is making the money on hearing aids?
It does not take an math whiz to see that the hearing aid reseller chain is the party making the most money and forcing the cost of hearing aids to remain high. This is the opposite of a free market. If an audiologist is selling a hearing aid for $3,000 and purchases it for even $600, that is a 500% markup. Now that's a healthy margin. Audiologist and Licensed dispensers have a stranglehold on the hearing aid market which artificially forces higher prices onto the consumer.
Not so long ago, reading glasses would have been "fitted" by an optometrist much like prescription glasses and would have cost potentially hundreds of dollars each pair, but the wisdom of the market prevailed, under the implicit acknowledgment that the vast majority of cases of people needing reading glasses don't require prescription-fitting. Pretty much everybody gets nearsighted in the same manner, albeit differing in gradation; so it's just a matter of finding the right amount of correction in purchasing the new reading glasses. You can try one pair and then another until you are comfortable. There's the possibility that one eye's visual correction need is different from the other's, and for those people optometrist consultation might be in order; however for nearly everybody else, off the shelf reading glass purchases are adequate.
Recent statistics show that 10,000 people enter social security everyday. 36 million baby boomers with up to 30% experiencing hearing loss. This is a group that could ill afford to dish out $3000 for hearing aids...so they go without.
Audiologists and dispensers can cite the cost of overhead: office space, personnel, etc. They can also talk about the personal service: fitting, making sure the hearing aid is programmed properly and reprogrammed etc. But the bottom line, pricing has much more to do with lack of access than technology which means customers are still funneled through licensed dispensers.
What about that customer that was offered two hearing aids for $8000...well he bought one from Century Hearing Aids for $699.
First....The main reason is that the hearing aid manufacturers and audiologists have a self-preserving high margin deal to keep the price for hearing aids as high as the market will bare—what you are willing to pay.
In the United States, the licensing of hearing professionals is governed and the responsibility of the each state. The audiologist and dispenser lobby groups have had a history of success with their lock-hold on who is allowed to dispense hearing aids. The Audiologists and lobbies are a powerful group and use the full weight of the law to enforce the Licensed Dispensers rule. Some states require an audiologist or dispenser in that State to dispense a hearing aid, and some allow reciprocity from other States i.e. a person in one state can purchase from an audiologist in another State. There are a small number of States that do not require a licensed audiologist or dispenser for a person to purchase a hearing aid.
There was apparently some interpretation a federal statute as labeling hearing aids as potentially prescription devices. This apparently was some misreading of statute and the market is now opening up with a Waiver--the Waiver procedure was granted and allows audiologists and dispensers to have a patient sign the Waiver that essentially says that they (the patient) waive their right to visit a physician for a checkup before a hearing aid is dispensed by an audiologist.
The FDA requires the waiver to be signed and kept on file at a dispensers office. Most States follow the FDA requirements and require that all purchasers of hearing aids sign the Waiver before purchasing a hearing aid. For Century Hearing Aids, this at the checkout process. Some states, like Connecticut and Maryland, do not allow online sellers to sell into their respective states.
Hearing Aids range in price from $300 to $8000, and the cost to manufacturer with profit included is between $75 and $500. You can have hearing aids manufactured in China or India for about $6 - $15 and sell on eBay for a as low as $20 but they are historically unreliable—and low quality—the maxim applies: you get what you pay for—forget about asking for repairs—just buy new ones.
Just as Intel supplies chips to 95% of all Personal Computers today, the chip inside of most hearing aids in made by one-two companies. So 90% of all hearings aids that are made today—have the same technology inside. So, regardless of the advanced blue-tooth features on a hearing aid, the shiny rainbow of color casings; regardless of all the massive marketing and advertising budgets, hearing aids costs less than $250 to manufacture.
So why do hearing aids cost so much?
Lets take 10,000 foot view of the hearing aid supply chain...which is how the products are made and delivered to the customer...
First, the Hearing aid manufacturer: A hearing aid manufacturer will mark up his hearing aid between 75% and 150%, depending on features and competition. So the manufacturer earns between a healthy 35% and 75% gross margin. This means that the cost of the hearing aid to a reseller will be somewhere between $150 and $600 on the average (some of the newer "open fit" hearing aids are sold to the reseller for up to $800).
Next, the Hearing Aid Reseller Chain: At the present time, 90% of all hearing aids are sold through Audiologists and Hearing Aid Specialists. There are also a few ENT (Ear Nose, Throat) physicians and some family doctors who team up with resellers to sell hearing aids but this only accounts for 2% of all hearing aid sales. There are only about 9,000 audiologists and about 3,000 dispensers in the USA. There are over 10 major hearing hearing aid manufacturers with the top 3 being Starkey, Siemens, and Phonak. Audiologists and Dispensers are courted aggressively by the manufacturers as once a product is chosen, it takes a lot of effort for another manufacturer to dislodge the manufacturer in place at that office.
So who is making the money on hearing aids?
It does not take an math whiz to see that the hearing aid reseller chain is the party making the most money and forcing the cost of hearing aids to remain high. This is the opposite of a free market. If an audiologist is selling a hearing aid for $3,000 and purchases it for even $600, that is a 500% markup. Now that's a healthy margin. Audiologist and Licensed dispensers have a stranglehold on the hearing aid market which artificially forces higher prices onto the consumer.
Not so long ago, reading glasses would have been "fitted" by an optometrist much like prescription glasses and would have cost potentially hundreds of dollars each pair, but the wisdom of the market prevailed, under the implicit acknowledgment that the vast majority of cases of people needing reading glasses don't require prescription-fitting. Pretty much everybody gets nearsighted in the same manner, albeit differing in gradation; so it's just a matter of finding the right amount of correction in purchasing the new reading glasses. You can try one pair and then another until you are comfortable. There's the possibility that one eye's visual correction need is different from the other's, and for those people optometrist consultation might be in order; however for nearly everybody else, off the shelf reading glass purchases are adequate.
Recent statistics show that 10,000 people enter social security everyday. 36 million baby boomers with up to 30% experiencing hearing loss. This is a group that could ill afford to dish out $3000 for hearing aids...so they go without.
Audiologists and dispensers can cite the cost of overhead: office space, personnel, etc. They can also talk about the personal service: fitting, making sure the hearing aid is programmed properly and reprogrammed etc. But the bottom line, pricing has much more to do with lack of access than technology which means customers are still funneled through licensed dispensers.
What about that customer that was offered two hearing aids for $8000...well he bought one from Century Hearing Aids for $699.
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