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July 27, 2009

Why do hearing aids, unlike other electronics, not fall in price?

From the NYT:

BOB BUCKWALTER, a retired pastor in Williamstown, Mass., bought his first pair of hearing aids in January. Like most people suffering from gradual hearing loss, he had resisted the idea for years. But, after talking with people who have benefited from aids and doing research to find a nearby audiologist, Mr. Buckwalter was ready to take the plunge.

But there was one thing he was not ready for: the $4,600 price tag.

Unlike computers, CD players, flat-screen TVs, cellphones etc. etc. hearing aids have mainly refused to become more affordable. Is it over-regulation? (FDA/state oversight that may stifle innovation and allow inefficient pricing & vendor profiteering.) Or some other reason?

Posted by Jay Hancock at 8:20 AM | | Comments (20)
Categories: Regulation
        

Comments

One of the reasons is high profit and restricted selling. There are major distributors that sell the "ears" for the manufacturers. They have a high markup. My pair costed about the same and I happened to the invoice and the audiolgist makes almost half of the cost.

Good question. I have been hard of hearing for many years. Family trait. I read lips but would like an hearing aid. The prices are definetly a deterent.

Jay,

I used to be a hearing aide dispenser and have worn hearing aides since I was 5 years old. What many people do not realize is that hearing aides are a small electronic device. That in many cases is housed in a customized shell made from a mold of your ear.

To say that the industry has been stifled from over regulation is untrue. Fifteen years ago "digital" hearing aides were not widely available. The quality of digital hearing aides have come along way in the past ten years so much so that if I had a choice I would never get a analog hearing aide again.

The question that should be asked is why the health insurance companies do not cover hearing aides or if they do it is at best a 20% discount? The reason that I have been given is that "hearing aides are not a durable medical device." Really are glasses or contacts any more durable? Oh one can get hearing aides covered if one is a CEO, a member of Congress or the Senate and yes even the President. For the rest of us I guess the health insurance companies do not consider being able to hear important or a necessity.

Sincerely,

Bryan Fugate

Jay
In the UK patients can get "free" hearing aids from the NHS. Yet I see patients every day who have tried the free aids without success, so they pay to get something better. And that is a big part of the supposed high cost - manufacturers spend millions on research and development. Then there is the audiologists time and expertise; these factors are usually built in to the cost of the aids, so the assessment, diagnosis and on-going management of the patient's condition are part of the cost too. When you start to break it down, hearing aids are not really that expensive, especially when you consider they will usually last between 5 and 7 years.

My hearing aids cost $3100 each - and the average life span is just 5-7 years!! Insurance after the warranty expires is $225 each per year. While I was able to use FSA $$ for the hearing aids themselves, the cost of the insurance is not FSA-eligible. Being hard of hearing is a very expensive proposition!

In fairness to the audiologists, I have to say that after the purchase of the hearing aid, subsequent trips for adjustments or problems have been at no charge from my audiologist, Dr. Seipp of the Hearing Assessment Center (who is a wonderful person). He's actually made minor repairs and refused any payment. They earn the fee they charge!!

Repairs that are made under warranty have to restore the hearing aid to like new condition for the overall hearing aid - because they are a medical device. That surely has to drive up the cost.

It's a shame medical insurance doesn't cover the cost of at least the first hearing aid. If they were, I can't help but think more people would purchase them and maybe the cost would go down.

(Incidentally, the cost of the mold for the hearing aid is only about $200 of the cost.)

Hi Jay,
I am a doctor of audiology who was born and raised in Maryland. I, too, have the insight of being on the other side of the coin. It's important to note that more advanced hearing aid models come out every 4-6 months. While the prices stay steady, the devices are improving dramatically. A patient getting an entry-level digital hearing aid today is really getting a device that is comparable to the top of the line hearing aid from last year. They do follow the same trend as TVs and cell phones where a specific technology drops in price as the more advanced models come out. However, what you see from the patient side is the range of cost seems to remain the same.

My obligation as an audiologist is to recommend the technology that will meet my patient's listening needs. I hope my patients trust that I am looking out for their hearing health care and not simply looking to make a profit.

Sincerely,

Cara Adornetto, Au.D.

Hearing aids are individually manufactured devices which require high skill level to assemble and form. In addition, as stated above, there is the high cost of continuing research and development. These costs cannot be recovered as easily as innovation in Television, etc simply because of the relatively small numbers produced. Think of the numbers of televisions, laptops, CD players etc, that are in homes across the world, versus the less than one million hearing aids sold each year. Smaller numbers of sales require larger costs of unit in order to cover the marketing, R&D etc. As far as the charges by the audiologists, take a look at the equipment being used to fit the hearing aids. All of that must be included in the costs of the product delivered.

I want to echo lydyb's praise for Dr. Stephen Seipp, who has cared for my hearing for many years. I have sent several friends to see him, and every one has been told they will need hearing aids eventually, but not quite yet. This is not a doctor who puts profits before people. Each time I pay for a new hearing aid the technology is better than what I had before. It's not perfect, but it's much better than going through life missing what is being said.

I to am in a related electronics business. I hear what you are saying but I would like to get a breakdown of the costs of all involved. Until this happens I remain unconvinced.

Many people try to get a hearing aid for free because they have not enough money to buy such thing. Especially children, we need to know their listening needs so we can give help for them.

The main reason hearing aids don't come down in price is because they are a quality of life product. It's a shame with such a growing need for a reasonable price product to be introduced, one that actually is a quality product.

I can't afford to buy hearing aid.. even its been years that i have a hard time hearing.. the price are so deterrent!!

I am a physician and we have created a low-cost hearing aid for those people that cannot afford a custom hearing aid and are currently going without any amplification. It is the Acoustitone PRO hearing aid at www.MDHearingAid.com - and there are no income restrictions or limitations.

Surely, a way must be found to bring the cost of these devices realistically down.
Surely, a government inquiry would help bring that about.

I think the main reason is that these hearing aids are built with quality that can last for a long period of time.

Jay,

There is no reason, other than the delivery system in the hearing aid market is broken.

Overseas manufacturers sell their product to US subsidiaries at a marked up rate. Those subsidiaries sell to a hearing care provider for and additional mark-up, followed by a final mark-up to the consumer.

Luckily there is a company out there that's decided to keep their margins slim on the sale of hearing aids and is passing the savings on to the consumer.

To learn how your readers can purchase name-brand digital hearing aids for nearly half of retail prices visit: http://hearingcaresolutions.com/patients_selecting.htm

Good luck.

For an all new experience in a hearing aid purchase, try www.diyhearingaids.com. The aids are top notch and their customer service among the best. As a previous hearing aid wearer I highly recommend them.

Lots of people are hoping that it will happen. Hearing devices are very expensive and not all people with hearing problem can afford to buy one.

I think that all of the companies are just artificially inflating the price. Hearing aids are simple: There is a microphone, a box that turns a digital sound to analog, and a speaker. Cell phones are 50 times for complex than a hearing aid and cost a fraction of that.

My mother is 88 years old and in need of a hearing aid. I need to know if Medicare covers hearing aids and if not, are there any grants or programs to pay for the cost of the hearing aid or assist with the cost of a hearing aid for my mother. Please advise and thank you.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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