Recently,
we posted a blog entry explaining why some commonly cited reasons not to buy
hearing aids online, despite much lower hearing aid prices, do not apply to Embrace Hearing.
This is the second of a two-part post focusing specifically on the last reason proposed by Neil J DiSarno in his recent March 6 Q&A piece in The New York Times.
Mr. DiSarno states that: “Audiologists are professionals who can provide adjustment and programming of the devices, counseling, hearing training and support when you obtain hearing aids from them. Hearing aids bought online do not include these services.”
We completely agree with this statement, but we also believe that the model of “bundling” hearing aids and follow-on services serves to obfuscate the true costs of hearing aids and hearing aid services, and allows audiologists to charge more for the services than they would be able to charge on an easier-to-understand visit-by-visit basis.
To demonstrate this point, we’ve calculated the effective price of hearing aid follow-on services.
Above and here is our analysis of the effective cost per visit of the “training and support” referenced by Mr. DiSarno, when purchased as part of a bundled package. This analysis assumes that an audiologist pays $1,000 for a set of hearing aids from a manufacturer, sells it to a consumer for $5,000, and that the “fair price” for that sale is really much lower. It then asks the question – how much is the customer really paying per follow-up visit, depending on 1) how often he returns for follow-up visits, and 2) what hearing aid price he considers “fair” in the first place?
At the risk of stating the obvious, we submit to you that these are very high numbers!
In our view it is unlikely that hearing aid wearers would be willing to pay per-visit prices at these levels, if given a transparent choice. Hearing aid “bundling” is so common because it allows audiologists to include these exorbitant hidden costs in the up-front $5,000+ hearing aid price. First-time hearing aid buyers may not know whether $5,000 is too much to pay for a medical device – but they would suspect that $1,000 is too much to pay for a follow-on visit.
While it is impossible to know Mr DiSarno’s true motivations, we note that he has “spent the last 35 years as a practicing audiologist” and therefore has likely benefited financially from profits created by the practice of hiding high per-visit costs in an opaque “bundle.” We leave it for our readers to decide whether this conflict of interest might influence the thinking of audiologists who advise consumers not to buy hearing aids online because doing so deprives consumers of the ability to obtain “adjustment and programming of the devices, counseling, hearing training and support” from audiologists.
To this argument, we say – if you really want to ensure that all consumers have access to these services, then why not charge for them on a per-visit basis, no matter where consumers originally purchased their devices?
In a more transparent system, the free-market price for these services would decline to the level that consumers feel is fair. In an environment with lower prices, it is highly likely that many of the 27 million Americans with untreated hearing loss would purchase hearing aids and achieve an improved quality of life. And shouldn't that be the goal of everyone involved in the hearing care industry?
Comments
I agree, the cost of hearing aids is prohibitive to many people getting the help that they need. However, the expense can not be solely attributed to the costs involved in distributing the product to the patient. It is the cost of the product directly from the manufacurer that needs to be addressed.
Great blog! I wish your company great success. For those interested, the following link gives additional information on HA costs and in the Oct 2, 2012 entry examines a franchise that provides premium aids, expert service, and even optional support groups at 25% the cost of current private practices:
http://hearingaidsunveiled.blogspot.com/
We thought we’d take this opportunity to respond to the comments received this week.
Robert — we appreciate the colorful image, but we’re not exactly sure what is meant by “orange flavored applesauce.” Hearing aids that represent the technological equivalent of the Embrace Stella — which we sell for $1798 for a set of two — do routinely sell for $5,000 at more traditional retail locations; please e-mail us if you’d like more specifics. We appreciate the importance of follow-up care, and note that 1) Embrace Hearing provides unlimited support via e-mail; and 2) all else equal, face-to-face follow-up care is superior. That said, we believe the question of “how superior” — as measured by the price a customer is willing to pay — is a question that customers are able to answer for themselves; and that if audiologists adopted a more transparent pricing model, customers would be more empowered to make these decisions with better information. Each time someone buys a set of hearing aids from us, we see it as a vote that the service package is not worth its price of $3,000+.
Audiologist — we completely agree with you. We do not have any negative feelings toward audiologists; and we realize that student loans and modest paychecks are the norm. Our assertion is not that audiologists overcharge, but that audiologists are forced to charge high prices simply to stay in business, given all the costs associated with maintaining a traditional practice. Many of these costs (eg office rent, receptionists, etc.) don’t directly contribute to better treatment for hearing loss; but the current distribution system means that people with hearing loss are essentially asked to to foot the bill for these costs.
Joseph — we very much appreciate the kind feedback, and we will be in touch directly with the hope of learning from your experience.
Jane — Candidly, we believe your analysis is flawed. We’ll divide our response into two parts. First is the device itself, which you’ve characterized as a “Yugo” as compared to the Lexus models presumably available at your practice. We know for a fact that the Embrace Stella and the Embrace X-Mini are technologically equivalent to many advanced models offered in traditional clinics, at discounts of up to 70%. We would challenge you to provide the rationale for characterizing these products as “Yugos” given the technological specifications that are available online, and which speak for themselves. Second is the follow-up service, which you’ve characterized as non-existent. This couldn’t be further from the case. Our customers receive unlimited e-mail follow-up with licensed professionals that we believe are among the best in the business. Our customers’ satisfaction is borne out by their very low return rate, which is far below the industry average for more traditional retail distribution. Do we wish we could provide face-to-face follow-up service to every customer? Yes, of course. Would we be able to do it at these prices? No, we would not. But we feel that customers have the ability to place a value on the “service” portion of the package themselves. Again — each time someone buys a set of Embrace hearing aids, we see it as a vote that the service package is overpriced at an effective $3,000+. Finally — we would note that face-to-face service is absolutely available on a fee-per-visit with local professionals, even if it isn’t bundled into the initial price. So it’s not as though customers are excluding the possibility of face-to-face service in the future, simply because they opt not to buy a $3,000 bundled service package today.
I suppose there is a place in the business model for everyone. Some people want a Lexus with a great warranty, great service, great followup and wonderful quality. Some people want a Yugo with no service and no followup. As long as people can get what they want and you realize where your business falls on this spectrum. I know where Embrace falls.
As a long time hearing industry executive, co-founder of bernafon USA and the former General Manager of Philips Hearing Instrument, I wholeheartedly commend your efforts to serve the vast majority of folks who need a little bit of help, a little bit of the time.
I was one of the principals involved with bringing affordable over the counter amplification to more than 150,000 people in 1996/1997. As the lead technical consultant, I wrote much of the script used in the “Factory Direct” infomercial. The efforts we put forth with the Ready to Wear “Crystal Ear” were significant. Unfortunately, poor management decisions and regulatory intimidation forced the main operational efforts to shut down
I think what you’re doing is fantastic. In fact, I’ve written about this matter and referred back to your company. I wish you nothing but success as you continue your efforts to provide affordable amplification help to the tens of millions who go unserved.
Sincerely,
Joseph R. Benevides
Macs4newbies.com
I can appreciate your sentiments, as someone who works in an audiology practice. But, I must tell you, you will pay the same price whether you go to the hearing aid dispenser with a high school diploma, or an audiologist with 8 years of education and background in hearing rehabilitation.
Please don’t lump all audiologists into this category of slimy salesman, cause it’s simply not true. Most of us only make $60k and can barely afford our student loans, so the majority are not profiting significantly from this practice, except for a small minority.
Are prices on hearing aids too high: yes. But, in the end people will never do as well with their hearing aids without proper professional guidance and fitting of their hearing aids, that’s just the reality. I hope you well, but I believe you only add to the confusion and misguided perceptions of getting hearing aids and in the end that doesn’t serve the consumer any better than the practices you denounce.
Your statistical analysis is skewed by mixing multiple technology and warranty types and coming up with orange flavored applesauce. An aid that you can sell for under $400 would never be sold by an Audiologist or licensed Dispenser for $2500. You are saying that you sell at or near cost of a cheap aid with limited technology that would be sold in an office with followup care and face to face counselling for $800 to $900. Three or four visits during the trial and cleaning and service during the warranty period. It also gives the patient professional care for their hearing deficit, not a price for a device and hope that it works and is comfortable.