Obscene Hearing Aid Profits!

Now folks, I’m fully aware I keep banging on the same drum of the hearing industry, sorry if I’m like a dog with a bone! They (HA manufacturers) have a captive client base, they must think it is their god given right to exploit said client base (via subterfuge/deception/profit margin) and screw every last cent out of us, knowing full well, we will pay the piper whom calls the tune… if we want better hearing, then we are forced to stump up! Now I am all for commerce and I do understand there is a need for research costs, advertising, production costs etc. But, here is the rub; most of the top brand HA’s are manufactured in Asia to exploit the cheap labour force and you would imagine some of those savings would be passed on to the end user? No, they are screwing everyone at both ends and increase the producers profit margin… A top end HA will cost at the very most $200 to produce each and around 1500% mark-up by the time they reach your ears, that for my money is unadulterated greed, sheer exploitation of the disabled and disadvantaged HOH end user! No matter how you paint it, it’s a sham/smokescreen to obscene hearing aid profits that would not be tolerated in the real world, if it were an essential commodity for many people, for instance a car! We HOH can do without a car, but we can’t do without a hearing aid, it enables us to compete in the hearing world!

This worldwide cartel has little or no interest in the end user…ONLY PROFIT IS THEIR GOAL!!!

Cheers Kev

Where’s the published article here??

Until hearing aids are no longer classified as a “medical device” by the FDA, nothing will change. IPODS are just as complicated and as dangerous to the wearer’s hearing but they are not controlled by the FDA.

Kev Takea deep breath and pour a nice scotch. I know there not cheap but I paid 2800 us for my Resound Futures. I plan on getting 4 to 5 years of use from them. Lets call that 54 months. My cost is 51.85 per month. I pay more for cell service,cable tv,cleaning lady, lunch on a monthly basis. I don’t mean to imply that I am wealthy or well off I’m not but I do pay for services that I can’t or won’t do my self. For 51.85 I get a 4 year warranty, unlimited visits for adjustments, replacement for lost or damaged no matter who is at fault and a real improvement in my life. I love what my HA have done for me so far and could not be happier. I feel like I got a bargan.

The difference is the degree of loss, yours is mild compared to Kev’'s, so you can get by with a much cheaper HA than he can. So he has a right to complain about being taken to the cleaners.

Kev, first off congratulations on on the hyperbole! Let me show you why you are wrong…

I open a hearing aid clinic. Let’s say I open a clinic in a small town in Pennsylvania for sake of argument. Rent and other overheads is going to run me about $3,000 a month for a decent location.

I’m going to need some equipment, a couple of computers, supplies, demonstration hearing aids, a sound booth, an audiometer, video otoscope, office supplies and furniture. That’s about $50,000 to make the office look nice, with a sign and everything.

Now I’m going to need a secretary to take the phone calls, book the appointments etc. That’s going to cost me $3000 a month by the time you factor in benefits and taxes.

So now I have a business that is costing me around $6,000 a month to keep afloat, and that’s before I have done any advertising, or paid back my initial business loan.

A good newspaper ad is going to cost me $4,000 or more depending on the market. Or I could do a direct mail piece to find some patients. Let’s say I do that once a month. I’m now up to $10,000 a month in overheads.

Let’s say the marketing brings me 20 patients to see in a month, and I’m really good at ‘selling’ them, so half of them buy a hearing aid system from me. I need to make $1,000 profit from each patient just to cover my overheads. I still have not paid back my business loan, nor paid myself a dime.

Let’s say the hearing aid company that supplies me makes the hearing aids for $400 a set and sells them to me for $2,400. I sell them for $4,400 a set.

Ten sales a month and I make $20,000. My overheads were $10,000. My business loan is going to cost me some of that. So maybe I can make $8,000 a month or $96,000 a year. But this isn’t considering that some people return their hearing aids. Sometimes I might run an ad and the phone doesn’t ring. Sometimes I might have to send an aid back five times for modifications by the lab.

So in a perfect world as a business owner who is assuming all the risks associated with that I might be able to make a decent living. Of course in this example, the business owner couldn’t really pocket all that money. There’s tax, and saving money for a rainy day. People don’t buy hearing aids over Christmas, or Thanksgiving, and a few other times of the year. And we are assuming everyone buys an average of $4,400 of hearing aids. Many people may buy monaural or cheaper models.

It is for these reasons I just shared that you don’t see hearing professionals driving Porsches very often. I would argue that the average income among hearing professionals is less than that of an average eye professional, dentist, therapist, or chiropractor.

As to the hearing aid companies that you vilify, they have to deal with numerous repairs, returns, and research and development that keeps them ahead of their competition. I work with Starkey and they got about 56 patents in the last year or so. You think that kind of R&D is free?

Speaking of Starkey I was at their global headquarters a month ago. I did not see a bunch of BMWs, Audis, Mercedes, Ferraris and Lambos in the parking lot. The workers and management were not wearing Rolex or Omega watches, nor wearing Armani suits.

In fact this particular evil hearing aid company that has ‘no interest’ in the end user has given about half a million hearing aids away to the poor and disadvantaged around the world since 2000.

So with the greatest respect, I think that your analysis of the industry lacks and real facts or handle on reality. I concede that maybe some owners and top executives make a good living, but this is true of ANY business or industry. The ordinary workers and hearing professionals are not making off like bandits. Which is a pity, as I’d love a Porsche!

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I don’t know if Kev is ranting about the whole HA industry or just the manufacturers. What it cost them to produce a HA if it’s made in Asia is probably cheap (very cheap) and what they make off it is obscene. Granted they have R&D to keep market share and their dealers happy. The fact that they have to deal with numerous repairs is not the patients fault but is a quality control issue of the manufacturer. Returns is also a quality control issue: using Phonak as an example, their new Spice HA probably have a high rate of returns if you can use the number of disgruntled people on the Forum as an example who have returned their HA after their trial because, 1. their Audi can’t get the programming right or 2. their Audi has screwed up the programming to the point of them having lost all faith in his or her ability to figure out how to make the HA work,or 3. they HA have issues with sounds , echoes, etc. that the Audi can’t fix and the rep can’t either. From what I’ve heard on this Forum it sounds like Phonak rushed this new platform to market before it or the dealers were ready or adequately trained to deal with its complexity, so because of their errors in judgement they will pass the cost of this screw up on to the enduser in the form of a price increase. It’s kind of like the gas company blowing up your house with faulty gas lines and then making you pay for the repairs through higher gas rates because your house shouldn’t have been built there in the 1st place. If they had held off releasing the new HA until they had the bugs worked out and the Audi’s and rep properly trained their return rate would probably much smaller.
As for the Audi’s and HIS I agree they need to make enough to make a decent living. However, in the San Jose area we have a huge swing in prices for the same HA from Audi to Audi. For Oticon Agils I know one person who got theirs for $4,500 and I know a lady who went to another Audi and paid $6,800 for hers. Why the $2,300 difference, is it because Audi #2 is an Oticon dealer? This kind of pricing could be what Kev is complaining about.
As for Audiologist and their cars, mine drives a nice BMW.

For Oticon Agils I know one person who got theirs for $4,500 and I know a lady who went to another Audi and paid $6,800 for hers. Why the $2,300 difference, is it because Audi #2 is an Oticon dealer? This kind of pricing could be what Kev is complaining about.
As for Audiologist and their cars, mine drives a nice BMW.

I got my Deltas 8000 through the Bureau of Rehabilitation. Somehow I got to see the invoice for them. I don’t remember the exact figures, but I know the markup was well over 200%. To be fair, the state also paid the audiology group $750 for unlimited adjustments. Assuming the markup I stated is accurate, what kind of profit that gives the individual audiologist in a group or a single practice after expenses I don’t know.

The question I have is how the cost can vary so much from audi to audi. I saw one the other day who started the dialog asking me what prices I had seen for the Agil Pros. I honestly said from $5200 to $6000. She then said she thought she could sell them to me for $5800. She, btw, only sells Oticon and Widex. Should I decide I like them, do I shop around? Bargain with her. Finding the best price and service is far easier when shopping for a TV or car (comparison shopping is a snap) than purchasing a hearing aid.

I bet there’s more HOH people than not in the world (no I don’t have stats or articles to prove that thought) and I’d bet if HA were more affordable there would be more people wearing HA than not wearing them?

I realize your analysis was ad hock, but do you realize you just said that an instrument retailer can break even by seeing 20 patients a month? If 10 are sales, I would estimate that as 40-50 hours of work.

Now you’re patent statement really had me rolling. You can patent a ham sandwich if you so desire. I work in R&D and some coworkers view # of patents as a badge of honor, these guys can rack up more then 20 each in a year. Starkeys 56 are a big yawn. Now if starkey’s R&D were so great and they could demonstrate in an objective study that there instruments really help you hear better then the competition, I might just pony up whatever their asking to try one. But they haven’t to date and I’m betting they won’t in the future. Instead look for that marketing material with a 70 year old model and a bird singing in the background on the cover.

Actually, if you look carefully, that’s not what I said.

We are making the assumption that running one ad (or multiple ads to the value I gave) would yield 20 patients that actually show up, and that ten of them would buy at the profit margin I suggested.

That’s a lot of ifs and hopes. Sometimes an ad doesn’t pull, so now you are in the hole financially, and you got to run another ad. Sometimes you’ll have 20 patients, and only four will buy, perhaps some had to be referred for medical issues. Sometimes it will be the wrong time of year, or bad weather etc. A lot of risk factors. I was trying to show just what was needed to stay afloat. I was also just throwing off some random profit margins, look how much profit is needed just to make this business model work.

Yes, but Starkey are not patenting ham sandwiches. They are developing some amazing technology, the likes of which I’ve never seen in my entire career. As for objective studies, there are tones of them. They even opened a web site where they publish peer reviewed articles from medical journals and other publications that are hard to fake, all on StarkeyEvidence.com. In fact they were the first to try and take an evidence based approach rather than making marketing claims.

In any case, I used Starkey because it’s my favorite. This isn’t really about Starkey, this is refuting the nonsense that ‘obscene’ profit is being made by the hearing aid industry. I am suggesting that the profit levels of a practice, chain or indeed manufacturer are in line with just about any other industry, and that the assertion that something shady is going on is just the rantings of someone with a conspiracy theory.

Sure you could label me an industry shill who is just trying to defend our obscene profits, but whatever, I’m just telling it how I see it. The difference is, I have been to see it, and I am not just ranting a conspiracy theory with no evidence.

An Audiologist spent six years in school and a year or two after that learning their trade. If you consider an AuD to be similar to a PhD, less than 1% of Americans hold that kind of qualification. As a medical professional, what’s wrong with owning a BMW? It’s what I used to drive, and the lease payment was just $498 a month. That’s also the same as a car payment on a $30,000 car; the average price of a car in the US.

I’m not sure how that is evidence to support ‘obscene’ profits being made. Just sounds like a highly qualified, successful professional person doing their job.

Now if your audiologist is driving a Bugatti Veyron, I’d be a little more willing to buy into the obscene profits concept.

Yes, and there are a lot of people in America who would like to have affordable health care. Yet when Obama tried to move towards universal health care, even his very pro-business conservative ideas got massive push back in this country. So since when has the cheap affordable access to health care being a successful argument in this country?

My apologies to you all, I do got off on one, every now and then:D It just makes my blood boil, that there are many needy folk in this world whom would benefit greatly from a high end aid and on the negative side there are too many greedy fingers in the pie, the end users cant afford to pay for these obscene markups… They end up buying what they can afford, which in many cases would perhaps be their 3rd or 4th choice, a far cry from what their actual 1st choice might be, totally governed by monitory constraints and not their actual audiogram!

Now lets get one thing strait, what we are dealing with here is not market forces, but a cartel whom keep their prices artificially high on order to obtain maximum profits on the backs of disabled people, kinda leaves a sour taste in your mouth! We end users don’t have the choice, we need these aids in order to function in our daily lives, to compete for jobs with the odds stacked heavily in favor of those whom are deemed to have normal hearing… We therefore have to be extremely brilliant at our particular job or we need the best hearing aids available to be on any kind of level playing field!

Now prodigyplace, let me say this unequivocally and without any fear or favor; I don’t say anything I can’t back up and I hereby challenge anyone on this forum to deny it costs any more than a couple of hundred dollars to produce a single high end aid once production is up and running and I’m being fairly conservative, it is most likely well under that? Now I do not blame the Audiologists or Dispensers, they have to make a living and many do all right, thank you very much! And yes, R&D does cost money, but it is not on the same scale as say HTC, whom will spend around perhaps 1 billion dollars per year on R&D on their new cell phone lines, yet their top of the range product is maybe $750, which BTW is far more sophisticated instrument than any hearing aid will ever be! And yes they do sell more, million more, (please remember also, 1 in 7 people have a hearing loss and here in the UK, it is perhaps 1 in 5 in some areas!) but their pricing is far more realistic, with perhaps a 100% markup from production to end user… In other words, no matter how you dress it up, we HOH are being screwed, BIG TIME!!!

Yes ZCT, I have little or no gripe with the Audi’s or Dispensers, apart from some of them being in the wrong career and as much use as a chocolate fireguard:D But, I will have to pay the same price in the high street whether they can fit my new hearing aid, or not! You and your fellow professionals sell for what you are told to sell for or the supply chain comes to an abrupt halt…

Lastly, thank you for the backup from my fellow HOH, tis very much appreciated:D

Cheers Kev.

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I just patented a Hot Dog shaped like a speech banana. You can patent any novelty.

I just bought a Blue Tooth in th ear device from Radio Shack that has more parts then an advanced hearing aid for $99.95. (carries a 2 year guarantee and money-back if not satisfied, connects to my telephone, has a tone adjustment, an amplifier with multi-band gain control.

And I bought an in the ear Hunter’s Ear from Cabela’s that has the very same parts as a hearing aid including amplification, compression, and volume limiters deluxe model for $499.

And two years ago I bought a mediocre hearing aid direct from Newsound of Xiemen, China for $144 plus shipping.

And I…well you get the idea. As long as the FDA says a minature amplifier/sound conditioner is a"Medical Device" it dictates a manufacturing and retailing scheme that costs the American consumer a bundle…limiting the market to those that can afford the $4,000 plus a pair.

But don’t see anyone getting rich off of this scheme. It’s just so damned inefficient compared to other similiar products sold on a free, open, and competitive market.

By the way, hearing aids must be sold by professionals…as aresult they are designed to be adjusted by professionals. IT DOESN’T HAVE TO BE THAT WAY.

The technology exists that would alow the majority (those with mild/moderate loss) to self fit their aids.

Write your elected representatives if you agree that something is amiss here. Soap Box Ed

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My point is that you posted in the wrong place in the forum. This area is for the published articles & studies mentioned by zafdor & ZCT.

You probably should have posted here.

Unfortunately, in the US with the best government corporate money can buy, you would need to do more than write your representatives. You would need to have a lobby group with more cash and power than some corporate lobbying groups.

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Kev you don’t need to apologize. Your thoughts are well within the realm of reality and hopefully they make a difference to those of us who cannot afford to high cost of hearing better.

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As for the former item, agreed, it is all so speculative as to be meaningless.

Tx for the web site link, unfortunately, it does not allow actual viewing of the articles. Many of them are likely not relevant to the performance of Starky vs competitors (vis “The role of virtual reality in hearing instrument fittings”). People who are enamored with getting lots of patents like publishing papers based on my experience BTW.

The fact is that even with small volumes (compared to mass consumed products) the development process for hearing instruments is grossly inefficient.

According to The Hearing Journal the average clinic in North America dispenses 15 to 18 hearing aids per month. Let’s assume the manufacturer sells the units to the dispenser for their out the door cost and runs there operation as a profit free concern.

How much would each aid have to cost for the clinic to survive ?

Comparing hearing aids and the services that are included with them to cell phones (which are an enormous rip off when you look at the services include) and ipods and other electronics is point less. 90% - 95% of the patients coming into my clinic could not or would never want a “do it yourself” option. So what do we do ?

I should also add that I fit digital aids from leading manufacturers starting at $750 per unit with many services included in the cost. I am constantly trying to find ways to reduce the costs as the volume helps to make up for it but eventually a line has to be drawn.

As far as “greed” goes we could talk about many industries that do the same thing or worse…banking industry, health care service providers (especially in the United States),anyone involved with investing and the stock market, several retail businesses, etc, etc,…