The VA get them even cheaper, and still the manufacturer can turn a profit, in my part of the world a local clinic can pay $800 to $1500 per set depending on the model (sorry I won’t mention brands) the prices are all over the place depending on what they can squeeze out of the clinic and of course “turnover” it’s a multi billion dollar industry for a reason, a lot of cream on them pies!
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I saw the prices the NHS pay back in 2012. Roughly £80 per Phonak Aid. Oticon and Resound were even cheaper!
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They may be selling at a loss to the government but covering the incremental costs to get additional volume. There is likely a tiered pricing structure based on volume and, in the case of the government, their demands to be lower than anyone else. I suspect if all private clinic HA buyers switched to Costco that Costco’s price from the manufacturers would have to go up or they would have to either scale back R&D or go out of business.
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I’ve been wondering about the low prices that’ve been posted for VA and NHS. I’m sure they get a good deal. But if this info is based on a list someone has seen, how do we know it represents the government’s cost? It could be an inter-departmental charge within the government instead.
No, they are supplied by agreement with the suppliers that is basically component cost only. All the R+D, Marketing and Company cost is passed on to the other products in the range. So the private sector is fully paying the surcharge for the supply to the public sector.
Even the component supply was negotiated to accommodate this surcharge and the suppliers agreed that x% of component supply was provided on a ‘for NHS’ basis. At least it was a few years ago.
To give you a picture of where Costco sits on the wholesale pricing curve, if you imagine that the top end product costs about £1500 plus 20% tax gross wholesale, a negotiated discount of 50-60% might be possible with a good level of exclusivity so £750+150 x 2 plus a charger - going out the door for under £4k. Costco are probably paying about a third of this up front, say £275 inc. tax, plus a charger at a fraction of what we pay.
Sale is £1495/1595/1695 or so, net £1K with no clinic to pay for.
Broadly speaking the Costco model wins on the client volume and the small guy gets squeezed and that’s how they develop market control. Undercut the local suppliers, take the volume share of the pie and kill off the small town businesses that would look after your mother rather than have her travel 2hours to sit in a hypermarket/store: yay Capitalism!
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This analysis assumes that the manufacturer sells the aids to the HCP at the manufacturer’s cost.
Based on what?
Feel better soon!
WH
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Here is a report of the costs to the VA of various HAs. The audiologists order HAs through Denver and it is all managed by contracts that are updated twice a year. (You might have to wait up to six months to see a new product available through the VA.) I think the updates are November and May.
Commodity and Services Acquisition Service (CSAS)
The link above brings up a page with a report link called “Hearing Aid Procurement Summary” The actual link is under the word “report” which downloads a file, excel format, I think. The most recent version should be last month’s summary report. Have fun!
WH
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@WhiteHat Thank you very much for the link.
Is the average cost per aid or per pair?
The Phonak’s RIC rechargeable numbers are insane +31000 per month!!!
Average RIC rechargeable cost $460 (I suppose that’s per aid)!!!
Sonova/Phonak being the most expensive on almost all HA types.
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TEN years ago I had Bernafon aids with replaceable sides. They came from Costco and the dispenser there ordered every color and graphic for me. Think Apple green, red, blue and red with Chinese dragons, my fav, blue with whales and green with tropical plants. I LOVED. them. Now the options are boring and terminally boring. I feel your pain.
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I think that’s a pair, but I am not certain. Probably a single aid. Here is another example of a public contract. Maine and Minnesota, not sure how many other states jump in on this one. They can use the volume to help push down pricing.
I think on the VA contract any federal agency needing to purchase HAs can use that vehicle for purchase. ie, DoD services, Indian Affairs, etc. Statewide Hearing Aid Contracts
The thing to recognize is that there is no audiological support service included here. You local shop has to provide whatever, and the costs for that can be either a la carte or bundled. Prices vary, etc. But it costs money to keep a shop open. Americans want the low price with the premium service.
Hope this helps.
WH
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Those sound amazing!! I change my aids out with stickers, charms and tube twists!
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Many years ago, but it was a long time ago, perhaps 2007 or 2008 comes to mind… I managed to gain entry (hacked might be too strong a word) onto The NHS Phonak website, I was on there for a couple of days, until they kicked my butt off there 
suffice to say, it was rather eye watering, to say the least, if I recall correctly, the Phonak Naida was relatively new (the exact same aids, the NHS had issued me) where just under £50 each, out of curiosity back then, I looked in the NHS Phonak Catalog… I then checked the high street retail price, £2,500 for the pair fitted, at that time, the NHS where possibly the largest hearing aid dispensers in the world? Needless to say, I was shocked at the price difference… Nowadays, I don’t bat an eyelid, and I would be shocked if the NHS, was paying any more than £250 or $300 for a pair of Phonak Naida M70 SP’s, I could not envisage Phonak selling at a loss… As always, YMMV. Cheers Kev 
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It was probably the accent Kev.
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Hah. I participated in that discussion. See if you can pick me.
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Might have been @d_Wooluf Perhaps it was the more subtle fact, I wasn’t registered as an A.uD at the local Audiology Department 
but it was an enlightening experience… Suffice to say, I was barred “Sin-die” Cheers Kev
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Thanks for sharing your insights here, and explaining the price components. What really shocks me is the “3-5 year” life expectancy of HAs here (the other component for the costs per year). My previous Starkeys lived, with minor repairs, 10+ years (and are still going strong). With their modular setup (RIC) I hope my new, precious, “water resistant” Phonaks with their Bluetooth/TV-streaming magic will exist for a little longer than three years. Perhaps they are living in a slightly more hostile environment than the 25+ y home amplifier in my living room or even my wrist watch, but it is not like I expose my head to daily sand-, hail- and rainstorms. The other comment I have is why companies like Phonak do so little to encourage self-fitting (like making Target freely available).
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