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Survey: Dispensers fitted more hearing aids in 2005 at higher prices

Kirkwood, David H.

doi: 10.1097/01.HJ.0000286695.28587.f5
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(The second in a two-part report on the findings of a survey of dispensers)

Author's acknowledgment My thanks again go to Dr. Gus Mueller, contributing editor of The Hearing Journal; Dr. Ken Smith, a member of our Editorial Advisory Board; Dr. Paul Dybala, editor/president of Audiology Online; the International Hearing Society; and, above all, to Earl Johnson, a doctoral student in audiology at Vanderbilt, for his analysis of the data.

The results of the annual survey of hearing aid dispensers conducted in January by The Hearing Journal(HJ) and Audiology Online (AO) indicate that last year was a generally healthy one for the dispensing community. The nearly 500 dispensing audiologists and hearing instrument specialists who responded to the e-mail survey sent to AO subscribers and to members of the International Hearing Society reported fitting more hearing aids per respondent than those surveyed a year earlier. What's more, among dispensers willing to hazard a prediction, 70% expect to dispense more hearing aids this year than last, while fewer than 3% expect to dispense fewer.

In addition, respondents reported that the average retail price of the hearing aids they sold in 2005 was $1836, $60 more than reported in our survey for 2004. And, for the first time in several years, the survey found that prices for instruments in specific categories of style and technology rose from the year before.

Some of these results supported the findings reported in our March 2006 cover story, which focused on the results of a section of the survey on the economics of dispensing. This section included questions on the salaries of non-owner dispensing professionals and the revenues and profits of private practices. Among the findings were that more than twice as many respondents said that their practices' revenues and profits increased in 2005 as said they declined from 2004.

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MONTHLY FIGURES ON THE RISE

The most direct indicator of growth in individual practices in 2005 was that, across the board, respondents to this year's survey reported dispensing more hearing aids per month than those in our surveys for 2004 and 2003. As Figure 1 shows, respondents said they dispensed, on average, 32 hearing aids per month in 2005. It should be noted that this figure is per response, and in many cases it represents the efforts of multiple dispensers in a practice. More meaningful is the figure of 15 hearing aids, which was the average number dispensed per month per individual dispenser. This figure was derived by dividing the number of hearing aids per month in each response by the number of people that the respondent said contributed to the total.

Figure 1

Figure 1

The 2005 monthly figure was up from 13 hearing aids per month reported in 2004 and from 12 per month in 2003.

The survey found growth among the primary dispenser groups. Hearing instrument specialists said they fitted an average of 18 instruments a month in 2005, compared with 14 in 2004. Audiologists who dispense had a similar pattern: 13 per person per month last year, 11 in 2004.

When asked how the number of hearing aids they dispensed compared with their figure in 2004, 43% of respondents said it was higher and 15% said lower (Figure 2). When we omitted respondents who said a comparison between 2004 and 2005 was not applicable for them, 48% reported an increase last year (20% an increase of more than 10%), while 35% said the 2 years were about the same and 17% said they dispensed fewer hearing aids last year than in 2004.

Figure 2

Figure 2

Figure 3

Figure 3

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DISPENSERS EXPECT MORE GROWTH

Since more than 80% of respondents reported doing as much or more business in 2005 than in 2004, it is not surprising that more than half (52%) also expect to dispense more hearing aids this year than last and only 3% anticipate dispensing fewer. When those who did not make a prediction are omitted, fully two-thirds predict growth in 2006.

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NEW TECHNOLOGY GAINS FAVOR

Not only were hearing professionals dispensing more hearing aids, they were providing patients with more advanced technology in those hearing aids (Figure 4).

Figure 4

Figure 4

Both audiologists and specialists said that slightly more than 90% of the hearing aids they fitted in 2005 were digital, which coincides closely with the Hearing Industries Association's report that 89% of all hearing aids sold by manufacturers in this country last year were digital. Respondents also reported that 59% of the instruments they dispensed last year had directional microphones.

While our previous survey asked about DSP and directional technology, the questions were worded differently, making comparisons between years difficult. However, in last year's survey, there were still a good number (22%) of respondents who said that fewer than 75% of the instruments they dispensed in 2004 were digital. And, in that survey, 51% of dispensers said that half or fewer of their fittings in 2004 included directional technology. So, clearly, both digital processing and directional technology gained considerable popularity in 2005.

This year's survey asked respondents for the first time what percentage of their fittings were open fittings. While the number was only 17% overall for 2005, it seems likely to rise in 2006.

As Figure 4 notes, audiologists dispensed a significantly higher percentage of directional and open-fitting hearing aids than traditional dispensers did.

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PRICES RISE

The upward trend in the average price of all hearing aids sold continued in 2005 (see Figure 5), reaching an all-time high of $1836. While this was $60 (3.3%) more than the $1776 average price reported for 2004, the increase was considerably less than the reported rise in the average price of hearing aids between 2003 and 2004, which was $115 or 6.9%.

Figure 5

Figure 5

Figure 6

Figure 6

As shown in Figure 5, hearing instrument specialists and audiologists reported charging almost identical average prices: $1830 and $1833, respectively. However, there was a substantial difference between what private-practice audiologists said they charged (a mean of $2014) and what audiologists in clinics or hospitals reported ($1640).

Among the factors that help explain why private practitioners—both audiologists and hearing instrument specialists—charged more for hearing aids than other groups is that they were more likely to bundle their charges for related services in with the price of the hearing aids. Among audiologists in private practice, 95% bundled, while 94% of specialists did. On the other hand, 24% of audiologists employed in clinics and hospitals charged for services separately.

Unlike the past several years when the price of the average hearing aid increased but the average price for nearly every specific category of hearing aid was flat or declined, in 2005 dispensers reported charging somewhat higher prices in most instrument categories than were reported a year earlier.

For example, the average price for a mid-range digital CIC was $2128 in 2005, while a year earlier it was $2065 among dispensers who bundled service charges in with the price and $1846 among those who didn't. A high-end digital BTE went for an average of $2586 in 2005, while the figures reported for 2004 were $2487 bundled and $2164 unbundled. At the low end, the average price in 2005 for an analog ITE was $835, while in 2004 it was $873 bundled and $753 unbundled.

(Note, in this year's survey, we reported bundled and unbundled prices together, in part because so few respondents—9%—unbundled. Those who did bill separately for services said the charges averaged $319 per hearing aid dispensed).

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OTHER TRENDS

Our latest survey found that increasingly dispensers are providing patients with telecoils. Respondents said that 54% of the devices they fitted last year had that feature (see Figure 4), as compared with 52% in 2004, 48% in 2003, and only 37% in 2001.

On the other hand, it appears that bilateralism may have hit a ceiling. From 1996 through 2004, our surveys found that the percentage of bilateral fittings increased almost every year, reaching an all-time high of 82% in 2004. However, the latest respondents said, on average, that they fitted 77% of people bilaterally in 2005, which was the same as in 2003.

One of the leading indicators of the future health of the hearing aid market is the percentage of first-time purchasers. In 2005, respondents said, 52% of their clients who bought hearing aids had never used amplification before. Although down from 54% in 2004, that number has changed little in recent years, fluctuating in a narrow range from 48% to 52% since 2001.

The return rate reported by respondents in 2005 was 5.4%, a little below the 6.2% reported for 2004. This figure has remained relatively constant over the years. A return is defined as a case in which a patient purchases one or two hearing aids and then returns them for credit without getting any new hearing aids from that dispenser.

Finally, for the second year in a row, our survey found that dispensers were purchasing hearing aids from more companies. On average, respondents said they dispensed instruments made by 5.5 companies. That was a small increase from 5.3 manufacturers in 2004 and a larger increase from the range of 4.0 to 4.7 companies reported in the four surveys before last year's.

Thus, while consolidation has decreased the number of hearing aid manufacturers that dispensers can choose from, it does not seem to be reducing how many companies they actually do choose. On the other hand, our survey found that dispensers generally have a clear favorite among their suppliers. In 2005, respondents said they bought, on average, 75% of their hearing aids from one company. That was fewer than the 80% reported in 2004, but more than in the prior 3 years when the average ranged from 65% to 75%.

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NOT ONLY ABOUT HEARING AIDS

As usual, the dispenser survey was about more than hearing aids. We also asked respondents questions on other products they dispense, procedures they perform, and business practices they follow.

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Other products

As seen in Figure 7, there were several products that most respondents dispensed in 2005, led by swim plugs (86%) and custom hearing protection devices (84%). While these results were not dramatically different from those for 2004, in the case of every product but one the proportion of respondents offering them to clients in 2005 was 2% to 4% smaller than the year before. The exception was private-label batteries, where the percentage was 53% both years. The differences were small and not part of a trend recorded in earlier surveys, so it remains to be seen if the decline in 2005 is anything more than a statistical blip.

Figure 7

Figure 7

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Clinical procedures

Table 1 shows the results of a question asking respondents how often, if ever, they perform 13 standard and not so standard clinical procedures. The results ranged from the 98.5% who always or nearly always do pure-tone air-conduction testing on their hearing aid patients to ABR measurement and other evoked response testing that a substantial majority of respondents said they never do.

Table 1

Table 1

Except for the most basic procedures (e.g., pure-tone air- and bone-conduction, speech audiometry, otoscopy), which nearly everyone does in most cases, our latest survey found that audiologists are more likely than hearing instrument specialists to perform the other procedures asked about. For example, as seen in Table 1, 78% of the audiologists said they do tympanometry most of the time, while only 24% of specialists do. And, while neither group measured otoacoustic emissions on most patients, 44% of audiologists said they do “fairly often” or more, while only 14% of traditional dispensers reported measuring OAEs that often.

On the other hand, 63% of specialists use video otoscopy on most or all of their patients, while only 15% of the audiologists do.

For the most part, the responses to this question differed little from those of the year before. However, there were two areas of significant difference. One was that the percentage of people doing tympanometry declined sharply. While 67% in last year's survey said they did so either “most of the time” or “always or nearly always,” this year only 51% said they do. On the other hand, the frequency with which dispensers do an otoscopic exam, always high, increased this year over last. This year, 94% of audiologists, 91% of specialists, and 93% of all respondents said they do otoscopy always or nearly always, while the numbers from the previous survey were 89%, 86%, and 88%, respectively.

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BUSINESS DECISIONS

Although the March 2006 cover story reported many of the survey's findings on the financial side of dispensing—e.g., professional salaries, practice revenues and profits—we also polled dispensers on some other business-oriented topics, including marketing.

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Marketing costs and sources of patients

One question we asked was, what percentage of your practice's budget was spent on marketing in 2005? The average amount reported was 8.9%.

Interestingly, when we asked dispensers what were the best and second best sources of new patients (see Figures 8 and 9), respondents named sources that most dispensers probably spend little money cultivating. These were “medical/professional referrals,” selected as the number one source by 44% of dispensers and second by 19% more, and “referred by friend of family,” chosen first by 27% and second by 46%.

Figure 8

Figure 8

Figure 9

Figure 9

Relatively few dispensers rated traditional marketing approaches as being especially productive. Eight percent said newspaper advertising yielded the most new clients for their practice, and another 8% said it was the second best source. Eight percent of respondents said direct mail generated the most new business and 4% ranked it second. Other paid marketing approaches, such as advertising in the yellow pages and radio and TV advertising were found to produce even fewer new patients.

Copyright © 2006 Wolters Kluwer Health, Inc. All rights reserved.