2017 has been a transformative year for audiology, with OTC hearing aids moving the game to a whole new battlefield. How do the recent changes impact the hearing industry and its stakeholders? The Hearing Journal spoke with select industry representatives and here's what they have to say. “OTCs are coming and the obvious questions are what impact they will have on the established distribution system for hearing aids, and what opportunities/challenges they present to the hearing health care provider. One of the likely effects is a downward pressure on the average selling price (ASP) of a hearing aid. This will obviously impact overall revenue and profitability. There have been many discussions regarding how to stay price-competitive by using strategies such as unbundling. I am sure we will see a lot more of this. However, I will focus on a few other areas.
So what options are available for countering the effect of a lower ASP? First is operational efficiency. If service is key to patient satisfaction, what percentage of your practice cost is going toward patient facing interaction? Reduce costs not related to providing patient service. Go paperless and reduce data redundancy. Increase efficiency measures for common administrative tasks and clinical activities like charting and medical report writing.
Second is increase patient retention. Only about half of patients purchase their next set of hearing aids from the same practice. Increasing the hearing aid re-purchase rate can have a significant revenue impact on a practice. Develop a strategy for making sure your patients continue to come back to see you for hearing healthcare services. Make sure your practice has an efficient recall system in place, and a communication plan, for creating patient touch-points such as newsletters, birthday cards, etc.
Finally, leverage more revenue opportunities. Target your existing patient base for re-sell opportunities. This can be done with extended warranty sales, annual hearing evaluations, clean and check services, accessory sales, and most importantly by moving up the hearing aid re-sell point.”
- Henrik Nielsen, MsC, President of Blueprint Solutions
“As OTC devices become available, there is no doubt the potential to bring new players into the market, outside the traditional suppliers, increasing competition and likely driving down costs to consumers. That said, we continue to see cases where companies unfamiliar with the complexities of treating hearing loss overestimate the ease by which they can access the market, the latest example being the reported closure of Doppler Labs. Whether or not decreased costs will result in increased use of amplification is up for debate. For instance, as discussed by Valente and Amlani (2017), we see that those markets providing hearing aids at little to no cost have similar adoption rates as those markets where hearing aids cost significantly more. No doubt, hearing aid adoption is a complicated issue and cost is but one factor. While the positives potentially include improved access to hearing aids and lower cost alternatives than have been traditionally available, there is also the potential of mistakenly shifting the focus of hearing healthcare towards the product as the sole solution for hearing difficulties.
This new OTC reality provides an opportunity to highlight the value of professional service in the treatment of hearing loss to the community at large. Research has repeatedly shown that patient outcomes with amplification are dependent on how a product is fitted (e.g., Leavitt and Flexer, 2012; Abrams, et al., 2012). Similarly, a soon-to-be published article by Valente and colleagues highlights the importance of verified audibility via real-ear measurements versus a ‘quick fit’ approach in both lab-based and real-world environments on speech recognition, sound quality, hearing aid benefit, and patient preference. I believe these factors will rise in importance with the advent of OTC devices because consumers will have no professional fitting assistance provided to them. Amlani and colleagues (2016; 2017) recently showed the positive impact that clinician services have on patient loyalty, satisfaction, willingness to pay, and perceived value of the provider. To the extent that OTC devices underperform relative to patient expectations, one might envision new business opportunities for clinicians to reach patients who might have otherwise simply lived with their mild to moderate hearing loss. These patients may look for value-added clinical services sooner, given a lower initial cost barrier and improved accessibility to their first amplification experience. Through objective measurements provided by modern audiometric and verification equipment, clinicians will have new opportunities to demonstrate and deliver superior amplification options.”
- John Pumford, AuD, Director of Audiology and Education at Audioscan
“First off, AuDStandard fully supports the independent practice owners and was strongly opposed to the legislation. Every week, I speak with a seasoned practice owner who is frustrated and looking for advice. Add OTC to this decade’s list of disruptors (corporate-owned retail, internet resellers, big box stores, and third-party referral companies), and you can imagine why owners are nervously raising their hands. The good news is that there are places for independent owners to turn.
Practice management groups will continue to grow as a distribution channel. To clarify, I am referring to organizations like AuDStandard that offer value added services that grow member practice’s revenue, while strengthening their foundations for future successes. While lower price is a basic premise of joining a group, it is a short-term benefit.
Lastly, I see manufacturers strengthening their partnerships with practice management groups. They too see this segment growing as they allocate additional resources in staff (sometimes teams), event sponsorship, and price concessions to support their group partners.”
- Tucker Worster, Managing Director at AuDStandard, LLC
“The movement from traditional amplification towards a consumer electronics model will result in a large expansion of hearing care clients. In addition to our current “clinical clients/patients,” OTCs invite people who prefer to be treated as a consumer. This group may have had either limited access or even resistance to a clinical environment. The “consumer client” will now have hearing care products marketed and designed to appeal to them. For this group, audiologists and dispensers can play a role, not only as a provider of clinical hearing care, but also as an expert reseller of a consumer product. This new business model requires careful consideration of managing consumer expectations, while at the same time controlling touch points and time management.
This field will quickly fill with new entrants, including well-known audio brands. Staking a position and remaining visible to all prospects is crucial. Ideally, audiologists and dispensers will find marketing messages that support the newly broadened range of available products. New consumers and traditional prospects alike will likely be drawn to familiar brands. Careful selection of OTC products, with focus on rounding out traditional offerings, could be one way to capture interest while also promoting advanced clinical care and performance.
From there, differentiation can focus on the individualized and customized care that is only available from a hearing care provider. Only hearing care professionals exhibit long-term commitment to success that goes beyond the immediate transaction of an OTC delivery.
In addition to the business model shift from traditional care provider to reseller, the hearing care community will need to meet the needs of consumers who have greater choice than ever before. This will require a blending of both health care and retail approaches - ensuring accessibility, choice, and convenience in addition to the expertise that already exists.
On the instrumentation front, hearing care providers need access to objective tools that facilitate meaningful comparisons between devices. Verification and validation tools are now more important than ever. This is not limited to highlighting the benefit of a specific fitting, but also for objective comparison between the wide array of options, many of which may look similar but perform entirely differently. Design and development of hearing care tools that provide validation, optimal workflow efficiency, and ease-of-use in a hearing care environment, that’s where our focus lies as an audiologic instrumentation provider.”
- Peter Kossek, Senior Product Manager for Fitting Solutions, and Wendy Switalski, Sr. Market Development Manager for Fitting Solutions at Otometrics
“Time will reveal any lasting impacts of OTC hearing aids. In the near-term, competition will increase at the low end of market. This will motivate the audiology community to accelerate product and service innovation for people with mild hearing challenges or tight budgets. Since OTC hearing aids will appeal to some consumers, overall market penetration might increase, too. Most notably, however, OTC hearing aids could anchor consumers.
We are anchored when our decision-making is biased by previous information. With awareness of incumbent hearing aid brands being low outside the audiology community, mass marketing of OTC hearing aids by more familiar brands could anchor consumers on price and performance. Audiologists may see more patients who reject traditional amplification based on price as OTC hearing aids enter the market. They may also see more patients who expect specific product features or are skeptical of aid performance because of their OTC experiences.
Regardless of these impacts, the audiology community has the tools it needs to stay ahead. Audiologists can itemize their products and services, and unbundle them when appropriate, to make pricing transparent and professional value propositions clear. They can dispense hearing aids with open technology that allow competitive pricing today and upgradeability later when patient needs require or budgets allow. In addition, they can employ assistants and other staff to increase efficiency and margins. Most importantly the audiology community can emphasize patient experience.
Patient experience is affected by all products and interactions, both real and virtual, in the hearing healthcare continuum. A great experience includes robust, evidence-based technologies that help people hear better plus remarkable interactions from beginning to end. Increasingly patients expect a no-obligation hearing aid trial, for example, as other consumer industries have raised the bar. Today hearing aids must be respectfully dispensed with pricing transparency and flexibility, timeliness and perceived expertise. By emphasizing patient experience in this way, making value propositions clear and working efficiently, the audiology community can thrive.”
- Aaron C. Jones, Director of In-Clinic Success at Unitron