Hearing aids are expensive, and the prices often make them unaffordable. Lowering the prices of hearing aids can boost hearing aid adoption – but they need to be lowered by a lot.
The discussion around why the prices of hearing aids are so high has been raging on for a while. Rather than throwing more gasoline in the fire, in this week’s post Audicus Hearing Aids rather looks at how price sensitivity affects the way we purchase hearing aids.
Price of Hearing Aids vs. Adoption Problem
According to the Better Hearing Institute (BHI), 68% of those with hearing loss (an estimated 9Mn people) cite financial constraints as a core reason for not using hearing aids. This is not surprising, considering the fact that a pair of hearing aids in the US can cost anywhere between $3000 and $8000. Let’s face it, the current price levels in the industry are a major barrier to hearing aid adoption.
By how much do prices of hearing aids need to drop for those with untreated hearing loss to feel properly incentivized to use hearing aids? A recent study done by the Henry Ford Medical Group looked at a group of 1,200 patients who obtained hearing aids between 2007 and 2010. The patients had either full insurance coverage, partial insurance coverage (from 20% to 40%) or had to cover the entire cost themselves. While patients with full coverage obtained their hearing aids about seven years earlier, there was no difference in the buying pattern between those who paid for the full cost of hearing aids or those who purchased hearing aids at the 20% to 40% discount. The study thus concluded (rather loudly) that “Lowering Cost Doesn’t Increase Hearing Aid Purchases”. That doesn’t smell right to us.
Prices of Hearing Aids: The Mount Everest Analogy
Our view is that lowering costs can increase hearing aid purchases – but for that to happen, far more substantial price drops are necessary than the 20%-40% mentioned in the study. To demonstrate that, data about government reimbursement (or inversely, “out of pocket” expense) and adoption rates of hearing aids in Europe lends itself particularly well.
Take the UK and Denmark, for example. The Brits and Danes effectively get 50% to 100% of their hearing aid costs reimbursed by the government (depending on whether they attend a private or public clinic). In comparison, other European countries like France, Germany or Italy, reimburse on average only 25%.
The resulting difference in adoption rates of hearing aids in these two sets of countries is striking: the average adoption rate of hearing aids in the UK and Demark is more than two times higher than in countries where reimbursement lies between 10% and 40%!
Climb the Mount Everest of Hearing Aid Prices
This is obviously a correlation, however there are some indicators that can be drawn from it. One of them being that lowering the prices of hearing aids does increase hearing aid adoption (unlike previously claimed). But those price drops will have to be closer to the 50%-100% range – something that can certainly be achieved. Audicus’ hearing aids for instance are 75-80% more affordable, without a detriment in product quality. That puts you almost on top of Mount Everest.
Sources: Audicus Hearing Aids, BHI, Henry Ford, Goldman Sachs Research, Wikipedia