Why do Hearing Aids Cost So Much?

It’s undeniable that the price of hearing aids is often a source of contention between consumers and their hearing aid providers. Nobody likes to be told that they’re going to have to lay out six or more thousand dollars for anything. But there are also some points that I think we can all agree on. Perhaps, it would be useful to review these before going on to discuss those areas in which unanimity is less likely.
The first point is that for many people hearing aids are not just helpful devices, but absolutely essential. There are individuals who simply can’t function without them. Their choices are not whether they should use a hearing aid, but which one (or two), where and how will they be acquired, and how much would they have to pay. In brief, for many people hearing aids are not a luxury but a necessity. What they would like to do is to purchase hearing aids that work as well as possible for the lowest possible price.

The second point, and one major theme of this exchange, is that we can agree that they are expensive. We may or may not believe that the cost can be justified, but whatever we feel, the dollar figure is still there, still high, and still looms very large for many prospective hearing aid purchasers. A pair of high-end digital aids costs as much as six or eight thousand dollars, with such accessories as a personal FM system adding thousands of dollars more. It is no wonder, therefore, that price becomes very a relevant consideration when people contemplate purchasing hearing aids.

Third, it is apparent that the high cost does discourage prospective new hearing aid users from acquiring their first set of hearing aids, while dissuading some experienced users from upgrading to newer models. While this reality is often countered by stating that the cost is worth the benefit (which, ideally, should be true in every instance), the fact remains that the high cost of hearing aids does deter some people from purchasing hearing aids, either initially or as replacements. This would be particularly true for those who feel that they can “get along” without hearing aids.

The fourth point is that to properly select hearing aids takes time. It takes even more time to provide the necessary follow-ups to ensure that the hearing aids are properly fit, both acoustically and physically, and that the user understands how to care and employ them appropriately. There are those who feel that the selection and adjustment process can be shortened, a step that could reduce the cost of hearing aids. For some people, perhaps experienced users or those with minimal hearing losses, maybe it can. For the rest, however, a truncated hearing aid selection process jeopardizes their chances of not only realizing the full benefit of hearing aids but of obtaining other kinds of help in learning how to minimize the effect of a hearing loss. And, yes, this does take time, and time is money. This is a reality that does have to be acknowledged and confronted.

Hearing aid users have very little information about how manufacturers arrive at the price they charge individual dispensers for their hearing aids. We don’t know what financial resources manufacturers devote to such areas as research and development, cost of components, the manufacturing process, as well as marketing and merchandising, etc. Much of this, such as costly marketing, is unavoidable because of the nature the business and our economic system. And we don’t know their profit margins and we are not likely to find this out. This entire area is a black box insofar as consumers (and hearing aid dispensers) are concerned.

Fortunately, given the intense competitive character of the hearing aid industry, it can be assumed that manufacturer’s prices are to some extent subject to market forces. For example, dispensers are often able to reduce their unit cost by joining a cooperative buying group who, by purchasing hearing aids in large quantities, are able to negotiate a lower price for the aids they purchase. This results in cost savings that can, theoretically, be passed on to a dispenser’s clients. A major force in the industry is the Veterans Administration which purchased nearly 290,000 hearing aids in 2003 (or 14.5% of the total hearing aid market). Undoubtedly, they paid much less per unit than a private hearing aid dispenser would. So bulk purchasing does work and is one way the price of hearing aids can be reduced for consumers.

The economies of scale are also a factor according to several of the contributors to this exchange. In 2003, the entire hearing aid industry sold just a bit less than two million hearing aids. That sounds like quite a lot, but when divided among 20 or so manufacturers is no longer such an impressive figure. If hearing aids were as popular as cell phones, I don’t doubt that economies of scale could be applied. But since, to put it mildly, this is not likely to happen, not with just 2% of our population using hearing aids, it is unlikely that the economies of scale will ever apply to the same extent it does to other electronic products.

Fortunately individual consumers are not completely powerless in negotiating the price of hearing aids with a hearing aid dispenser. Consumers can shop around, look for sales, and use alternative channels like mail order and the internet in return for lower prices. Most importantly, by knowing the cost ranges of various kinds of hearing aids, plus their performance implications, consumers can make a more intelligent cost/benefit choice in respect to specific hearing aids.

So what is the average cost of a hearing aid (in 2003, the last full year for which this data is available)? One can answer $1794.00, which is the figure used in the 2004 Hearing Review dispenser survey. But this figure lumps all types of aids and technology together; it is accurate, but not applicable for specific individuals. Instead, we should look at the breakdown of costs, the author of The Hearing Review survey (Karl Strom) provides.

According to this survey, the price of the different types of hearing aids, i.e. behind-the-ear (BTE), in-the-ear (ITE), in-the-canal, (ITC) and completely-in-the-canal (CIC) differed considerably. Generally, the smaller the hearing aid, the more it cost (CIC aids were the most expensive while BTE and ITE were the least). What I find most interesting was the breakdown given in the survey between the price of economy, mid-level, and premium digital hearing aids. Economy digital aids were just a little more than half the price of the premium aids. For example, economy BTE digital aids averaged $1390 while the cost of the premium BTE digital aids averaged $2559. Overall, the price range between the highest and lowest digital hearing aid was over $1700. This suggests that effective hearing help is currently available at less than premium prices. And even less expensive than the economy digital hearing aids were the digitally programmable analog hearing aids, with linear analog hearing aids costing the least. We should emphasize that these, too, can provide significant auditory assistance to many hearing-impaired people.

The question we have to ask ourselves is whether there is a performance difference between the highest and lowest price hearing aids? That is, do people who buy more expensive hearing aids actually hear better? And if there is such a difference, is it worth the extra cost to the people who wear the most expensive hearing aids? Maybe it’s not necessary to purchase a “premium” hearing aid in order to receive, if not “premium” hearing help, at least perfectly acceptable help!

Fortunately, we have some information on this question in a report by Sergei Kochkin in a 2003 article in The Hearing Review. In it, he points out that in numerous studies he found only a slight positive relationship between the cost of a hearing aid and the actual hearing benefit received by a consumer. So paying more does not guarantee that someone will hear noticeably better. But benefit (an objective measure) is still not the whole story. In terms of how people perceive the value of the benefit they receive whether they feel the benefit is worth the cost – the situation gets a bit more complicated. It turns out that the more people pay for a hearing aid, the higher their expectations (not at all surprising!) and the less they are likely to be satisfied with the value of the hearing aid. In other words, higher price hearing aids do not automatically translate into greater benefit or satisfaction with the hearing aid performance.

As a society, however, we are somehow conditioned to believe “that you get what you pay for”, i.e. that superior performance can be purchased with higher prices. This is an oversimplification. True, for some features (like directional microphone hearing aids), this may well apply. And yes, such features do add to the cost of a hearing aid. But simple directional microphones are now routinely included in the many of the lower price digital hearing aids. I stress the word “simple”, since this feature has spawned a host of expensive variations, such as adaptive directional microphones, for which the degree of added benefit and value is still an open question. Other specific hearing aid features may be important to some particular individual, and these too would add to the cost, but the burden of proof has to be on the dispenser to demonstrate that the higher price tag associated with a specific feature does confer desirable (and proven) benefits.

It is apparent that high-end modern digital hearing aids are chock full of expensive features and other refined electroacoustic variations. The digital revolution has opened up the kind of speech processing strategies we could hardly conceive of a generation ago. But because something can be accomplished technically, does not mean that the outcome is of practical significance. This has to be demonstrated separately, most desirably with well-controlled research studies independent of the manufacturer. The question we have to ask is whether these newly introduced and expensive hearing aids actually produce in real-life the benefits described in the marketing material? Is the cost/benefit ratio going to be positive for the individual wearer? It may well be that an economy or mid-level BTE or ITE hearing aid could provide the same practical assistance to a hearing aid user as a more expensive model.

My own feeling is that part of the reason that hearing aids are so expensive is precisely because of the competitive nature of research and development in the hearing aid industry. Each company that engages in this R &D activity strives to differentiate itself from its competitors by introducing some technical variation – the basic goal being to ensure audibility of a speech signal at as high a speech to noise ratio as possible. Understandably, their intent is to boost their market share and bottom line. But such activities cost money, a lot of it I suspect, and this is an expense that is ultimately borne by consumers. Logically, it is not plausible that every newly introduced development results in improved listening technology. If so, then over the past 50 years that I’ve observed the industry, with a “new” feature or circuit introduced every year or two, I’d expect hearing aid users to display “superhuman” hearing! And nobody that I know is claiming this!

Actually, while it may be heresy to say so, the most important consideration in a hearing aid selection is not the hearing aid itself. Rather, it is the skill and dedication of the hearing aid dispenser. It is this person’s responsibility to ensure that a suitable instrument is selected, while providing the client with an understandable explanation of its merits and problems. Of course the selection and fitting process takes time; in one study, the audiologists at a large center spent almost four contact hours with each new hearing aid user. As it happens, the time that audiologists spend with people who purchase premium models is not significantly greater than with those who purchase less expensive models. With all of them, the audiologist still has to interview the person, conduct appropriate audiometric and other tests, take ear impressions, select and fit the aids, reprogramming when necessary, schedule several follow-up appointments, provide all necessary information, and deal with drop ins when problems occur. I view these kinds of services as intrinsic to the hearing aid selection process. Without them, we could just as easily purchase hearing aids through mail order catalogues.

In fact, it is precisely because professional services are time-consuming that many people, including several of the respondents in this exchange, have suggested “unbundling” the hearing aid selection process. In its extreme application, this would mean that hearing aids would be sold as a distinct product and that every test, clinical activity and follow-up visit be charged separately. The proponents of unbundling point out that some clients take an inordinate amount of the dispenser’s time, returning often for troubleshooting visits, while others take relatively little time, but that both pay the same price for the hearing aid. Thus some clients can be said to be subsidizing the visits of other clients. With unbundling, each client only pays for the services that he/she receives. The advocates do have a point.

On the other hand, the opponents of unbundling are convinced that many people would not return for necessary follow-up services, or would not contact the dispenser when problems occur, and that seems plausible too. These people require the extra assistance that repeated visits can give them, but are unable or unwilling to pay for them, or simply unaware of the frequent necessity for follow-up visits. Without the encouragement and support occurring in these repeated visits, many such individuals would either discard their aids or not realize their full benefits. Here, the advocates of bundling also have a point.

The people espousing both points of view in this exchange are responsible professionals who truly want to serve their clients to the best of their ability. But at the same time, hearing aid dispensers are professionals conducting a business with their professional time one of their major assets. So is there another point of view or a middle ground in this debate? I think so.

For me, it comes down to how the hearing aid dispensing process is defined. I do not think of hearing aids as just sophisticated electronic devices. That point of view trivializes the potential impact of a hearing loss upon the person and his/her family. A hearing aid can be conceptualized as the therapeutic “hardware” designed to ameliorate the auditory consequences of a hearing loss. The “software” is all the testing and services required to ensure that hearing aid users receive optimal benefit from this hardware. As with computers, we can’t really separate the hardware from the software. When a hearing aid is dispensed, it has to be part of a package that routinely includes certain required professional services. These would include all the prior audiometric testing, interviewing, fitting, and follow-up activities. And, as recommended in an SHHH position paper, I would include a group hearing aid orientation program as an integral component of the selection procedure. One advantage of such a program is that it is likely to reduce the need for some scheduled individual visits as well as reduce unscheduled drop-ins.

If this were to occur, then it would be perfectly appropriate that people would be expected to pay for any visits and services that are in addition to those defined as part of the package. It should not be assumed that the purchase of a hearing aid is a free lifetime ticket to the professional ministrations of the hearing aid dispenser. But it also should not be assumed that a hearing aid stands by itself without consideration of the essential fitting and follow-up activities.

I know that I haven’t provided any definitive answer to the question of why hearing aids cost so much. But then neither have any of the respondents to this exchange. Some of the reasons are unavoidable (e.g., the fitting and follow-up process) while others are an integral consequence of our economic system (i.e., the intense competition between the various manufactures). I’m afraid there’s not much we can do about these factors. What we can do is seek amelioration of this economic burden elsewhere, such as working for third-party insurance coverage, recognize the cost/benefit value of less expensive hearing aids, and consider alternative dispensing models (e.g., an Internet based model that would include human interactions). And above all, to recognize the profound impact that well-fitted hearing aids can have on the lives of hard of hearing people.