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Why Do Hearing Aids Cost So Much?

Article taken from HealthyHearing.com

We’ve all heard about the guy that knows the price of everything, but the value of nothing? It turns out the price of things is not always linked to some intrinsic value, their materials or their size. 



The price of gasoline has risen dramatically.  It seems obscene that we pay nearly $4 or more for a gallon of gas, but then again…there’s a lot of value that gallon of gas provides.  The ability to travel 20 or 30 miles (unless you bought one of those SUVs) is certainly worth 4 dollars. 
When you consider the specific costs involved, in some respects, there’s more value in a gallon of gas than a gallon of bottled water.  The gallon of water probably bubbled out of the ground, almost directly into a bottle and required no serious processing or transportation costs.  The gallon of gas required major cost for exploration, drilling, pumping, transporting half way around the world, refining, transporting again, and retailing … yet, some bottled water costs more than gasoline. 



So although gasoline is indeed far more expensive than we’re used to, what makes gasoline so cheap when compared to water?  And -- what’s that got to do with the price of hearing aids?



With hearing aids, some of the same issues apply.  Everyone knows the cost of hearing aids isn’t based on the materials that go into them – that’s a given.  From a “materials” standpoint, there’s a little plastic, a wire or two, a tiny microphone or two, a speaker and the equivalent of millions and millions and millions of digital chips, but still, the actual dollar cost of raw materials is fairly low.  Then again, based on raw materials, the average human being is worth less than $1.  Both human beings and hearing aids are worth (and cost) a lot more than the cost of their materials.

So why do hearing aids cost so much?  There are a number of things that contribute to the retail price of hearing aids.  These include:

Technology

Just 20 years ago, most hearing aids were analog; they were not programmable and certainly not digital. Hearing aids had no software, they were adjusted using a screwdriver, and generally, there were only two adjustment screws. Most hearing aids didn’t have telecoils, and very few had directional microphones. FM, remote controls Wi-Fi and Bluetooth didn’t exist. Today, all those things are common.

These things didn’t just “happen”. They are the result of hearing aid manufacturers investing heavily in developing new technology and features. They are the result of hearing aid users being willing to pay for the advantages that these (and future) “leading edge” improvements provide.

The cost to the manufacturer for staying on the leading edge of technology is a killer. Consumers, of course, pay for those advances, but that’s the cost (and benefit) of staying on the leading edge. Very good hearing aids with older technology are available at lower prices, but when most people buy a hearing aid, they want the best they can get, not the best that was available 20 years ago.

Some of the first home computers available in the early 1980s retailed at a price of $6,000. It was an amazing piece of equipment and a good bargain considering that most computers back then cost millions of dollars and filled a basement. It was amazing that the average person could actually buy a personal computer for only $6,000, which 28 years ago seemed very fast (4 MHz.). It had lots of memory (it came with 16 kilobytes), and it had not one, but two floppy drives -- holding a mammoth 180 kilobytes on each diskette. All for only $6000. But remember, 28 years ago, that was a bargain.

Now, you can buy a PC literally 1000 times faster with 8000 times the memory and 10,000 times the disk space and other amazing things (too numerous to mention) all for one-tenth the cost of an original personal computer. That kind of price reduction is not going to happen with hearing aids; because so few hearing aids are sold compared to computers, but the rapid and uncertain direction of technology caused early personal computers to be very expensive … just as that same factor has affected hearing aid prices.

Durability and Reliability

Hearing aids have to work and endure some nasty situations. Most people wear their hearing aids some 12 to18 hours daily. They wear them in freezing winter weather and on hot summer days. They wear them when it rains, maybe with an umbrella, maybe not. They wear them when they play tennis and sweat trickles around their ears. The custom made hearing aids that fit in the ear canal have to function in an ear canal that literally exudes wax and humidity. Even the cleanest of all ear canals have bacteria, fungi and viruses too. So beyond moisture, heat and earwax, we have unimaginable germs working to negatively impact the environment in which hearing aids live every moment of their life cycle.

Speaking of life cycles, digital custom-made hearing aids are expected to survive nicely in even the nastiest ear canals for approximately 5 to 7 years. Behind-The-Ear (BTE) instruments generally last longer than in-ear models.

Durability and reliability that can handle that kind of abuse is not cheap. When NASA wants a transistor for a spacecraft, they don’t pop over to Radio Shack, choose a bubble pack and hope it works all the way to Saturn. They need to know that their transistor will handle the rigors of space. You can bet that the transistors NASA does buy are going to be a lot more expensive than the ones you can buy in a bubble pack.

Likewise, most hearing aid manufacturers have to invest heavily making sure their switches, mics, receivers, chips, cases, connectors, and even battery contacts hold up through years of normal and abnormal use, too. If they use cheap parts and crummy assembly techniques, they will pay over and over again to correct very costly errors.

Personal Fitting

When you buy glasses, the doctor measures your vision, writes a prescription, and you buy glasses from someone who inserts the lenses in the frame and adjusts the frames so they fit correctly. With hearing aids it’s similar, but a lot more problematic. With glasses, the prescription is almost always a near perfect match for your needs. With new glasses you can immediately see quite well. It doesn’t matter how bright the light is or whether the colors are properly adjusted; you can see almost perfectly in all situations.

With hearing aids, the prescription is less likely to result in an immediate perfect fit. Your hearing loss and your hearing test is just the starting point. Hearing aids can make a huge difference in your ability to hear, but no hearing aid can achieve near-perfect hearing right out of the box. Considerable and highly specialized attention throughout the fitting process is required to adjust the hearing aids, not just to your hearing loss, but indeed, to your individual hearing needs.

If your hearing aid just had to match your hearing loss, that would be easy. Like glasses, the “first fits” would likely all be perfect. But it’s just not that simple. Your brain is really where hearing occurs, and your ears are merely the transmitters of the information. The professional has to adjust the hearing aids to amplify the soft sounds you don’t hear well without making the other sounds too loud. All the amplified sounds have to be placed in your comfortable listening range. Ear molds, or the aid’s body itself, have to be designed with appropriate bores and vents to match your needs and to straddle a, sometimes, thin line between that “plugged-up” feeling and feedback. Features that can minimize background noise must be properly set so that you can hear your best at parties, in restaurants or in the car. Getting the aids to work well for you on the phone adds another challenge to the fitting, with telecoils, or assistive technology requiring special attention.

The amazing thing about all this personal fitting stuff is that it has to be done without the professional being able to actually hear what you are hearing. No one can hear what you are hearing.

Fitting glasses is more like a science and fitting hearing aids is more like an art ... and it’s likely to remain so.  Frequently, several visits are required for you to get the most comfortable and effective fitting.  A lot depends on your ability to convey your experiences and needs to your fitter, and a lot depends on their skill, training and ability to work with you. 

Professional Costs

Fitting hearing aids is indeed a complicated affair. Most people buying hearing aids expect to be fitted by someone who is really good at what they do. An audiologist in the United States must have at least a master’s degree in audiology such as the M.A. or M.S., or a doctorate degree in audiology such as the Au.D. (Doctor of Audiology) or Ph.D. degree. Degrees cost a lot of time and money! Another important issue is that technology changes so rapidly that anyone licensed to fit hearing aids (audiologists and hearing aid specialists) must attend seminars and other training events to stay current and to maintain their licenses. They can’t fit hearing aids with a $2 screwdriver anymore; special computers, adaptors, experience and skill are needed to fit them correctly.

The High Cost of Low Volumes

Not sound volume -- sales volumes. Hearing aids are typically not high volume products. In fact, less than two million units are fit per year in the USA. When you consider the number of manufacturers (many dozens) and the different models and circuits offered, the “number of units sold per model” is relatively low, never really achieving the “economies of scale” apparent with lap-tops, cell phones, PC computers, DVD players, TV, CD players, iPods automobiles, eyeglasses, sunglasses, digital cameras, calculators or contact lenses. The lack of sales drives up the cost in at least two important ways:

Research and Development:

When a company manufactures a product, the pricing of that product must recover the cost of research and development (R&D) for that product. Because hearing aids are often “leading edge” products, the research and development costs can be substantial and must be spread over a relatively small number of units sold.

Manufacturing Costs

Most hearing aids are not manufactured in huge volumes (see above). Manufacturing costs for any product are high (on a per unit basis) when volumes are low. Costs, such as bricks and mortar, leases/mortgages, insurance, warrantees, production equipment and personnel, administrative staff, phones, shipping, packaging, returns for credit, marketing, heat, lights, taxes and on and on…. all add to the per-unit cost of hearing aids. Interestingly, the cost of research is relatively fixed. For example, it takes a team of engineers X amount of time (and equipment and related costs) to design a new hearing aid circuit. However, if only one person purchases that circuit, that one person pays the whole bill. If ten people purchase that circuit, they each pay a tenth, and if a hundred people buy it they each pay one one-hundredth. Economy of scale is an important issue.

Marketing Costs

There’s a lot of competition in the hearing aid industry. The Sunday papers sometimes have full page ads offering “free hearing screenings” from hearing aid dealers. They say you should come in and be tested because it “might just be wax” and you can get a $1000 discount if you buy now. These ads are typically from the “mass marketing” distributors that typically sell one brand (theirs, of course). Somebody’s got to pay for those ads, right?

Even major name brand hearing aids marketed through audiologists require a substantial amount of money for marketing. A lot of money is needed to market any product. Advertisements, web pages, slick brochures, product launch events, seminars, training, nice packaging, and toll-free numbers are examples of marketing costs. Someone has to pay for all of those things too! Of course, the local professionals need their own marketing materials too, and computers, and offices, and administrative staff, and business cards, and telephones, and lights and signs, etc.

Warranty Costs

When you purchase hearing aids from an audiologist it will come with a warranty. If you have any problems, they’ll fix it or replace it for free (see above). Some warranties even cover problems that aren’t the fault of the hearing aid or fitting itself. For instance, if you step on your hearing aid and crush it, or if your dog chews it up, the professional will generally replace it for free, or perhaps charge a slight “refit” fee. Try that with your car, iPod, DVD player, CD player, cell phone or TV. It pays to understand what your warrantee covers, but whatever it covers, somebody’s got to pay for maintenance or replacement when something does go wrong.

Obviously, when a hearing aid fails, it costs money to repair it, and of course, if it’s under warranty, you don’t receive an additional bill. However, the manufacturer does pay dearly.

Imagine if even a ten-cent switch breaks during the 11th month of hearing aid ownership. You bring the hearing aid to the professional, they fill in the paperwork, send it via air express, the factory takes it apart, troubleshoots it, fixes it, re-assembles it, sends it back to the professional air express, the professional receives the hearing aid, calls you, and you pick up the instrument…what did the ten cent switch cost the manufacturer to repair?

That’s why durability and reliability and warrantee costs are very real issues for the manufacturers too!

Free Trial Costs

Most states require that hearing aids can be returned within a 30-day period for just about any reason, with only a small fitting fee kept by the professional. Try that with your travel agent or with your automobile dealer. Obviously, it’s not really free, and such costs are just one more reason that hearing aids are expensive.

Inflation

Inflation affects everything, even hearing aids. But, it’s not really the main reason, or even a primary reason that hearing aids are expensive. There have been articles that have tried to show that since the first hearing aids were produced almost a century ago, that the current price isn’t all that far out of line after it’s been adjusted for inflation. Of course, it’s pointless to compare the price of things over so much time and technological advancement. An airliner costs a lot more than the Wright Brothers’ plane did in 1903 even after adjusting for inflation. Does that mean that airplanes are too expensive now? Of course not! Even if they are too expensive, it’s not because of inflation.

In some ways, hearing aids are like airplanes. Just as a 747 has much more capability than did the Wright Brothers’ plane, today’s hearing aids are dramatically improved compared to even aids of 20 or 30 years ago. So, while inflation does matter, it’s not really the key price factor for airplanes or hearing aids.

Customization

Many hearing aids sold are custom made devices. That means the hearing healthcare professional has to physically examine your ear, safely take an ear impression with appropriate medical grade silicone, using universal precautions (to protect you and the professional) and then safely remove the ear impression from your ear. The professional then ships the ear impression to either an ear mold lab for BTE instruments, or to the hearing aid manufacturer for custom made in-ear instruments. The hearing aid shell is manufactured before the circuit is installed, and by the way, it takes a computer to figure out how to place an amplifier, miscellaneous computer chips, a microphone, a receiver, a power supply, a vent and other wires and components into a shell that has been custom built for your ear canal, which may be the size of a pencil eraser, in such a way as to not cause electrical “cross-talk” problems or acoustic feedback. Remember the “Economies of Scale” from earlier? Well, each hearing aid is brand new, and has never before been assembled in a shell to exactly fit your ear!

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