Hearing Aid Industry at a Crossroads
This group meets and agrees to such things as the funding of the NOAH programing platform, the Better Hearing Institute, or BHI, and forms a small counterpart to the various professional associations from a lobbying standpoint. It’s membership is made up mainly of the reigning CEO’s of the big six, and whatever smaller labels who wish to participate.
Sometimes the lengths that our manufacturers go in attempting to differentiate from one another is downright humorous. This due to the fact that the goal of all hearing aid manufacturers is to deliver high quality sound, with advanced signal processing in a lightweight, nearly invisible, ear level acoustic device and sell them for as much as the market will bear.
Traditionally the vast majority of hearing aids were delivered through independent dispensers and audiologists in a highly regulated delivery system involving licensure, mandated protocols and face to face professional encounters.
So, while the ‘Big Six’ competed mightily in the product area, all of that product has traditionally flowed through a very tightly controlled pipeline, to a very regulated ‘professional’ for actual sale to the public.
By controlling who the consumer could buy from, and under what circumstances profit margins could be kept at their highest. After all, the scarcity alone of restricting points of access tends to drive prices up.
This arrangement worked for better than fifty years. This as the field of audiology evolved along with the hearing aids being offered by these same big manufacturers through this same highly regulated and established medical model of dispensing.
However, the old system began to break down as consumers, marketplace and equipment moved from the analog into the digital age.
The Internet, our marketplace and everything, but the old hearing aid delivery system embraced the digital age. Yet, still the ‘Big Six’ continue to push the majority of the products they deliver through this same old, highly restrictive model.
However, as Adam Smith’s Invisible hand became visible, in the form of HealthInnovations. By becoming the sole authorized provider for hearing aids for all the policyholders of the nation’s largest health insurer, UnitedHealthcare the entire playing field was tilted, and shifted dramatically.
At an annual revenue of $122 Billion, this single company did it’s own scientifically conducted, peer reviewed analysis of the actual risks associated with the dispensing of a hearing aid. They found no appreciable risk to consumers. They then simply discarded fifty years of evolved protocols and ‘best’ practices, in favor of an over the phone, or internet experience.
Simply pick your hearing aid, pay your deductible and they will ship your new hearing aids to you, no intervening professional, or license required.
The net effect of this action is that our industry has become, for all intents, and purposes de-regulated. This because the various state Boards simply cannot take actions within their local areas against individuals, while totally ignoring the same activities of a corporate giant who chooses not to play by the same rules.
To do so creates serious constitutional issues for any who try.
Equal protection under the law, is the essence of section one of our fourteenth amendment. It is a basic guaranteed civil right of everyone in our great nation.
Given these on the ground facts, and the fact that this the de facto deregulation took place on the first of January, 2013, you would think that perhaps one out of those ‘Big Six’ would be pushing the envelope, and experimenting with their delivery system, at least just a little. This especially given that our market has been stuck at around twenty percent of total market penetration for the past couple of decades, and that growth of ‘market share’ is the Holy grail of all hearing aid manufacturers.
Yet a reliable inside source reports that given the five percentage point drop in Phonak’s cherished market share last quarter alone, due to the fallout from their previous customer base over being hosed by their placing their entire product line in Costco’s warehouses, the rest of the ‘Big Six’ are basically paralyzed by the fear. Afraid that if they try anything different and alienates their current customer base, that they’ll suffer the same, or worse fate.
Having governing Boards that live from quarter to quarter, and apparently lacking vision of a way forward, do we have an entire manufacturing sector afraid to innovate their delivery systems for fear of the next quarters sales figures?
Here, as on an individual basis we see the result of fear based management and thinking.
Rather than looking at the eighty percent of a market that none of them are reaching, the current leaders of the hearing aid industry appear so risk averse that they are afraid to make a move for fear of loosing what little share of the twenty percent of consumers they are currently reaching.
Are these industry leaders so afraid of missing a quarterly goal that they have become paralyzed?
Does the fear of loss of their part of a twenty percent share of current customers blind them to the opportunities offered by capturing part of that greater eighty percent still out there?
How long before some other outside player comes in, and actually decides to become a household name in personal audio, innovating not only the products being offered, but the experiences provided, as well as how they are offered, and by whom?
Sure leaves me wondering, and still looking for that agent of change on the manufacturing side who will lead us forward into new and innovative ways of doing business?