Obscene Hearing Aid Profits!

Phonak have been selling their middle of the road, Naida V UP to the UK NHS for for over a year now (£120+£22 VAT each=$185.87 USD excluding the Vat, minus say 50% markup, then the cost to produce will be under $100 USD as they aint going to sell at a loss) and the advert you see below is 100% genuine, it was lifted from a Phonak website, from which I’m shall we say not allowed to visit anymore lol :D, so I cannot offer a link!

BTW ZCT, I have no prejudice whatsoever towards Englishmen or for that matter any other race, creed or colour on this earth, I’m proud to treat everyone I meet with the same respect they deserve!

How come none of you Pro’s answered EarGear’s post on this thread (A fellow Pro) when he stated he could find “no justification” on the prices charged for hearing aids?

Glad to see this thread is warming up nicely:D

Naida Price

Cheers Kev:D

Good things come to those who wait??

@kevels55 said:

How come none of you Pro’s answered EarGear’s post on this thread (A fellow Pro) when he stated he could find “no justification” on the prices charged for hearing aids?

Glad to see this thread is warming up nicely:D

Cheers Kev:D

@alpine1 said:

Good things come to those who wait??

Aye Alpine1, I hear you…But, we’ll maybe wait a while longer lol:D

Take care, Cheers Kev.

@EarGear said:

Common rules of business apply. There are three things that you can acquire in any purchase.

Best Product
Best Service
Best Price

The rules of business dictate that you can have any two items from that list, but you cannot have all three. You have to make a choice on what is important to you as an individual.

Having said all of that, personally I can find no justification in some of the prices being charged for hearing instruments. My post is to clarify some of the unique challenges of the hearing professional in todays market. It is not an effort to justify prices currently being charged.

In a free market society the market always corrects itself. We are seeing this now with the introduction of hearing aid sales via internet, Costco, Walmart, Best Buy. The current business model for hearing aid sales has already begun to change, and will continue to change in an effort to reach the most hearing impaired, with more affordable options, and avenues for purchase.

A reasonable comparison is that 15 years ago $1500.00 might have bought you a programmable analog hearing aid with a volume control, today the same investment is probably going to purchase a 4 to 6 channel digital hearing instrument, with directional microphones, feedback control, multiple programs, noise reduction. In my opinion (again, not worth much) the same investment is going to serve 80 - 90 % of the hearing impaired with a high degree of satisfaction.

We have gone crazy with technology, when the determining factor should be “Is any additional investment, going to provide me with any additional benefit?” In my experience, in a majority of cases, it is not.

I realize that was a bit more than $.02, my apologies.

@kevels55 said:

How come none of you Pro’s answered EarGear’s post on this thread (A fellow Pro) when he stated he could find “no justification” on the prices charged for hearing aids?

I’ll reply to it. First, you imply that he said he couldn’t find justification on any/all prices charged for hearing aids since you leave out the word “some”. I absolutely agree that I cannot find justification for what some people charge for some hearing aids. I’d like those people charging $4000 or $4500 for one hearing aid (so $8000 - $9000/pair) to tell me how they came up with that number. I guess if it’s Palm Springs, or Miami beach or some other place like that maybe that’s acceptable…but when I have patients come in my office telling me that they got a quote from a local dealer for $8000 I get very angry. When I speak to groups about hearing aid I tell them that if someone tells them they need to spend more than $6000 on a pair of hearing aids, get up and leave. I think EarGear’s post was exceptional and I agreed with pretty much all of it. The big thing for me was the following:

Common rules of business apply. There are three things that you can acquire in any purchase.

The rules of business dictate that you can have any two items from that list, but you cannot have all three. You have to make a choice on what is important to you as an individual.

I felt the part in bold was especially important.

I have no clue how much it costs for the manufacturers to make their products. But I realize that they are a business and one whose goal is to make a profit. The more successful the company, the bigger the profit. The more profit, the better the company because there are funds to funnel back into the company to further improve it and it’s products. What do we consider obscene? Buyers want exceptionally good hearing aids but then vilify the companies for making more money than is thought to be okay. Does the public/HOH community expect a high-end hearing aid that they only pay $1000 for and get the same level of quality and service? I’d be curious to know exactly what those of you who are so upset with the cost of the product think is acceptable? And what level of service do you expect to come along with that?

@zafdor said:

I refer to your following statement "has produced such a crappy health care system in America ". This is clearly an opinion. One of which I do not agree with.

Okay here are the facts:

Infant Mortality (CIA World Factbook 2009): 46th in the world.

Life Expectancy (CIA World Factbook 2009): 36th in the world.

World Health System Ranking (WHO 2000): 37th in the world.

Satisfaction with healthcare (Commonwealth fund 2008): America 10th out of 10 nations studied. In the same study 33% of Americans surveyed said that the system was so broken it needed to be completely rebuilt.

Conclusion of Commonwealth Fund 2010: “Despite having the most expensive health care system, the United States ranks last overall compared to six other industrialized countries—Australia, Canada, Germany, the Netherlands, New Zealand, and the United Kingdom—on measures of health system performance in five areas: quality, efficiency, access to care, equity and the ability to lead long, healthy, productive lives, according to a new Commonwealth Fund report. While there is room for improvement in every country, the U.S. stands out for not getting good value for its health care dollars, ranking last despite spending $7,290 per capita on health care in 2007 compared to the $3,837 spent per capita in the Netherlands, which ranked first overall.”

Physicians per 1000 people (nationmaster.com): 52nd in world.

Hospitals beds per 1000 people (nationmaster.com): 81st in the world.

Time Magazine 2004: “The prices Americans pay for prescription drugs, which are far higher than those paid by citizens of any other developed country, help explain why the pharmaceutical industry is — and has been for years — the most profitable of all businesses in the U.S. In the annual Fortune 500 survey, the pharmaceutical industry topped the list of the most profitable industries, with a return of 17% on revenue.”

Given that we are spending at least double per person on health care than any other country on the planet, you can’t look at these stats and be proud. We spend a fortune and get horrible results. If you believe differently, you simply have not researched the topic.

Zct,
Unfortunately, the reason our healthcare system is so screwed up is probably because the government got involved and we all know how Washington works. It is no longer a government of the people by the people but rather a government for the people by the lobbyist who own our politicians. I remember my mother, who was a nurse, coming home telling us how much the billing department inflated the cost of care to Medicare and Medi Cal because they would pay it without questioning it; this is one reason we’re in this mess called the U.S. healthcare industry.

@seb said:

Zct,
Unfortunately, the reason our healthcare system is so screwed up is probably because the government got involved and we all know how Washington works. It is no longer a government of the people by the people but rather a government for the people by the lobbyist who own our politicians. I remember my mother, who was a nurse, coming home telling us how much the billing department inflated the cost of care to Medicare and Medi Cal because they would pay it without questioning it; this is one reason we’re in this mess called the U.S. healthcare industry.

Nice try.

Sadly, pretty much all those countries that are kicking our ass in the above statistics have government run, or single payer health care systems.

The issue in America is because the government is NOT involved and simply allow for profit corporations to run wild looking to screw the sick out of as much money as possible.

It is a complete Republican fantasy to suggest that if the government simply turned all health care issues over to the private sector everything would be cool. This model has not worked in any other country, and in the stats I posted earlier these same countries are kicking our butt, AND better than that doing so on a fraction of our per capita spend.

@zafdor said:

The base manufacturing cost of a hearing aid has already been thrashed to death. Apparently the only way I will change your mind is for you to get me the bill of material and assembly drawings and do a detailed cost estimate. Even if you could do the former, I would not be willing to do the latter. Yes, I do think a hearing aid is pretty much a DSP, a reciever and a directional mic. Passive components (resistors and capacitors) are so inexpensive as to be negligible in cost; 50 components and 200 connections do not impress me. How many components and connections does a $50 computer mother board have? (ANS: thousands).

Yes, I see you have mined again your favorite statistics used to slam the american medical system. Yes, it has problems, but I can say it has certainly worked very well for me. And seb, no I am not a government employee, I work in private industry, for a company that does not treat it’s employees particularly well benefits wise. I also work with some people from Europe and get to hear their take on government provided health care.

OK, last and most relevant topic. Which of the major hearing aid companies are publicly held? Much to my surprise, the first two I picked turned out to be privately held.

Well said.

Phonak (Sonova) and William Demant (Oticon and Bernafon) are public. Siemens is also but since they are into so many industries I’m not sure you can pick out just the hearing aid business, but I haven’t looked at them.

http://www.sonova.com/en/investors/OurStrategy/Pages/default.aspx

Demant

Leading in hearing healthcare Demant is the only company in the world that covers all areas of hearing healthcare, from hearing devices and hearing implants to diagnostic instruments and professional hearing care, and we harvest significant synergies...

@zafdor said:

The base manufacturing cost of a hearing aid has already been thrashed to death. Apparently the only way I will change your mind is for you to get me the bill of material and assembly drawings and do a detailed cost estimate. Even if you could do the former, I would not be willing to do the latter.

See there I have to disagree again. All that has happened are some people with a bit of electronics knowledge have stated on this board what they think they know about the parts that go into a hearing aid, along with their take on what these would cost.

But simply reiterating over and over again that you think a hearing aid costs $100-$200 to manufacture is irrelevant to this discussion. First off because it is only an opinion, with no facts presented, and secondly this thread is about OBSCENE PROFITS being generated within the hearing aid industry. So as I’ve already explained far too many times, it really doesn’t matter what a hearing aid costs to make, what matters is when all the costs associated with doing business are calculated, how much profit is being generated, and is it obscene, or simply in line with any other business.

And no, I am not going to provide you with any such information to perform your bogus math, because I am not privy to it. Once again, the onus isn’t on me to disprove any of your musings.

@zafdor said:

Yes, I do think a hearing aid is pretty much a DSP, a reciever and a directional mic. Passive components (resistors and capacitors) are so inexpensive as to be negligible in cost; 50 components and 200 connections do not impress me. How many components and connections does a $50 computer mother board have? (ANS: thousands).

Well this clearly demonstrates your fundamental lack of understanding again. This thinking may have been true 10 years ago, but not today, at least not with anything remotely approaching middle to high end.

Once again you draw a meaningless comparison between a motherboard the size of a hundred hearing aids, and a hearing aid. Mass produced to a totally different global market.

@zafdor said:

Yes, I see you have mined again your favorite statistics used to slam the american medical system. Yes, it has problems, but I can say it has certainly worked very well for me. And seb, no I am not a government employee, I work in private industry, for a company that does not treat it’s employees particularly well benefits wise. I also work with some people from Europe and get to hear their take on government provided health care.

Actually, infant mortality was a go to, but other than that I actually did some Google searches to come up with some credible and interesting stats.

Frankly your personal sample size of one, in a country of 300 million is a little selfish and statistically irrelevant. It’s people like you that allow the insurance companies and medical industry to continue to rape consumers in this country. It is interesting how you seem to be completely okay with the average medical spend per person, and the mediocre to crappy world statistics this country returns for that investment. Yet you are wanting to get on a soap box about hearing aids. Is it just that you only get mad about stuff that affects you personally, and you don’t like to look at the bigger picture of all the issues with health care in America?

As for Europeans moaning about their health care system, that’s fine. It doesn’t mean in all of those stats I showed you earlier they are still kicking our ass while spending half per person. One can only imagine how good their respective systems could be if they pumped as much money into it as we do. But also it is being self critical and demanding improvement in health care that has gotten their systems as good as they are. People like you who bury their head in the sand and claim that the American system has been fine for you, allow the health care industry to carry on as it is, while millions of Americans suffer and die.

@zafdor said:

OK, last and most relevant topic. Which of the major hearing aid companies are publicly held? Much to my surprise, the first two I picked turned out to be privately held.

What does that prove? If I open a small hearing aid company and expand it into a major player, I am supposed to take it public? There are plenty of publicly traded companies that get us in all kinds of trouble (see recent financial crisis). Being on the stock market does not ensure any kind of real transparency or accountability. In fact I’d argue that not being owned by a bunch of greedy shareholders who all want massive return on their investment in the stock could even be a good thing. I’m pretty sure if Starkey were public the shareholders would demand a sharp cut back on their charity work to increase the bottom line.

@Don said:

Well said.

Phonak (Sonova) and William Demant (Oticon and Bernafon) are public. Siemens is also but since they are into so many industries I’m not sure you can pick out just the hearing aid business, but I haven’t looked at them.

http://www.sonova.com/en/investors/OurStrategy/Pages/default.aspx

http://www.demant.com/

So I looked up these two evil hearing aid companies. According to the shareholder reports Oticon / Bernafon are making an annual profit of around 22.1%

Phonak are at 24.5%.

So after all this nonsense about obscene profits being made on the backs of the hard of hearing community, we take two major players and we see that their profits are right where one would expect them to be for a healthy company that is maintaining their business such that it should still be around to service your hearing aids for a few years to come.

They could maybe cut their prices by a few percentage points, but certainly not in any way that is going to make a massive price difference to the consumer. And by weakening their financials in that way, they are just reducing their ability to innovate and continue to support their customers (be it end users or practitioners).

It’s been fun chatting about this, but at the end of the day, the facts speak for themselves.

From what I have seen based on using aids for almost 45 or so years, I don’t think anyone or any company is making any obsene profits. Certainly if they were you can be sure competitors (probably Asian) would be all over the place.

And I have not seen any local dispensers/Audiologists driving Maserate or Rolls Royces.

No obsene profits just normal profits from what I can see.

The reason (in my opinion ) hearing aids are so damned expensive compared to other similiar electronics, is not in obsene profits, but in the business model. And t he business model is the direct result of government trying to protect the public.

No nasty greedy mean uncaring people screwing the poor defenseless old HOH people. NO Sir. The problem lies in the way aids are distributed to the HOH.

If aids were manufactured and retailed like all the other consumer electronics, you can be sure they would cost a small fraction of their present retail price.

But as long as aids are sold in limited quanties, require the services of trained professionals at the local retail level, they are going to cost a bundle.

For example what do you think a in the ear blue-tooth semi minature gadget would cost if dispensed in the way hearing aids are. Radio Shack sells them for about $100.
Technologically they are very similar to a BTE hearing aids.

I say: " Let my people go." Free us from the goverment regs and watch the prices tumble. And the technology exists to allow the majority of HOH to self adjust their aids.

Those with severe and/or complex loss will always need skilled professional services. IMO Ed

@zafdor said:

No, quite the opposite in fact. The liberals (socialists) think that some machine can watch out for everyone. The right wingers think you are responsible for you’re own well being. In that aspect I am a right winger. I know several people who live below the poverty line and they leverage the many state programs for health care coverage that is actually superior to mine (these includes programs in Mass and NY). In your case the machine would do this for everyone automatically. To give adults the impression that they are not responsible for their own well being in all aspects goes against my grain, but apparently not yours.

We gotta be cousins or something.

I, too, know people who live below the poverty line who take advantage of state run programs, and consequently have health insurance superior to mine.

To all those poor people, I say:

“I am grateful that I able to pay taxes and ease your burden”

I think we are beating a dead horse, everybody has their own opinions and so far I haven’t seen any one change their minds based on what someone else said. So lets all say we choose to disagree on the topic and let it die.