By Amyn M Amlani, PhD
The recent industry analysis from Bernstein1 indicates that the US private hearing aid market is experiencing a 6% growth in the first two months of 2018 compared to the same period in 2017. Conversely, the Veteran’s Administration (VA) is experiencing a 1.5% decline during the same comparison period.
Hearing Aids in the Private Sector
In 2017, an estimated 3 million hearing aids were sold in the private sector. Figure 1 provides an estimate of the percentage of unit sales through the various supply channels.
Figure 1. Estimated distribution, in percentage, of hearing aids dispensed in the private sector for 2017. Reprinted with permission of Lisa Bedell Clive of Bernstein Research.
The largest contributors to private hearing aid sales was the buying groups for independent and small chains representing 28% of the supply channel, followed by the independent and small chains representing 25% of the supply channel. Costco contributed 13% to the overall supply channel, followed closely behind by Amplifon at a total of 13% (7% through its Elite Newark and an additional 6% through Miracle Ear). Two subsidiary companies, Beltone, part of the GN family of companies, and Audibel, a Starkey-owned company, each added 9% and 7%, respectively, to the supply channels. Together, these six supply channels represent 94% of the supply channels in the private sector of the US hearing aid market.
Costco Effect
Costco’s retail hearing aid business has grown an astounding 16% compound annual growth rate (CAGR) since 2004. Since 2004, Costco has grown from dispensing roughly 0.05 million units annually to about 0.4 million units annually.
Costco’s hearing aid business now represents 13% of devices dispensed in the US private market.
VA Hearing Aid Market
Today, the VA provides free healthcare to approximately 22 million Veterans, of which 4.2 million receive healthcare under service-connected disability coverage (SCD), as shown in Figure 2. About 35% of those those that receive SCD, or roughly 1.4 million, suffer from hearing impairment. Since 2000, the VA hearing aid program has grown at an average rate of 8% per year and accounts for over 0.7 million units sold in the total US market (roughly 19%).
Figure 2. Estimated Veterans population and service-connected disability coverage (SCD). Reprinted with permission of Lisa Bedell Clive of Bernstein Research.
Since 2015, however, there has been a slight decrease in the growth of the hearing aid program, with the average between 2015 and 2017 yielding < 5%. This decrease appears to stem from the marked increase of Veterans demonstrating hearing-related difficulties and the lack of service professionals to diagnose and treat individuals.
Two initiatives are presently available to reduce the bottleneck effect:
- Fit to Serve bill was passed by the Senate in November 2016 affording hearing instrument specialists to provide hearing aid fitting and dispensing services.
- Veteran’s Choice Program (VCP) and Patient-Centered Community Care (PCCC) provides reimbursement for audiology services (e.g., audiological assessment, earmolds, hearing aid fitting, follow-up care). Hearing aids are provided by the VA through its contracts with various manufacturers.
There is insufficient data, at this point, to determine whether these initiatives increase hearing aid dispensing and services to this population.
References
- Bernstein (2018, March 15). Hearing aids: US private market sees growth of +4% in February, while a sluggish VA declines -2%.
Amyn M. Amlani, Ph.D., Editor of Hearing Economics, is Professor and Chair of the consortium program in Audiology & Speech Pathology between the University of Arkansas for Medical Sciences and the University of Arkansas at Little Rock. Dr. Amlani holds the B.A. degree in Communication Disorders from the University of the Pacific, the M.S. degree in Audiology from Purdue University, and a Ph.D. degree in Audiology/Psychoacoustics (minor in Marketing and Supply Chain Management) from Michigan State University.
*featured image courtesy pixabay
