Phonak Move Has Audiology and Dispensing Community on Edge

Hearing Health & Technology Matters
March 18, 2014

If you’re a practicing audiologist or a hearing instrument specialist and haven’t heard the latest news that Phonak will begin distributing hearing aids through Costco beginning in April, then you’ve probably been living under a rock.

In response to the latest announcement, Phonak says that Costco serves a different clientele from the average professional office and that as a company they want to “help all hearing-impaired people, including those motivated by price.” Furthermore, the “independent audiologist will continue to be our primary focus”.

However, the independent audiology and dispensing offices clearly didn’t get the memo.


Emotions Running High

Did Phonak really "sell out" their loyal customers for profit? Image courtesy BoomerHealthInstitute

Did Phonak really “sell out” their loyal customers for profit? Image courtesy BoomerHealthInstitute

Right or wrong, Phonak’s latest move into Costco has created an uproar in the professional hearing healthcare community, with many describing feelings of betrayal and anger over the move. Many have commented on their belief that Phonak has “officially sold out” to the increased corporatization and commoditization of hearing care, “willing to sacrifice quality patient care for the sake of selling a few more hearing aids”–asserting the widely held belief that the level of care at the larger retailers is clearly not what patients can and should receive in a professional setting.

The following are just a small sample of the comments that have been making the rounds in the audiology community{{1}}[[1]]Some of the comments have been edited for the sake of anonymity[[1]].

“I’ve already heard from dozens of audiologists via phone, text, and email that they’re dropping Phonak, and, as I predicted, a few told me they’re sending back all of their stock (one told me she’s returning about 20 Q90 products today!). Unfortunately, the person this is going to hurt the most is the rep that covers these territories; their commissions are based on unit goals, and their March is going to suck… The Costco situation, however, is a game changer, one I can’t abide by.”


“This is the very reason that we have stopped using these companies (those in Big Box retailers). They are competing against us every chance they get.”


“This has happened in the past when ReSound went into Costco. Lo and behold, the week after we did an open house at our practice, the local Costco started selling ReSound. We had 22 units returned the following week, all with the answer “I can get it cheaper there.”  Even though it’s a different product, patient perception was that it was the same, and they were so focused on price that no matter how we explained the difference and also how we could provide a higher level of service. Dollars won.”


“Phonak has made it clear- money talks. It’s time for dispensers and audiologists (collectively) to learn to speak that language. If you haven’t done so yet, STOP supporting HearingPlanet, and stop supporting all Sonova subsidiaries.”


“One final thought… with these changes we are seeing with Big Box retailers and manufacturers selling out-would you recommend a young person go into this profession???”


While clearly outnumbered (probably 10 to 1), there have been some tempered and even supportive comments regarding Phonak’s decision to distribute in Costco from within the audiology and dispensing communities.

“If I stopped doing Phonak/Unitron, then I would have to stop doing Resound. I would have to stop doing Oticon/Bernafon/Sonic Innovations. I would have to stop doing Widex. I would have to stop doing Siemens. I would have to stop doing Starkey. [Where I live] all these manufacturers directly or indirectly own hearing aid chains or clinics. The manufacturer isn’t out to help the audiologist, the manufacturer is out to make a profit. I’m not out there to help the manufacturer make money, I’m out there to help my patients and myself.”


“Phonak and every other hearing aid manufacturer is in the business of selling hearing aids and gaining market share.  Sonova and its leadership have a fiduciary responsibility to their stockholders to produce growth.  I cannot begrudge them, or any other manufacturer, from pursuing another supply chain.  Manufacturers are not responsible for minding or growing our business.  We are!  Audiologists need to provide a level of care that can typically ONLY be provided by an audiologist in a non-retail setting (comprehensive, evidence-based practice, true hearing aid evaluations, verification and inventories, access to assistive technologies, rehab and counseling).”


“You are wrong about Costco…. as an employee I give my patients (members) the same care as when I was in private practice.”


What Can We Make of it All?

So, is it fair that Phonak is being singled out considering three of the other “Big 6” hearing aid manufacturers are already producing for Costco? That will certainly depend upon who you ask, but it’s obvious that this latest move has many in the dispensing community on edge–as the comments clearly speak for themselves.

While some see doom and gloom, others see it as an opportunity.

Audiology proponents for Direct Access and Limited License Physician (LLP) status view the latest news as a sign for increased urgency and a call to action. Still others have made calls for more practical and pragmatic solutions. One such model discussed would involve small independent practices banding together nationwide to negotiate lower costs from hearing aid companies while also simultaneously helping fund national lobbying campaigns for political actions.

After a period of time, no doubt cool heads will prevail–although memories of these recent events are unlikely to fade quickly in the minds of those who are feeling slighted.


Personalize don't Commoditize!

Independent Practices: Personalize– don’t Commoditize!

Future Outlook

If anything, more and more independent practices will come to the realization that their real asset is service–not price. The independent practice is not a volume-based business like Costco or any other major retail outlet, it’s success rides on highly personalized service. Believe it or not, there are still a lot of people who don’t fit the retail model.

Hearing care is not one-size-fits-all proposition, and people’s motivation for choosing one avenue to pursue hearing aids over another is a deeply personal one.

With a growing demographic in need of hearing help, there’s going to continue to be high demand for hearing services despite increased retail presence.

We must never forget that hearing aids alone are only a part of the overall solution. As amazing as the technology in hearing aids has become, and it truly is amazing, the patient outcomes will be only as good as the person programming the devices. Independent practices can, and will continue to, thrive by promoting their own brand and what makes them different–in spite of any major retail chain out there.

In the end, for the successful independent practice, understanding that you can’t compete with the Big Box stores over price is essential. High quality, personalized, service is the key to success today and will be even more so in the future.

birdsong hearing benefits
  1. Possible clarification: I believe that technically (4) of the Big 6 are or will be represented at Costco, not just three as the article indicates, either directly or by proxy: ReSound, Siemens (through Rexton), Oticon (through Bernafon), and soon Phonak. I may be incorrect, however, as I haven’t heard much about whether they are still offering Bernafon or not. They used to, but someone can correct me if this is not longer the case.

  2. I can’t help but think that, especially as the baby boomer population continues to age and their hearing fades, providing affordable devices and more accessible care to them is great. Your average aging adult who loses hearing will not go into an audiologist office, especially since insurance rarely covers the cost. But they may consider stopping into a Sams or Costco hearing clinic. These hearing aid companies are not selling out, but are adjusting to clientele and increasing availability and affordability of product. (and lets face it, hearing aids are EXPENSIVE!!)
    However, the responsibility needs to remain where these clinics continue to refer children and those with severe hearing losses to private clinics for more powerful aids and more intense care.

    1. If I understand your last sentence, you’re stating that when the going gets tough, you need a private clinic audiologist. I can’t help but wonder why that might be.

      1. There is a place for Costco selling hearing aids just for the fact that hearing aids are so under utilized due to cost. I do agree that pediatric patients need be served by clinical audiologists, by the nature of their training, to ensure proper evaluation and treatment of the child with a hearing disorder. While there will be many consumers who can purchase a Costco hearing aid and do well with it, there will be many folks who require not just a hearing aid, but a comprehensive plan of treatment or audiologic rehabilitation which goes beyond the hearing aid fitting.

  3. Audiologists are recognizing the unwelcome truth, i.e., hearing aids are electronic devices subject to the same economics as TVs and cellphones. They will continue to get smaller, better and cheaper. In a well-informed market, neither the manufacturers nor the audiologists will be able to keep all those profits to themselves. The consumer wins, and the manufacturers and audiologists must adapt.

Leave a Reply