Barriers in the US Hearing Aid Market, post script

Since its inception, Hearing Economics has toiled persistently, if not rigorously, to infuse basic economic thinking and its lexicon into the audiology world. The goal is to broaden our view, giving us more opportunities to strengthen our grip on our profession.

In that spirit, the five-post barriers series fits into the Econ 202 discourse which pops up occasionally.  Econ posts rarely prompt comments or questions, probably not unlike basic econ college courses.  Consequently, it is exciting when a reader or writer makes the effort to critique or question, as has happened and prompted this post-script to the series.

A teaching moment at last!

 

Once Again, From the Top

 

The barriers posts took advantage of this paraphrased quote to serve as a convenient jumping off point:

There are no barriers that discourage new entrants to the hearing aid industry

To which an esteemed audiologist and guest contributor to HHTM lodged a polite objection on Facebook (Fig 1):

ramachandran response to barrier post
Fig 1. A polite critique of a paraphrased quote by Hearing Economics.

 

Fair enough.  Better to let the original quote stand on its own.  Here it is:

 

PCAST Myth 9: The Hearing Aid Industry is a Closed Market

The report talks about Federal and State regulations that “appear to discourage potential new entrants” into the hearing aid markets. There are no such barriers.

 

Defining Terms Frees Up Discussion

 

Thanks for your response, Dr. Ramachandran.  The quote, paraphrased or in full, is in context of the PCAST report’s stated concern that barriers exist in the US hearing aid market.  The Econ 202 series was interested in the discussion as a means of expanding dispensers’ and audiologists’ understanding of a theoretical term that is outside our field but bears strongly on our professional endeavors in the present market.

Just as audiologists are at pains to use psychometric terms correctly when establishing meaningful communication with patients and those in other disciplines, it behooves us to use terms from other disciplines with equal care.  Doing so reduces misunderstandings and helps enable defense-free environments for free discussion.

 

Barriers Defined

 

In that spirit, an economic barrier refers to anything that limits access or can influence Price in a market.  As the series worked to explain, economic barriers come in many overlapping forms, including regulatory, strategic, technological, tactical, natural, even illegal on occasion.

  • Some barriers are worth protecting (e.g., R&D protected by patents; education, licensure, and malpractice insurance for audiologists);
  • Some barriers deserve review (e.g., current FDA PSAP activity);
  • Some barriers are taken down (e.g., 1978 US Supreme Court ruling that membership organizations could not prohibit competition among members1);
  • Some barriers are evolving (e.g., forward integration of retail hearing aid distribution networks);
  • Some barriers are eroding (e.g., Big 6 market power; ASHA CCCs)

 

Why Does This Discussion Matter and Why Especially Now?

 

The take home point is that economic barriers, good/bad/high/low, exist and need to be acknowledged and discussed within and outside our field.  Any claim that there are no barriers in the US hearing aid market waves a red flag to the sophisticated PCAST and IOM panels, suggesting naiveté or denial within our profession.

Neither naiveté or denial are attributes that encourage influential outside groups  like PCAST and IOM to dialog with us.  The need for representative dialog has never been greater, with PCAST’s final report on the table and IOM’s due out next week.  Our success in maintaining a parity role in the national debate pivots on our efforts to educate ourselves to new views and lexicons.

Thank you, Virginia, for raising the important questions, participating in the debate, and keeping our profession on its toes.

 

Footnotes & References

 

1This series’ main focus was manufacturing barriers. Little attention was given to service barriers, though they certainly exist.  For example, the practices of trade associations that work to set standards at local and federal government levels “generally are scrutinized closely because of the concern that these standards will be set not to protect consumers, but rather to protect the profits of incumbents by erecting a barrier to entry.” (Culbertson & Weinstein, 2004).

Culbertson JD & Weinstein R.  Antitrust Aspects of Barriers to Entry.  Paper presented at the UCLA Law First Annual Institute on US and EU Antitrust Aspects of Mergers and Acquisitions.  Feb 27-28, 2004.

 

This is Part 5 of a 5-part series on barriers.  Click for Part 1, Part 2, Part 3, or Part 4

 

Feature image from The Treasure of the Sierra Madre

 



About Holly Hosford-Dunn

Holly Hosford-Dunn, PhD, graduated with a BA and MA in Communication Disorders from New Mexico State, completed a PhD in Hearing Sciences at Stanford, and did post-docs at Max Planck Institute (Germany) and Eaton-Peabody Auditory Physiology Lab (Boston). Post-education, she directed the Stanford University Audiology Clinic; developed multi-office private practices in Arizona; authored/edited numerous text books, chapters, journals, and articles; and taught Marketing, Practice Management, Hearing Science, Auditory Electrophysiology, and Amplification in a variety of academic settings.