The Hearing Disruptions series seeks to cover the rapid changes taking place in hearing healthcare. Today’s post is culled from recent topics presented to the Institute of Medicine’s (IOM) Committee on Accessible and Affordable Hearing Health Care for Adults.
A Bi-Model Market for Hearing Aids and Ear Amplifiers
The hearing device market is bimodal and not in equilibrium, meaning that it is not functioning efficiently for suppliers or consumers. A hearing aid report card by Dianne van Tasell, PhD,1 scored hearing aids high on effectiveness (based on verification and validation studies) but low on price and access (Fig 1).
As Van Tasell pointed out to the IOM Committee, federal and state regulations restrict access to a Supply line comprised only of devices approved as hearing aids (Fig 1, middle column).
- Those devices are only manufactured by a handful of specialty high tech companies that can afford the approval process.
- All or almost all such devices are only dispensed by practitioners who’ve met and met the requirements and paid for the right to obtain specialty state licensure, and who dispense out of expensive bricks and mortar environments.
Pricing Strategies Shaped by Demand and Public Policy
Monopolistic pricing is the strategy of choice at each stage in the restricted hearing aid Supply function (Fig 2). That places hearing aids predictably on the economic demand function — high, inelastic Price; low Quantity demanded (point A in Fig 2). In other words, like other healthcare, hearing aid care by approved methods is rationed by price and access.
“Ration,” which probably stems from Latin “ratio” and relates to “rational,” is a much abused and confused word in our language. Though guaranteed to raise ire, it deserves thoughtful definition by two distinct, often divergent, paths in the present discussion.
- Economically defined, healthcare rationing is simply limiting health care goods and services to only those who can afford to pay. In the United States this type of rationing affects about 15% of the population, who are either too poor to afford care or unwilling to buy care or simply uninsured.
- Defined by regulatory means, healthcare rationing involves restricting health care goods and services from even those who can afford to pay. In the United States this type of rationing affects anyone in need of licensed healthcare services, prescription medications, and FDA regulated products, such as Class I and Class II hearing devices.
By contrast, the FDA-delimited Wellness Model of PSAPs and Hearables makes them directly accessible at low prices giving them high scores in those categories (Fig 1, right column). Ear amplifiers don’t get a grade for effectiveness because the data is lacking, although a few small studies suggest they could be comparable to hearing aids. Yet, even with regulation-free products and a Supply line of many suppliers willing to sell at a very low prices, consumers’ willingness to purchase is well below available (or potential) product production (points C and B in Fig 2, respectively).
The Misbehaving Market
The market conditions depicted in Figures 1 and 2 say several things:
- Most consumers are expressing their preference to live with hearing difficulty rather than adopting an ear level device of any kind.
- Barriers other than Price are holding back the market: regulatory restrictions on the high end and incomplete consumer information on the low end of Price.
The “misbehaving” market poses a considerable and continuing challenge for the device industries. Further, emerging research is making it increasing evident that the market reflects potential ongoing and undesirable health situations for those with hearing difficulty. This may be especially so for those who could benefit from amplification regardless of how it’s defined.
Market forces resist barriers of regulation, turf, and definition as they push the market toward equilibrium. Part 4 of this presentation considers three such forces and their predicted effects on market behaviors.
1Van Tasell D. Hearing aids, enabling technologies, barriers. IOM Committee on Accessible and Affordable Hearing Health Care for Adults. April 27, 2015.
- Amlani AM & De Silva DG. Effects of economy and FDA intervention on the hearing aid industry. Am J Aud. 2005;14, 71-79.
- Consumer Electronics Association. 2014 CEA Personal Sound Amplification Products (PSAPs) Study.
- Hosford-Dunn, H. If hearing aids were hula hoops. HearingHealthMatters.org, June 17, 2017.
- Hunn N. The market for smart wearable technology: A consumer centric approach. 8/07/2014
- Lin FR et al. Hearing Loss and Incident Dementia. Arch Neurol. 2011;68(2):214-220. doi:10.1001/archneurol.2010.362.
- Lin FR et al.Hearing Loss and Cognitive Decline in Older Adults. JAMA Intern Med. 2013;173(4):293-299. doi:10.1001/jamainternmed.2013.1868.
feature image courtesy of eugenio pirri